The “Legality Rating” as a means of privileged access to credit for businesses

Lawyer Andrea Scarpellini explained to Diritto 24 what the “Legality Rating” is and its advantages for businesses.

The Decree Law 1/2012 introduced the “Legality Rating”, “ as a tool aimed at promoting the introduction of ethical principles in corporate conduct.

This is a certificate, issued by the Italian Competition Authority, which assesses a company’s sensitivity to the issues of respect for the law and the protection of values of significant social interest.

The assignment of the legality rating entails at least three advantages for businesses:

• it facilitates access to bank loans. Banks must take into account the legality rating attributed to a company in the preliminary assessment process for the granting of loans, also with the aim of reducing processing time, and in the loan conditions granted (since they are obliged to communicate annually to the Bank of Italy the reasons why, where it occurred, the legality rating was not taken into account when processing requests for credit);

• it allows or facilitates the allocation of public funds. When assessing the granting of funding to companies, public bodies take into account the legality rating attributed to them, providing for at least one of the following reward systems:

  a) preference in the ranking;

  b) attribution of additional points;

  c) reserved quota of allocated financial resources;

• it improves the image of the company, in terms of Corporate Social Responsibility.

The rating can be requested by enterprises operating in Italy that:

• have operational headquarters in the country;
• have achieved a minimum turnover of €2 million in the year prior to the rating request (referring to the individual company or parent group);
• have been listed in the business register for at least two years.

The rating will range between a minimum of one ‘star’ to a maximum of three ‘stars’, assigned by the Authority based on self-assessments submitted by the companies (which will be cross-checked with data held by the public administrations concerned).

To be awarded the base score of 1 star, the company must meet all the following requirements:

•   the entrepreneur and other relevant parties for the purposes of rating (technical director, general manager, legal representative, directors, majority shareholders) have not been subject to preventive and/or precautionary measures, criminal rulings/orders of conviction, or plea-bargained rulings for certain offences (tax crimes pursuant to Legislative Decree 74/2000, offences pursuant to Legislative Decree no. 231/2001, failure to pay social security and welfare taxes, other crimes against the Public Administration);
• the company has not been subject to convictions or precautionary measures for administrative offences resulting from offences under the aforementioned Legislative Decree no. 231/2001;
• in the two-year period prior to the rating request, the company was not convicted of serious offences under competition law;
• in the two-year period prior to the rating request, the company was not convicted of unfair trading practices (violations of the consumer code);
• in the two-year period prior to the rating request, the company was not convicted for a failure to comply with regulations related to health and safety in the workplace;
• in the two-year period prior to the rating request, the company was not subject to investigation by the tax authorities (with the exception of those settled with payment as a result of acceptance or acquiescence) or to investigations for violations of pay, contribution, insurance and tax obligations towards its employees and external providers of services;
• in the two-year period prior to the rating request, the company was not subject to any provisions for the withdrawal of public funding for which it failed to fulfil repayment obligations;
• in the two-year period prior to the rating request, the company was not subject to measures issued by A.N.A.C. (National Anti-Corruption Authority) of a pecuniary and/or disqualifying nature; the company does not appear in the digital criminal records of companies pursuant to art. 8 of Presidential Decree no. 207/2010, which would prohibit it from entering into contracts with the Public Administration or from participation in tender procedures or the award of public works, services or supply contracts; administration of the enterprise by an external commissioner was not ordered under Law Decree no. 90/2014 (converted with Law 11/8/2014 no. 114), envisaged for companies subject to investigations for corruption offences or similar.
• the company must make payments and financial transactions exceeding the threshold of €1,000 exclusively by means of traceable payment instruments.

All the measures that prevent the attribution of a ‘star’ must be incontrovertible or confirmed by a final judgment.

There are additional conditions that make it possible to increase the base rating of one star.

For every 3 requirements fulfilled, a further star will be attributed (up to the maximum rating of 3 stars).

The additional conditions set by legislation are as follows:

• complying with the contents of the Legality Protocol signed by the Interior Ministry and Confindustria, the guidelines that constitute its implementation, the Protocol signed by the Ministry of the Interior and the League of Cooperatives, and the protocols signed at a local level by the Prefectures and trade associations;
• using payment tracking systems also for amounts lower than those set by law;
• adopting an organizational structure that monitors compliance of company activities with the specific regulatory provisions applicable to the company or adopts an organizational model pursuant to Legislative Decree 231/2001;
• adopting processes to guarantee forms of Corporate Social Responsibility;
• being registered in one of the lists of suppliers, service providers and contractors not subject to attempts at mafia infiltration;
• adherence to self-regulated codes of ethics adopted by trade associations;
• adoption of organizational prevention and anti-corruption models;
• having reported one of the crimes provided for in the regulation, committed against the entrepreneur or their family and assistants, if the reported offences are subject to prosecution.

The legality rating has a duration of two years from issue and is renewable upon request. In the event of the loss of one of the basic requisites necessary to obtain a ‘star’, the Authority revokes the rating. If the requirements thanks to which the company obtained a higher rating are lacking, the competition authority reduces the number of stars.

On its website, the Authority publishes an updated list of companies for which the legality rating has been attributed, suspended, or revoked, with the associated dates. The legality rating is also communicated to the Chambers of Commerce and is visible in any reports extracted from the Business Register.