Directors: waiver of remuneration must be specified in the contract

With its order 24139/2018, the Court of Cassation clarified that in order to render the office of a company’s director gratuitous rather than remunerated, a lack of requests for payment is not sufficient, as a specific clause indicating the gratuitous nature of the director’s services must be included in the contract or the company’s articles of association.

The Facts

This case began from a request for payment made by a director of a limited liability company, which was accepted in the first instance, but rejected on appeal.

In particular, the director had claimed remuneration for the period he was in office from 2001 to 2006. The Court of first instance had accepted the claim and recognised that remuneration was due. The Court of Appeal having jurisdiction for the action brought by the company had accepted the latter’s claims, finding that the lack of a claim for remuneration, whether while the director was in office or after termination, constituted a waiver due to conclusive facts.

The Court of Cassation dealing with the director’s appeal once again reversed the ruling and accepted the reasons put forth for the claim.

The ruling of the Court of Cassation

According to the Supreme Court the office of a director is presumed to be remunerated in accordance with Article 1709 of the Italian Civil Code, stating that: “The office is presumed to be against remuneration. If not determined by the parties, the amount of the remuneration shall be determined based on professional fees or practices; in the lack thereof, it shall be determined by the court.” By accepting the office, the director therefore acquires the right to receive remuneration and any failure to act, i.e. failure to claim the remuneration, while in office and upon termination, is not in and of itself sufficiently indicative of a tacit, valid and effective waiver pursuant to Article 1236 of the Italian Civil Code. This is because in this case no intention that was objectively incompatible with maintaining the right to be remunerated was detected. Finally, the Court underlines that, given the presumption of remuneration, the gratuitous nature of the office must be established expressly or through a specific provision in the company’s articles of association or a specific agreement to this end with the Director.

Conclusions

The director of a company is entitled to receive remuneration for his or her service, which is presumed to be provided against remuneration. This is notwithstanding any failure to act by the director. The gratuitous nature of the office can therefore only ensue from an ad hoc arrangement.