The case, explained

Accounting Jurisdiction for In-House Companies: The Orientation of the Supreme Court's United Sections

7 min read · Updated November 2026 · Editorial oversight: Avv. Federico Papa

The Supreme Court of Cassation, in a recent ruling, drawn a clear line of demarcation regarding jurisdiction over public investee companies. According to legal press reports of November 5, 2024, the core issue concerns the liability of directors of so-called in-house companies, namely entities operating as internal branches of the Public Administration despite their private corporate form. The decision of the United Sections clarifies whether damage caused to the assets of such companies falls within the jurisdiction of ordinary civil courts or the Court of Auditors. Through our usual twin case, we explore how the distinction between form and substance dictates the judicial forum for individuals managing public funds. The ruling reinforces a line of authority aimed at protecting the public treasury against mismanagement within entities that, although structured as joint-stock or limited liability companies, act in practice as municipal or state departments. The analysis examines the criteria required for a company to be classified as a so-called longa manus of a public authority, shifting officer liability from civil litigation to public accounting jurisdiction.

Accounting Jurisdiction for In-House Companies: The Orientation of the Supreme Court's United Sections

In brief

The article analyzes the recent orientation of the United Sections of the Supreme Court regarding accounting jurisdiction for in-house companies. The Court confirms that under conditions of similar control and total public ownership, directors answer before the Court of Auditors for public asset damage. Through the twin case of Gaio Sventura, the practical application of in-house providing requirements and the procedural differences between civil and accounting litigation are illustrated.

  1. The facts

    According to reports published by NT+ Diritto and Il Quotidiano Giuridico, the dispute originates from a liability claim instituted by the Regional Prosecutor's Office of the Court of Auditors against officers and employees of a public investee company. The case reached the Supreme Court of Cassation, which ruled through its United Sections to settle a preliminary jurisdictional challenge raised by the defendants' counsel.

    The prosecution alleged negligent management resulting in substantial financial loss to the company, technically qualified as an in-house entity. While the Accounting Prosecutor argued that the action involved public asset damage on the grounds that the company's capital was fundamentally public, the defense submitted a motion alleging lack of accounting jurisdiction. Defense counsel maintained that, as the entity was a private-law corporation, jurisdiction belonged exclusively to the Ordinary Civil Court pursuant to the Civil Code.

  2. The regulations at play

    The statutory framework relies on three fundamental normative pillars.

    1. Art. 103, paragraph 2, of the Constitution: establishes the jurisdiction of the Court of Auditors over public accounting matters, ensuring that entities managing public funds answer to a specialized judicial body.
    2. Art. 12, Legislative Decree no. 175/2016 (TUSP): provides that corporate liability rules apply to directors of investee companies, while setting out an express exception for in-house entities, whose officers remain subject to accounting jurisdiction for damages caused to the public shareholder entity.
    3. Art. 2392 of the Civil Code: defines the standard of care required of corporate directors, the breach of which underpins liability in both civil and accounting contexts.

    The statutory architecture balances corporate operational flexibility with the protection of public funds. When accounting jurisdiction is affirmed, proceedings follow the Code of Accounting Justice, which grants the Prosecutor broad investigative powers and interim protective measures.

  3. What the case law says

    The settled case law of the Supreme Court establishes that an in-house company constitutes a so-called longa manus of the Public Administration. Where there is no true operational or legal separation between the public authority and the corporate entity, damage to corporate assets directly harms the public treasury. Precedents require three cumulative criteria to establish an in-house providing structure: similar control (the public body exercising control equivalent to that exercised over its internal departments), 100% public ownership, and the execution of the main part of its corporate activity for the benefit of the public shareholder.

    In the absence of any of these elements, traditional corporate autonomy principles apply, allocating jurisdiction to the ordinary civil court. The United Sections reaffirmed that adopting a private corporate vehicle cannot serve as a formal shield to remove the management of public funds from the judicial review of the Court of Auditors.

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  8. What it teaches professionals

    1. Carefully review the company's articles of association and shareholder resolutions for similar control mechanisms capable of triggering accounting jurisdiction.
    2. Monitor compliance with the 80% threshold for prevalent activity continuously, as shifts in revenue sources can alter jurisdictional boundaries.
    3. Advise officers and directors to secure specialized insurance coverage (D&O) explicitly encompassing administrative and accounting liability before the Court of Auditors.

References: Art. 103 Cost.Art. 12 D.Lgs. 175/2016Art. 1 D.Lgs. 174/2016Art. 2392 Codice Civile

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Avv. Federico Papa
Editorial oversight: Avv. Federico Papa·ICAMContent drafted with AI support and subject to editorial source checks. Despite these controls, inaccuracies may remain: reports and rectification requests are welcome. Report a correction

Frequently asked questions

Can a director of a public investee company face dual proceedings before both civil courts and the Court of Auditors?

Generally no: in-house companies are subject to Court of Auditors jurisdiction for public asset damage, whereas ordinary investee companies fall under civil court jurisdiction. Concurrent actions are permissible only if the same conduct causes separate and distinct losses to the company and to the public shareholder entity.

What financial consequences follow a adverse judgment by the Court of Auditors?

A judgment of liability requires the defendant to make full restitution for public damage using personal assets; the accounting court may also grant pre-judgment attachment orders over the defendant's assets during the investigation phase.

What does 100% public ownership mean in this context?

It refers to the condition where the entire share capital is held by public entities. The presence of private equity, even if minimal, generally precludes in-house qualification, save for explicit statutory exceptions.

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