The subject of corporate compliance for the small and mid-sized enterprises is increasingly in the focus of legislation and prosecution authorities. In general, the term corporate compliance covers all rules, which a rule-abiding enterprise as well as its organs and employees must ensure in order to comply with the relevant statutory and internal requirements and prohibitions.
The Minister of Justice Conference has recently decided to pursue the draft law of a so-called Association Criminal Code which was submitted by the State of North Rhine-Westphalia. According to this the penalty for companies upon the transgressions of their responsible persons concerning the absence or the violation of the existing compliance structures shall amount to 10% of annual sales at the most, with the option that a company can be dissolved by force.
Contrary to the usual opinion in the mid-sized entrepreneurship, not only industrial companies but also those of the SME sector would fall within the scope of this draft law as well as the already existing sanction options for anti-competitive behaviour according to the Act against Restraints of Competition (ARC), e.g. a fine. The practice of the Federal Cartel Office and the State Cartel Offices suggests that the focus of the investigations is shifting continuously towards small and medium-sized enterprises. The principal witness regulation is thereby an important instrument for prosecuting agencies in order to get results quickly.
In light of the already existing high penalties – such as in case of the antitrust violations where at the top the concerned enterprise together with associated enterprises can be liable for up to 10% of their annual sales – SMEs should take precautionary measures. Independent corporate compliance structures that correspond to the needs of the small and medium-sized enterprises would be the most important step to prevent existing and future liability risks. The introduction of such structures is not only costly but it also provides numerous opportunities next to the avoidance of liability.
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