International Regulatory Enforcement (PHIRE)

New German Act to Combat Corporate Crime

September 09, 2019

Dr. Regina Engelstäedter, Sebastian Ens, Tara Giunta and Diogo Metz

On 22 August 2019, the German Federal Ministry of Justice presented the draft bill for the introduction of the Corporate Sanctions Act (Verbandssanktionengesetz, the “Act"). Once the German Parliament enacts the Act, it will enhance enforcement against corporations against business-related crimes, facilitate punishment, promote internal investigations, and incentivize investment in compliance.

It is expected that the Act will significantly change the compliance and investigation practice in Germany and beyond. This may also pose major risks in M&A deals, at least where the target is integrated into the buyer's group.

  • Introduces a legal framework for sanctioning of offenses committed by corporations.

  • Will grant prosecutors the power to sanction corporations for employee misconduct.

  • Significantly increases monetary sanctions up to 10% of the annual global turnover.

  • Allows the upper limit of fines to be reduced by 50% by conducting internal investigations.

Click here to read the alert.

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