The Polish Ministry of Justice has produced a proposed draft of a law on corporate criminal liability, which, if it comes into force, will significantly change the legal environment for corporate entrepreneurs, by introducing the concept of ‘culpability’ for companies.
Under the proposed law, a company’s criminal liability, just like the criminal liability of an individual, will be based on culpability. A company’s culpability can stem from entrusting the management of its assets to the wrong person (known as ‘fault in selection’) or failure to supervise ongoing processes (‘fault in supervision”). Within the meaning of the law, having flawed internal organisation that facilitates the commission of crime is also considered to be organisational culpability.
Irregularities or faults in the company organisation that facilitate or allow the commission of a crime represent nothing other than a failure to adopt an appropriate compliance system. By defining the company’s culpability in this way, the bill indirectly requires entrepreneurs to implement compliance procedures.
The basic assumption is that an organisation should have internal rules to prevent crimes from being committed in relation to its business operations, as well as rules for reacting to incidents already detected.
Such a collection of rules usually constitutes the company’s code of conduct. Construed more broadly, these procedures encompass training programmes addressed to selected groups of employees, as well as specific procedures to be followed when irregularities are discovered.
The proposed law makes it necessary to define the duties of corporate bodies and their employees who perform specific functions. Such a system should structure tasks, competences and responsibilities within a company, as well as, where necessary, indicating those responsible for dealing with irregularities.
The proposal also requires that companies that employ at least 50 employees and achieve annual net sales of at least EUR 10,000,000 appoint a compliance officer or create an organisational unit in charge of supervising compliance, with binding rules and laws regulating their particular branch or sector.
The new bill also foresees that a collective entity can be liable for the actions of its contractors or third parties. A company may be found liable for a crime committed by an employee of its contractor if the company benefited from the unlawful action. The company will be liable for this crime if it was simple (within the framework of a due diligence test) to discover that the contractor has not implemented elements of the compliance system. This means that companies in a business relationship (e.g. permanent suppliers) will be obliged (or in fact required) to investigate each other’s performance of their compliance obligations to avoid ‘surprises’.
The draft law is at the end of its legislative process in the government. If it reaches the parliamentary stage it may be enacted soon (particularly since the Polish parliamentary process can be completed very rapidly), but it is difficult to predict how soon at this stage. The proposed timescale for implementationis short: three months.