On what terms a collective entity will be held liable after the amendment
The amendment involves moving away from the need to obtain a prior criminal court judgment for the possibility of initiating proceedings against a collective entity. The amended law is also intended not to identify specific offences for which such an entity may be liable. In practice, therefore, an entity will be liable for any offence committed by persons acting on its behalf, i.e. in particular its management board members, registered holders of a commercial power of attorney or employees, as long as it gains or has the possibility to gain a benefit, even if the perpetrator is not detected. The assumptions of the bill draft thus indicate a willingness to actually apply the provisions of the act and effectively impose liability on collective entities.
However, liability will not be imposed on all collective entities. The sanction will only be able to be imposed on entities employing at least 500 people in the last two financial years or with a sales turnover of more than €100 million. The Ministry of Justice wants to prosecute only the largest companies on this basis. If the liability of a collective entity is established, a pecuniary penalty in the range of PLN 10,000 to PLN 30,000,000 can be imposed on it. It will still be a condition for the imposition of the penalty that the collective entity has benefited from the offence (including the possibility of obtaining such benefit).
Due to the abandonment of the requirement to convict in criminal proceedings an individual who has committed an offence, there will be no need to conduct pre-trial proceedings against a collective entity. Evidentiary proceedings are to be administrative in nature. The assumptions of the bill draft do not specify which administrative procedure is meant, however, it should be expected that with regard to such procedural institutions as expert opinions, searches, inspections or mandatory participation of a defence counsel, the administrative procedure will guarantee a lower level of protection for a party to the proceedings than the provisions of the Code of Criminal Procedure.
Relevant internal procedures
At present, a collective entity will not be held liable if it demonstrates that the supervisory procedures did not fail (that there was no fault in supervision) and that any persons acting on the collective entity's behalf exercised due diligence. In view of the planned tightening of the liability rules for collective entities, the proper functioning of internal compliance procedures and the regulations for allocating responsibility for key areas of a corporation's operations will become even more important.
The amendment in question is already another attempt to make the Act on the Liability of Collective Entities an effective tool for enforcing criminal sanctions against corporations. The previous draft amendment from 2019 became defunct upon the ending of the parliamentary term. According to government assumptions, the current draft should be adopted by the Council of Ministers later this quarter which could suggest it coming into force from the beginning of 2023. It is expected that the amended law will only apply to crimes which were committed on behalf of a collective entity after the amendment comes into force.
We will keep you posted on any news and developments related to this amendment. Hogan Lovells' Proceedings Team is also available to assist you in reviewing your internal procedures and safeguarding your organisation from potential criminal liability.
Authored by Andrzej Dębiec and Jan Starybrat.