All clients, in particular clients that cooperate with public sector entities, should take a closer look at the existing and newly introduced changes to the regulation on liability of collective entities.
Pursuant to currently binding regulations, a collective entity (e.g. company) may be held liable for certain crimes (such as bid rigging and fraud), if they were committed by its employees, management staff, or its business partners, and if the company obtained or could have obtained a material benefit out of such a crime. The company may be fined up to PLN 5 million (but no more than 3% of its turnover). Moreover, it may also be banned from conducting certain promotion or marketing activities, use of public funds, or participating in public procurements.
We would like to draw your attention to the amendments that came into force on 28 July 2016. In our Law-Now alert dated 12 July 2015 we already covered changes in public procurement regulations. In addition, the recent changes have introduced the possibility to issue a preventive measure against a company, by means of prohibiting it from participating in public procurements, already at the stage of conducting criminal proceedings against an individual for whose activities it may be held liable. Such a measure may be imposed by the court at the request of a prosecutor or injured person, and is appealable.
The new measures come in addition to a whole group of existing preventive measures introduced last year to the Polish legal system, which cover a ban on merging, divesting or transforming the business or disposal or encumbrance of assets without the court’s prior consent.
The recently introduced measure may bring certain risks for companies acting on the public sector market as they may suffer negative consequences before any final judgment is made as to whether an individual committed a crime or not. Consequently, it is recommended that the companies implement and enforce compliance rules binding on all their personnel, especially in the area of public procurement rules.
In the next Law-now we will focus on the principal aims of upcoming changes on holding collective entities liable.