GERMANY Trends and Developments Contributed by: Thomas Richter and Sina Loibl, RICHTER
• the authority to take decisions on behalf of the legal person; and • the authority to exercise control within the legal person. Furthermore, EU member states shall take the necessary measures to ensure that legal per - sons can be held liable where the lack of super - vision or control by a person referred to above has made possible the commission of a corrup - tion offence for the benefit of the legal person by a person under its authority. This is similar to the provisions of the Administrative Offences Act, which is already in force in Germany. If a legal person is liable in accordance with these provisions, the draft directive also pro - vides for a strict sanctioning regime by imposing criminal or non-criminal penalties or measures. Such penalties may include financial penalties or fines, the amount of which shall be proportionate to the gravity of the conduct and the individual, financial and other circumstances of the legal person concerned. The fines outlined in the draft directive can be rather significant. EU member states shall ensure that the maximum level of such fines is at least 5% or 3% (depending on the nature of the offence) of the total worldwide turnover of the legal person, respectively, either in the busi - ness year preceding that in which the offence was committed, or in the business year preced - ing the decision to impose the fine. A revenue- based assessment of fines is already known at European level from other areas of law, such as the General Data Protection Regulation and the Market Abuse Regulation. Instead of turnover thresholds, the minimum and maximum amounts of the fine can also be deter - mined in absolute numbers, in which case the
amounts shall not be less than EUR40 million or EUR24 million, respectively. In addition to financial penalties, the draft direc - tive outlines further sanctions against legal per - sons. Besides the exclusion of the company concerned from public benefits or public fund - ing, the competent authorities shall be able to issue trade bans and to revoke or withdraw licences. Furthermore, authorities that have con - cluded contracts with the company concerned may choose to annul or rescind a contract in the context of which the offence was committed. As a last resort, the draft directive provides for the winding up or closure of such a company. Outlook: increasing importance of compliance As a result of the proposed directive, the rel - evance of compliance and internal investigations will be strengthened once again. This is because it may be considered a mitigating circumstance if the offender provides the competent authori - ties with information that they would not other- wise have been able to obtain, helping them to investigate or bring to justice the other offenders or to gather evidence. Likewise, effective internal controls, ethics aware - ness and compliance programmes to prevent corruption set up by a legal person prior to or after the commission of an offence may be consid - ered a mitigating circumstance. The prompt and voluntary reporting of an offence to the relevant authorities and the following implementation of remedial action may also be regarded as a miti - gating factor under the draft directive. Companies are well advised to keep an eye on the further development of the directive and to adjust their compliance systems in time accord - ingly.
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