Company Sanctions Act
Arguments and Positions
The government coalition agreement between the political parties CDU/CSU and SPD includes the introduction of a company sanctions act (Unternehmenssanktionsrecht). In "white collar crime", it wants to ensure more severe sanctions also on companies that benefit from the misconduct of their personnel, as a matter of principle. Sanctions of up to 10 percent of turnover are planned. Moreover, an obligation to investigate for public authorities and a nationwide uniform prosecution of infringements by companies are striven for. Also, clear-cut rules for proceedings and, where appropriate, their termination are intended to bring more legal certainty for companies and greater flexibility for the judiciary.
Good starting points for solutions through own proposals and the "Cologne Draft"
In the past years, politicians and associations presented various reform proposals for a company sanctions act. Among the most recent ones, there is the "Cologne Draft" for a sanctions act. It is mainly about improving corporate compliance by way of sanctions. The chemical industry actively works for modernising the company sanctions legislation based on the "Cologne Draft". A reform of the legal rules on minor irregularities (Ordnungswidrigkeiten) or the introduction of a new company sanctions act should mainly serve for a better corporate culture and better compliance. This opportunity should also be used to clearly regulate the sanctions procedure and the rights of those affected.
Encourage compliance instead of "pillorying"
The defence options of companies and their personnel should be proportionate to the powers of public investigators. It is also important that a willingness to cooperate of the companies concerned should have a mitigating effect. A self-denunciation that relieves from sanctions (sanktionsbefreiende Selbstanzeige) could provide an incentive for company-internal investigation and clarification. There should be the possibility to suspend monetary sanctions subject to conditions. Measures that are only harmful to the company – for example, exclu¬sion from award procedures or public "pillorying" – are not helpful. Instead, imposed sanctions should strengthen the "self-cleansing" of companies and improve their compliance systems.
- Strengthen compliance systems
Above all, a future company sanctions act should strengthen all compliance systems in companies. Therefore, no sanctions should be imposed if an individual offender disregards a basically functioning compliance system and commits an infringement from within the company. Company sanctions should be based on a demonstrable deficiency in the organisation.
- Observe the separation principle under company law
Parent companies should not be liable for the misconduct of their subsidiaries. As a matter of principle, only the individual legal entity – and not the group as a whole – should be held liable.
- Preserve the defence rights of companies
An effective protection of confidentiality for management and in-house lawyers is needed to preserve the defence rights of accused companies. Therefore, rights to refuse to testify and to cooperate are needed. Furthermore, prohibitions to confiscate should be introduced; in particular, this applies for documents from company-internal investigations.
- Introduce a self-denunciation that relieves from sanctions
A self-denunciation that relieves from sanctions is an incentive to investigate and find out about internal shortcomings. The companies should be given this possibility.