German Federal Government wants to improve the compliance of the law by German companies. The starting point are the increasing numbers of criminal cases involving senior executives.
The new law will create a criminal liability for the legal entities. This would be a paradigm shift in the history of German corporate and criminal law.
At the moment a legal entity cannot be made responsible for a criminal offence. In the case of a criminal offence committed by a natural person with authorization to represent the legal entity only a regulatory fine can be imposed. And this regulatory fine cannot exceed the amount of 10 million Euros. This is even the case if the criminal offence was committed with intent.
The draft bill already passed these stages:
- ministerial draft bill (22 April 2020),
- government draft bill (16 June 2020),
- consultation in the Bundesrat (the German Federal Council and also the federal legislative body that represents the 16 federated states in Germany) with overall affirmative statement and some suggested improvements (18 September 2020).
The next possible steps will be:
- the counterstatemet of the Bundesregierung (the Federal Government) and then
- the adoption by the Bundestag (the German Federal Diet).
Due to the fact that the next German federal elections will be held between August and October 2021, it is highly possible that we will see the promulgation of the new law in less than a year.
At the moment it is still too early to discuss the individual regulations of the draft bill. But this statement can be made: This Act will have 3 general impacts:
- It will enforce the role of the compliance for the German companies.
- It will increase the use of independent internal investigations in Germany.
- It will definitely establish a new corporate criminal liability regime.
My personal opinion
In my personal opinion the first two impacts are very positive. The German corporate world is changing. Compliance and integrity are now not only fancy words but are the building blocks of the corporate world.
The third one will be a definitely a challenge. It will put pressure on the management and the companies. It will make the daily work more challenging. In the future it will be crucial to know and to understand the interdependence of corporate and criminal law.
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