On 1 June 2016 the President of the Czech Republic signed an amendment to the Act on Criminal Liability of Legal Entities and Proceedings Against Them (the “Amendment”). The Amendment will come into force on 1 December 2016 as the number of crimes which can be committed by legal entities will increase from 83 to approximately 200.
The Amendment introduces crimes that previously were not imputable to legal entities and are known to occur frequently in practice. Some noteworthy examples are: a violation of obligations of trust, damage to the creditor, favouring creditors and causing bankruptcy.
The Amendment also contains a new defence for legal entities. Provided companies can prove they have “undertaken all the effort that can be reasonably required” to prevent a crime from being committed and the crime was committed by a governing body, an executive of a legal entity or an employee while exercising his/her tasks, they will be excluded from criminal liability. This provision has caused uncertainty among corporates, state prosecutors, judges and advocates as there has been no explanation of the term “undertaking all the effort that can be reasonably required” by a legislator.
Before the Amendment comes into force, we recommend that companies should modify their compliance programmes to reflect the changes. Legal entities should focus on ensuring that compliance programmes are as detailed as possible. They should also revise compliance programmes regularly and assess the results of such programmes periodically.