Criminal liability of legal persons and “Compliance Programs”

Supervisors: JUDr. Radek Šmerda, Ph.D., doc. JUDr. Tomáš Gřivna, Ph.D. and JUDr. Lukáš Bohuslav, Ph.D.

Under the Act no. 418/2011 Sb., Criminal liability of legal persons, as amended, was convicted 70 legal entities in 2015. They were sentenced the following penalties: a fine, a publication of the verdict, ban on use or cancellation of the legal person.

What we offer:

We offer a preventive programs to prevent crime committed by legal entities through the so-called “compliance programs.” The aim and content of the criminal law “compliance program” is to prevent or eliminate the unlawful conduct or unlawful conditions. It concerns a corporate management and control system aimed at compliance with generally binding legal regulations related to the activities of legal entities, as well as the creation of mandatory professional and ethics internal standards.The program consists of management tools and controls which part of the service is also specialized training, eg. On the topic of corporate criminal liability, the code of ethics or anti-corruption measures.

Frequently Asked Questions:

Do already the Law enforcement agencies applied this law?

Definitely yes. Increase criminal proceedings corresponds to normal delay between the committed crime and its procedural solutions by the Law enforcement agencies on the present. In terms of crime committed by legal entities, a cases have beeing solved from the years 2012 -2015. Legal entities are responsible for the acts or omissions of his that has occurred since 1 January 2012.

Which legal entities are criminally responsible?

All legal persons without distinction. Criminally responsible are thus joint-stock companies, limited liability companies, cooperatives, foundations, organizations, state enterprises, etc. An exception is the Czech Republic as a legal entity sui generis (ie. an institution acting on behalf of the Czech Republic – the ministries and other government departments, administrative offices, etc. – are not criminally responsible). The second exception is the local government units (municipalities and regions), but only and exclusively in the exercise of public power. Municipalities and regions in the context of private relationships (contracts, disposition of assets, etc.) are also criminally responsible.

How can legal person commit a crime when it is essentially legal structures and natural persons act on behalf it?

For legal entities can not talk about the committing crime in the strict sense, but a “derived criminal responsibility” of negotiations of specific natural persons where the delict of natural person is subject to statutory conditions called. Juridical person added.

What threatens legal entity?

The law recognizes a diverse range of punishments, which are:

a) cancellation of the legal person;
b) confiscation of property;
c) a fine (from 20 thousand. CZK 1.46 billion. CZK);
d) forfeiture of property or other assets;
e) ban on use;
f) a ban on public contracts, the concession procedure or in a public tender;
g) the prohibition of receiving grants and subsidies;
h) a publication of the verdict.

What is Compliance Program focuses on criminal law?

Each offense committed by natural or legal person must be always lawless act. Therefore compliance program has goal and content to prevent illegal activities or conditions.Compliance program is essentially a “company system” aimed at compliance with generally binding legal regulations related to the activities of legal entities, as well as the creation and compliance with mandatory internal standards (professional and ethical).

Compliance program consists of analysis, project and implementation phases. In the analytical part the internal regulations of legal preson are adjudicated, we analyze and propose these and we projec or create new internal regulations (eg. code of ethics, anti-corruption principles and organizational rules), and also examine the functionality of the internal processes of a legal person. We focus on existing risks for the company itself, risk management companies, risks arising from actions by employees and the risk of criminal prosecution and its consequences on society. In the project phase, we propose measures, that legal person help to eliminate risks, based on the findings from the analysis phase. In the implementation phase, we are able to implement the proposed measures. Part of the whole process is training for leaders of the legal person, and middle management. The result is that the company will have the under control the internal regulations, clearly defined competencies and functional system of monitoring compliance with the rules of both generally binding and internal.

We have a corporate organizational regulations, working regulations and a code of ethics. Why should we spend money for the Compliance program?

Our experience is as follows. Basically, we have not meet in practice with a legal entity, which would internally use the services of a lawyer with a focus on criminal law.These services are in demand usually only when it is necessary to arrange the process of representation in running case.However, it is often already too late, it is just minimize the damage. Criminal law is not only a question of a penalty for the committed offense, criminal law is primarily the issue of prevention and it is the primary mission of the existence of this discipline in the legal system. The aim of the criminal law and the task of the Law enforcement agencies is prevent and avoid crime, if possible.This is, we think, the goal of any management or owner.

The law itself to preventive action for legal persons specifically encouraging because the structure of attribution of natural persons to the detriment of a legal entity in itself raises considerable room for clarification processes and responsibilities, not only but only through the lens of labor law or business law, but with an emphasis on consistent practice in the field of criminal law, which includes a completely separate legal institutions like. culpability.

Legal entities often give attention to the creation of internal regulations and also not neglect the existence of supervisory authorities. Our experience leads to knowledge that the internal rules are so large and complex, often internally inconsistent and outdated that the control authority or management not to be able to make head or tail or even its target recipients – employees. Legal entities do have a lot of things prepared and ready, but missing their connections in a logical, internally coherent complex that is clear and especially functional. It is important to realize that a clear delineation of powers in the legal entity determining the competencies and related responsibilities, including the criminal law, will contribute significantly to increase the efficiency of company operations, for is no shifting of responsibility towards “above” to the Director General and Chairman of the Board and building a buck-passing environment where everyone basically solves everything and nobody by own name, but the responsibility lies with the one who sign the document, which is impossible to check, but even impossible to read due its amout. This may, in our experience, well prepared and maintained compliance program to wipe out. Instruments of Compliance program also provide to management effective feedback from the internal environment of a legal person.

Why then should the management to invest resources and time into such a project?

Simple answer. Fulfill the task entrusted to the owner to properly manage the company and protect its assets. Needless to remind that, members of management protect themselves as natural persons.