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Introduction of legal entities' criminal liability

On November 13, 2015 the National Council of the Slovak Republic has approved the Act on legal entities' criminal liability and upon the amendment of certain laws thereafter (hereinafter referred to as the “Act”), which shall become effective on July 1, 2016. The Act was prepared on the basis of the Plan of legislative tasks of the Slovak government for the year 2013, as well as on grounds of the government's resolution related to securing of the recommendations of OECD regarding bribery in international business transactions for the Slovak Republic, the government's resolution to the Action plan to combat tax fraud for the years 2012 to 2016 etc. The Act regulates the bases of legal entities' criminal liability, penalty types imposed on legal entities and procedures of bodies involved in criminal proceedings and courts in criminal proceedings led against legal entities.

The Act does not represent the first initiative to solve the issue of legal entities' criminal liability introduction. Its solution was proposed during the criminal law recodification in 2015, as well as in the form of separate acts in 2006 and 2007; however its approval did not take place on any of these occasions. The legal entities' criminal liability was introduced to the Slovak legal order in 2010, however only in its indirect form – a so called pseudo criminal liability. It is a model, in accordance to which the legal entities' criminal liability is not formally expressed and only the natural persons acting on behalf of the legal entity are criminally liable. The law simultaneously enables to impose some criminal sanctions on legal entities, which are not defined as penalties, but as protective measures. These protective measures are thereby not imposed on the legal entities as a consequence of criminal offence commission, but in the interest of the society's protection from criminal offences. Confiscation of the sum of money and confiscation of a property form such protective measures. Pursuant to by now accumulated statistical data these protective measures have been imposed on no occasion so far. Of all the member states of the European Union (hereinafter referred to as the “EU”) the mentioned concept has been introduced solely by the Slovak Republic after Spain's pattern. Nevertheless, Spain retreated from this pattern in 2010. The other member states of EU impose penalties and protective measures on legal entities as criminal consequences of a criminal offence committed by a natural person acting on behalf of a legal entity in the form of ascription to the legal entity. Federal Republic of Germany is the only exception, since in Germany the legal entities are sanctioned by the administrative criminal law regulation, upon which an administrative body decides on the sanction in the first instance and a court in the appellate procedure.

As mentioned in the explanatory report to the Act, the mere essence of the legal entities' criminal liability interferes with the continental model of criminal law principles, particularly with respect to the strictly individual character of the criminal liability (i.e. its perception as the natural entity liability). On the other hand, it is crucial to adapt to the actual development trends relating to social, economic and political changes. These trends require not only the state's reaction, but they also represent a manifestation of will of a certain international community. The obligation of the Slovak Republic to sanction legal entities, provided that a criminal offence in connection with their activities has been committed, results from the whole range of its international and transnational liabilities (among many we shall mention the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions).

The Act introduces the enumeration of criminal offences regulated in the special part of the Act no. 300/2005 Coll. Criminal Code, as amended (hereinafter referred to as the “Criminal Code”), which result in legal entities' criminal liability, if they are committed in the manner specified by the Act. It is a wide range of criminal offences contained in all chapters of the Criminal Code:

a) among the offences against life and limb we shall mention the illicit manufacturing and possession of narcotic and psychotropic substances, poisons or precursors and trafficking of them;

b) among the offences against freedom and personal dignity we shall mention the trafficking of human beings;

c) among the offences against (the right of) property we shall mention the legalisation of the proceeds of crime;

d) the economic criminal offences form one of the largest groups of the criminal offences applied to the legal entities (e.g. the criminal offence of harm caused to a consumer, forgery, fraudulent alteration and illicit manufacturing of money and securities);

e) among the criminal offences against public safety and against the environment we shall mention the prohibited acquisition and possession of firearms and trafficking of them, endangering and damaging the environment;

f) among the criminal offences against public order we shall mention mainly the criminal offences of corruption and many others.

As far as the conditions for legal entities' criminal liability conclusion are concerned, the criminal offence is in terms of the Act considered to be committed by a legal entity provided that it was committed in its favour, on its behalf or within its operation or through it, in case the subject performing the action was (i) the statutory body or a member of a statutory body, (ii) the person performing controlling activities or supervision over a legal entity or (iii) other person authorized to act on behalf of the legal entity or decide on its behalf. The criminal offence is considered to have been committed by a legal entity also in case some of the abovementioned persons enabled through its insufficient supervision or control the commission of a criminal offence by a person acting within its authorization entrusted to it by the legal entity. For conclusion of the legal entities' criminal liability it shall not be demanded to deduct a natural person's liability and it is also established that the legal entities' criminal liability shall not be conditioned by ascertaining which natural person acted on behalf of the legal entity. The Act further institutes that the legal entities' criminal liability shall not cease to exist upon bankruptcy declaration, entry into liquidation, its winding-up or establishment of the receivership. However, in terms of the Act the criminal liability shall be excluded in relation to the state, state and self-governing bodies.

Understandably, not all existing types of penalties determined by the Criminal Code for the natural persons will be imposable on legal entities. There were also new, specific penalty types introduced for the category of legal entities. The penalty of winding-up of the legal entity, forfeiture of property or a thing, pecuniary penalty, prohibition to undertake certain activities, prohibition to receive subsidies or budget grants, prohibition to receive assistance and support provided from the EU funds, prohibition to participate in public procurement or publication of the convicting judgment shall be imposable on legal entities. When imposing the penalty the court shall take into account such aspects, as securing of the least possible impact on the employees of the legal entity or creditors' interests protected by law.

In the light of changes introduced by the Act, the inevitable amendment of the large number of related acts must have taken place. Besides the related criminal acts (Criminal Code, Criminal Procedure Code), also the acts regulating the official evidence, which the legal entities have to be registered into to be incorporated (Commercial Register), specifically in terms of extension of registered data about legal entities by imposed penalties and protective measures, belong to them. Further acts amended are the acts regulating issuance of permissions, licences and authorizations to perform various specialized activities, which are preconditioned by demonstration of integrity. So far it was necessary for the integrity condition to be fulfilled by a statutory body as a subject authorized to act on behalf of the legal entity or by members of its supervisory bodies. This concept shall be preserved, but it shall be extended by an integrity condition of the legal entity requiring the issuance of such permission itself.

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