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Coronavirus - Draft on "corporate criminal liability" enters the final phase - Germany

  • Germany
  • Litigation and dispute management

10-03-2020

At the end of last week, German government parties were able to agree on the basic structure of the long-announced bill on implementing corporate criminal liability (Verbandssanktionengesetz). Relevant NGOs and associations will now have the chance to comment on the draft at hearing this week. This heralds the final phase of the legislative process, and "corporate criminal liability" is no longer just a distant fantasy.

While it has been clear for several months now that the dissolving a corporate entity, a possibility included in the first draft bill, will probably not become applicable law, further possible modifications to the draft bill, which has been circulating since late summer, are now gradually being announced.

For example, it still seems to be discussed to which extent the formal separation of corporate defence and conducting an internal investigation, which is anchored in the draft bill, will become law and whether - under certain circumstances - even a (partially) "failed" internal investigation can be a reason to reduce the scope of sanctions. In this respect, the first draft bill stipulated that only a fully legally compliant internal investigation which is serving the purpose of clarifying the matter under investigation - i.e. if the corporate offence was actually cleared up by the company or third parties commissioned by the company - would be able to trigger a mitigation of the corporate sanction.

On the other hand, the maximum amount of a fine to be imposed (EUR 10 million or 10% of the average annual group turnover for "large companies"), which is already contemplated in the draft bill, or the applicability of the principle of legality – meaning the duty to investigate and prosecute – if an offence is falling within the scope of the law appears to be set for the final bill.

For companies, this means that they must now seriously concern themselves with the forthcoming "corporate criminal liability". Our criminal law advisors Dr. David Rieks and Tobias Abersfelder will be happy to answer any questions you may have on this topic.