Since 2012, a prosecution was initiated against more than 1400 legal persons and more than 230 proceedings ended by a legally effective and convicting judgment. The most frequently imposed punishment was a monetary punishment in the extent from 5 thousand up to 5 million CZK. Twenty-seven companies were dissolved.
In this article, I would like to mention the reasons that are significant when considering whether to deal with the issue of criminal liability of a legal person and whether to adopt appropriate measures to reduce the risk of criminal liability.
What consequences an imposed punishment may have for a commercial company, conditions of criminal liability?
- a legal person may be criminally liable for an act of a natural person (typically, an executive director, director, procurator, head of department, representative, appointed worker etc.);
- a legal person may be convicted despite the fact that the given culprit is not convicted, or it is not discovered who committed the crime;
- criminal liability is transferred to a legal successor of the given legal person (typically, in a merger, transfer of a significant part of assets, sale of enterprise etc.);
- a monetary punishment may be enforced from members of statutory or supervisory bodies due to a breach of care of a proper manager;
- a punishment of prohibition to participate in public procurements may lead to an economic liquidation of some companies;
- information about any imposed punishment is recorded in the criminal record and it is available on the public administration portal; depending on the amount and type of punishment, it may be erased after up to thirty years;
- information about any imposed punishment expels the relevant legal person from its participation in public procurements, it reduces its credibility between local and foreign partners and it ultimately leads to a significant reduction of orders for several years, or even to the liquidation of a commercial company.
How can I reduce/eliminate the risk of criminal liability of my company?
- A legal person may exempt itself from criminal liability, if it has made every effort that may be reasonably required from it to prevent the commission of an illegal act.
So, what should I adopt and change in my working company?
- to implement effective tools across the organization (a compliance program), which will contain the following rules:
- effectively preventing actions leading to the risk of criminal liability;
- identification and reporting of illegal acts and timely response;
- revisions and updates of the rules following any reported incidents;
- to regularly train responsible persons, to control and enforce the fulfilment of implemented rules;
- to update the implemented rules following any change of legislation.
A well-set compliance program will be usually the most important reason that will decide whether your commercial company will be criminally liable and punished, or not. However, the defined program must not remain only on paper. Its actual implementation and enforcement through regular checks and trainings must be ensured.
We will return to the topic of criminal liability of legal persons – the second part of the article will be published in the autumn and it will be focused on the content and settings of internal guidelines.