Compliance Programme Saves First Company From Criminal Prosecution

The Municipal Court in Prague has dropped the criminal case against a company suspected of illegal conduct in public procurement. The reason: the company implemented an ethics code.

Controversial new legal provision

A new amendment to Czech Act No. 418/2011 Coll., on the Criminal Liability of Corporations (the "Amendment") has been in effect since December 2016. The Amendment added a controversial provision into Czech criminal law stating that companies will be exonerated from criminal liability if they prove that they have "made every effort that may be reasonably expected to prevent the commission of a criminal offence".

Until now, it was not clear precisely what "every effort that may be reasonably expected" meant. So far legal experts have interpreted this to mean that the company must implement a compliance programme and ensure that the employees and management adhere to it.