On November 13, 2015, the National Council of the Slovak Republic passed a new standalone law (not merely an amendment to existing legislation) on the criminal liability of legal entities and on amendments to certain laws (hereinafter referred to as the “Act”). In the following article, we will provide you with a detailed overview of the content of this Act.
This amendment addresses the legal basis for the criminal liability of legal entities, the types of penalties imposed on legal entities, the procedures for imposing such penalties, and the procedures followed by law enforcement authorities and courts in criminal proceedings against legal entities.
The bill was submitted by the Ministry of Justice of the Slovak Republic and was drafted with reference to numerous international documents that highlight the need to establish an effective mechanism for sanctioning legal entities when a criminal offense is committed in connection with their activities.
The new law will take effect on July 1, 2016.
The introductory provision of Section 1 of the Act regulates the relationship with the Criminal Code No. 300/2005 Coll., as amended, and with the Criminal Procedure Code No. 301/2005 Coll., as amended. This constitutes a relationship of subsidiarity, and unless the nature of the matter precludes it, the Criminal Code applies to the criminal liability of legal entities and the penalties imposed on them, while the Criminal Procedure Code applies to criminal proceedings against legal entities.
The legal provisions set forth in Section 2 govern the territorial scope of the Act. Under this Act, the criminality of an offense committed by a legal entity within the territory of the Slovak Republic is assessed. Among other things, the Act also assesses the criminality of an offense committed outside the territory of the Slovak Republic by a legal entity having its registered office in the Slovak Republic, as well as by a legal entity whose organizational unit has its registered office in the Slovak Republic, provided the offense was committed in the course of its activities. Under this Act, the criminal liability of a legal entity that is not established in the territory of the Slovak Republic is also assessed if the act was committed for the benefit of, or if the act caused damage to, a legal entity established in the territory of the Slovak Republic, or a natural person who is a citizen of the Slovak Republic, or a foreign national who has permanent residence in the territory of the Slovak Republic.
The Act on Criminal Liability of Legal Entities amends and supplements a number of laws as set forth in its third part, i.e., the general, transitional, and final provisions, and it is precisely from Section 2 of the aforementioned Act that the need to amend the Criminal Code No. 300/2005 Coll. arises. On the effective date of the Act on Criminal Liability of Legal Entities, the Criminal Code will undergo a change in the concept of who may be the perpetrator of a criminal offense. The legislature adds text to the original wording of Section 19 of the Criminal Code, according to which a perpetrator may be not only a natural person but, under the new provisions, also a legal entity, subject to the conditions established by the Act on Criminal Liability of Legal Entities.
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The second part of the Act regulates the fundamentals of criminal liability of legal entities. For the purposes of this Act, Section 3 provides an exhaustive list of criminal offenses. An exhaustive list means that a legal entity cannot commit other criminal offenses and may therefore only commit the criminal offenses listed in the following paragraph.
These are criminal offenses regulated in the Special Part of the Criminal Code:
1) the unlawful production of narcotic and psychotropic substances, poisons, or precursors, their possession, and trafficking in them under Sections 172 and 173,
2) the promotion of drug addiction under Section 174,
3) human trafficking under Section 179,
4) sexual violence under § 200,
5) sexual abuse under §§ 201–202,
6) endangering the moral upbringing of youth under § 211,
7) complicity under §§ 231 and 232,
8) laundering of proceeds of crime under Sections 233 and 234,
9) usury under Section 235,
10) unauthorized access to a computer system under Section 247,
11) unauthorized interference with a computer system under Section 247a,
12) unauthorized interference with computer data pursuant to § 247b,
13) unauthorized interception of computer data pursuant to § 247c,
14) manufacture and possession of access devices, passwords to a computer system, or other data pursuant to § 247d,
15) unauthorized employment under Section 251a,
16) damage to the financial interests of the European Union under Sections 261 to 263,
17) harm to consumers under Section 269,
18) unfair commercial practices against consumers under Section 269a,
19) counterfeiting, altering, and unauthorized production of currency and securities under § 270,
20) putting into circulation counterfeit, altered, and unauthorized currency and securities under § 271,
21) manufacture and possession of counterfeiting equipment under Section 272,
22) tax and insurance premium evasion under Section 276,
23) failure to pay taxes and insurance premiums under Section 277,
24) tax fraud under Section 277a,
25) non-payment of taxes and insurance premiums under Section 278,
26) obstruction of tax administration under § 278a,
27) general endangerment under §§ 284 and 285,
28) unlawful possession of weapons and arms trafficking under §§ 294 and 295,
29) establishment, conspiracy, and support of a criminal group under § 296,
30) establishment, organization, and support of a terrorist group under § 297,
31) unlawful production and possession of nuclear materials, radioactive substances, high-risk chemical substances, and high-risk biological agents and toxins under § 298 and 299,
32) endangering and damaging the environment under Sections 300 and 301,
33) unauthorized disposal of waste under Section 302,
34) unauthorized discharge of pollutants under Section 302a,
35) violation of water and air protection under Sections 303 and 304,
36) violation of plant and animal protection under Section 305,
37) violation of tree and shrub protection under Section 306,
38) terrorism under Sections 313 and 314,
39) accepting a bribe pursuant to Sections 328 through 330,
40) offering a bribe pursuant to Sections 332 through 334,
41) indirect corruption pursuant to Section 336,
42) human trafficking pursuant to Sections 355 and 356,
43) pimping pursuant to Section 367,
44) production of child pornography under § 368,
45) distribution of child pornography under § 369,
46) possession of child pornography and participation in a child pornography performance under § 370,
47) endangering public morals under § 371 and 372,
48) terrorism and certain forms of participation in terrorism under § 419,
49) supporting and promoting groups aimed at suppressing fundamental rights and freedoms under § 421 and 422,
50) production of extremist materials under § 422a,
51) dissemination of extremist materials under Section 422b,
52) possession of extremist materials under Section 422c,
53) denial and approval of the Holocaust and crimes of political regimes under Section 422d,
54) defamation of a nation, race, or belief under Section 423,
55) incitement to national, racial, and ethnic hatred under § 424
56) and incitement, defamation, and threats against persons due to their affiliation with a particular race, nation, nationality, skin color, ethnic group, or family origin under § 424a.
A legal entity is criminally liable under Section 4 of the described Act for the above-mentioned criminal offense (a list of 56 different offenses) if it committed the act, if the act was committed for its benefit, in its name, within the scope of its activities, or through it, if a statutory body or a member of the statutory body of the legal entity acted, or by a person who performed supervisory activities within the legal entity, or by another person authorized to represent the legal entity or make decisions on its behalf. It is important to note that the criminal liability of a legal entity does not cease upon the declaration of bankruptcy, entry into liquidation, its dissolution, or the imposition of receivership.
Section 5 of the Act on Criminal Liability of Legal Entities lists the legal entities that are not criminally liable under this Act:
1) the Slovak Republic and its authorities,
2) other states and their authorities,
3) international organizations established under public international law and their authorities,
4) municipalities and higher territorial units,
5) legal entities established by law at the time the criminal offense was committed,
6) other legal entities whose financial affairs as a debtor cannot be settled under a special regulation governing bankruptcy proceedings.
The sole exception among items 1–6 are legal entities in which such entities hold an ownership interest. Criminal liability for the committed offense may be imposed on such legal entities. This primarily concerns legal entities—enterprises with an ownership interest held by the state or local government.
Another issue addressed by the law is the criminal liability of the legal successor of a legal entity, which is regulated in Section 7. The criminal liability of a legal entity that has been dissolved passes to all its legal successors. The criminal liability of a legal entity does not pass to a natural person. In the event of a merger, consolidation, or division of a legal entity, a transfer of assets to a partner, a change in the legal form of the legal entity, a relocation of the legal entity’s registered office abroad, or the dissolution of the legal entity during enforcement proceedings, the court that ruled on guilt and punishment shall, upon a motion by the legal successor of that legal entity, decide whether or to what extent the unexecuted sentence also applies to that legal successor.
The Act further regulates in Section 8 the concept of effective repentance, through which the criminal liability of a legal entity ceases if:
1) the criminality of the act ceases pursuant to the provisions of the Criminal Code on effective repentance of the person referred to in Section 4(1),
2) the legal entity voluntarily refrained from further conduct aimed at committing a criminal offense and prevented or remedied the harmful consequences of the criminal offense, or
3) the legal entity voluntarily refrained from further conduct aimed at committing a criminal offense and reported it to a law enforcement authority or the Police Force at a time when the harmful consequences of the criminal offense could still be prevented or the danger posed by the criminal offense could still be eliminated.
Despite the doctrine of effective repentance, the criminal liability of a legal entity does not cease even if conditions 1–3 are met (they are not cumulative) if the legal entity has committed any of the crimes of corruption or a crime of harming the financial interests of the European Union.
The third part of the Act regulates in its provisions the issue of penalties that a court may impose on a legal entity:
1) dissolution of the legal entity,
2) forfeiture of assets,
3) forfeiture of property,
4) a monetary penalty,
5) a prohibition on conducting business activities,
6) a prohibition on receiving grants or subsidies,
7) a penalty prohibiting the acceptance of aid and support provided from European Union funds,
8) a penalty prohibiting participation in public procurement,
9) a penalty requiring the publication of the conviction.
Part Four of the Act sets forth detailed provisions regarding criminal proceedings against legal entities, with the Act further specifying matters such as: the initiation of criminal prosecution, the conduct of criminal prosecution, and the territorial jurisdiction of the court conducting the proceedings. Furthermore, the Act regulates important issues regarding notification of the initiation and conclusion of criminal prosecution and a number of other issues concerning criminal proceedings, such as the right of an accused legal entity to choose a defense counsel, as well as issues such as the questioning of a person authorized to act on behalf of the legal entity.
Part Five of the new law regulates the enforcement of the penalties specified in Part Three of the law.
Following the adoption of the law on the criminal liability of legal entities, related provisions are being amended, particularly in Act No. 300/2005 Coll. The Criminal Code, as specifically stated in the text, as well as Act No. 301/2005 Coll., the Criminal Procedure Code, and numerous other legal regulations.
In conclusion, it is necessary to note the significant role the newly adopted law will play. It addresses one of the most debated topics in the legal system of the Slovak Republic, and does so in a very straightforward manner by recognizing a legal entity as a perpetrator of a criminal offense. It thus establishes a broad mechanism for sanctioning legal entities if a criminal offense is committed in connection with their activities. We view the adoption of this law as a step forward, one that has been highlighted not only by numerous domestic initiatives but also by a number of international documents.
