Legal news Deloitte Czech Republic. July 2016

Transcription

1 Legal news Deloitte Czech Republic July 2016

2 Amendment of the Act on exempt from corporate criminal 2 On 1 December 2016, the amendment to Act No. 418/2011 Coll., on Corporate Criminal Liability and Related Proceedings (ACCL), which had been debated for so long, will become effective. It can be said that it is the most important amendment in the area of corporate criminal liability since its introduction in the Czech Republic. The changes in two primary areas will be crucial significant expansion of the catalogue of criminal offences for which a corporate entity can be held criminally liable and changes related to the attributability of a criminal act to corporate entities. Additionally, the scope of criminal offences has been expanded for which a corporate entity can be held liable even if it does not have its registered office in the Czech Republic and committed the criminal offence abroad, as well as the scope of criminal offences whose punishability does not expire due to effective repentance and the scope of criminal offences excluded from the statute of limitations. Criminal offences for which a corporate entity can be held liable Since the introduction of corporate criminal liability in the Czech Republic, the factual effect of the law was limited to an enumerative list of criminal offences included in Section 7 of the ACCL. The new amendment expands the pool of criminal offences for which a corporate entity can be held liable to include all criminal offences listed in the Criminal Code (CC), aside from those explicitly excluded. While the previous regulation included an exact list of criminal offences for which a corporate entity can be prosecuted, the new amendment contains an exact list of criminal offences for which a corporate entity cannot be prosecuted. They include primarily criminal offences that a corporate entity cannot commit and criminal offences closely linked to the perpetrator-natural person. A corporate entity therefore cannot be prosecuted, for example, for manslaughter (Section 141 of the CC), abandonment of a child or a person in their custody (Section 195 of the CC) or intoxication (Section 360 of the CC). Under the amended legal regulations, however, it will still not be possible to prosecute a corporate entity for the breach of regulations on economic competition rules according to Section 248 (2) of the CC. Attributability of an act to a corporate entity Based on the current regulation, a criminal offence committed by a corporate entity refers to an illegal act committed on its behalf or in is interest or as part of its activities. The amendment narrows this definition down to illegal acts committed in the interest of a corporate entity or as part

3 3 of its activities, excluding those committed on its behalf. Additionally, the pool of persons whose acts can be attributed to a corporate entity has been narrowed down to the following: a) The statutory body or a member of the statutory body, or another person holding a managing position in the corporate entity; b) A person holding a managing position in the corporate entity who carries out managing or controlling activities within the corporate entity despite not being a person listed under a); c) The person having control of the management of this corporate entity, if their acts were at least one of the conditions needed of the consequence leading to corporate criminal liability to arise; or d) An employee or a person in a similar position (hereinafter employee ) in the fulfilment of their work tasks despite not being a person listed under a) through c). A key change is the introduction of the possibility to be exonerated from criminal liability for acts of all the persons listed above. Under the current regulation, it is possible for the corporate entity not to be attributed acts of an employee if the corporate entity had sufficient preventive and supervisory measures in place. This regulation was criticised as unsuitable, as it does not include the possibility to be exonerated in the cases of evident individual misconduct made by other individuals. This construction of corporate criminal liability was in practice often interpreted as objective corporate criminal liability and therefore criticised as being in conflict with the Charter of Fundamental Rights and Freedoms. As such, the amendment allows the corporate entity to be exempt from criminal liability, if it made all possible efforts that can be rightfully required from it to prevent the persons listed above from committing the illegal act. This change gives corporate entities the possibility to prevent criminal liability from arising in cases of excesses of natural persons by implementing preventive measures, especially by the introduction of sufficient compliance programmes. However, if the corporate entity has adopted the measures only formally but has not ensured their factual application, supervision and monitoring of their non-observance, it will not be sufficient for its exoneration.

4 4 What could be seen as problematic is the nonexistence of binding rules for the creation of programmes that would meet the criterion of all possible efforts that can be rightfully required. Such methodologies exist in other countries, for example in the United Kingdom or Spain. Expiration of criminal liability through effective repentance The list of criminal offences for which corporate criminal liability does not expire through effective repentance was expanded to include machinations in insolvency proceedings (Section 226 of the CC), breach of regulations on the economic competition rules according to Section 248 (1) (e) of the CC, negotiation of advantages in the awarding of a public contract, in a tender or in a public auction according to Section 256 (3) or (4) of the CC, machinations in the awarding of a public contract or in a tender according Section 257 (1) (b) or (c) of the CC and machinations in a public auction according to Section 258 (1) (b) or (c) of the CC. Before the amendment, the list was limited to criminal offences related to corruption acceptance of a bribe (Section 331 of the CC), bribing (Section 332 of the CC) and indirect bribery (Section 333 of the CC). What is important for corporate entities Corporate entities should realise that preventive and supervisory measures implemented in the company will play an important role in determining whether or not a corporate entity can be exonerated from criminal liability. Formal measures cannot be relied upon; what matters is their observance and perception in practice. If a corporate entity tolerates breaches of internal regulations, they will probably not pass the test for all possible efforts. Jaroslava Kračúnová jkracunova@deloittece.com

5 Contacts If you are interested in obtaining additional information regarding the services provided by Deloitte Czech Republic, please contact our legal specialists: Ambruz & Dark Deloitte Legal s.r.o., advokátní kancelář Nile House Karolinská 654/ Praha 8 - Karlín Czech Republic Tel.: Fax: Subscribe to dreport and other newsletters and invitations here Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee ( DTTL ), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as Deloitte Global ) does not provide services to clients. Please see for a more detailed description of DTTL and its member firms. Deloitte provides audit, tax, consulting, financial advisory and legal services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries and territories, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte s more than 225,000 professionals are committed to becoming the standard of excellence Deloitte Czech Republic