Friday, July 25, 2014

New grounds for applying measures under criminal law against legal entities

On June 4, 2014 the Law of Ukraine "On amendments to some legislative acts of Ukraine in the field of state anticorruption policy due to the implementation of the EU Visa Regime Liberalization Action Plan for Ukraine" No.1261-VII (hereinafter the Law) came into effect. 

The Law expands the grounds for applying measures under criminal law to legal entities. Thus, according to the previous wording of Article 96-3 of the Criminal Code of Ukraine grounds for the application of such measures could be a number of offenses committed "on behalf of a legal entity", if such offenses were "aimed at obtaining" "undue advantage or create the conditions for obtaining such advantage" for that legal entity, which indicated the need to establish a direct intent to achieve a criminal result.  The new wording of this provision establishes that the mentioned offenses shall also be deemed committed in favour of a legal entity, if they "resulted in obtaining undue advantage" by a legal entity or created conditions for obtaining such advantage", i.e. regardless of the focused intent of that legal entity’s authorized person.
Also, the adopted Law sets forth an additional ground for applying measures under criminal law to legal entities. Now such measures can be applied not only for authorized person s’ offenses committed on behalf of and in the interests of a legal entity, but also for "failing to ensure the performance of duties to prevent corruption imposed on the authorized person by law or constituent documents of a legal entity", if it led to any offense provided for in Articles 209, 306 or to offenses provided for by separate parts of Articles 368-3, 368-4, 369 and 369-2 of the Criminal Code of Ukraine and related to the undue advantage obtained. 

It should be noted that the adopted Law fails to disclose the content of "duties to prevent corruption." At the same time, the new Article 14-1 added to the existing Law of Ukraine "On Principles of Prevention and Combating Corruption " obliges legal entities to ensure the "development and application of measures to prevent corruption, which are necessary and reasonable for preventing corruption in the activities of a legal entity and for encouraging employees to act in accordance with the laws and regulations and under rules and procedures established by the company to identify and prevent corruption in its activities."

Also, the Law has changed the amount of fine as a measure under criminal law, which may be applied to a legal entity: earlier, the court could impose a fine in the amount of UAH 85 thousand to 1,275 thousand, now the mentioned amount may only be applied, if undue advantage was not obtained or if its amount may not be estimated. In all other cases a fine in the double amount of obtained undue advantage shall be applied.

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