Draft of the Act on Liability of Collective Entities adopted by the Government

Yesterday, i.e. on 8 January the Council of Ministers adopted a Draft of the new Act on the Liability of Collective Entities for Punishable Offences prepared by the Ministry of Justice. As the Minister of Justice Zbigniew Ziobro emphasised yesterday, ‘the point is that Polish law should be effective in response to abuses that could be committed by large companies in their pursuit of profit.’ On the other hand, Deputy Minister of Justice, Marcin Warchoł, pointed out that ‘it is an act for citizens, for business and for the State […] and it is not targeted against business. On the contrary, it is an act created for people who want to invest, for people who want to develop their business.’

The draft of the act provides, among other things, for the extension of the scope of liability of collective entities. A collective entity shall be responsible for the activities of both collective bodies and members of the collective entity’s bodies. In certain situations, a collective entity shall be responsible for its representatives and proxies, employees and even subcontractors. The draft Act also provides for the removal of the requirement of prior obtaining a precedent against natural person, i.e. a final ruling confirming the commission of a criminal offence by a natural person in relation to the business activity conducted by a collective entity. The Act also provides for the introduction of a new institution of a so-called whistleblower, i.e. a person who would report to the collective entity irregularities and obligations of the collective entity connected to those irregularities. The drafters have also extended the list of penalties and measures imposed on the collective entity, e.g. added to it the penalty of liquidation of the collective entity. The lower and upper limit of the financial penalty was also increased (to PLN 30,000–30,000,000).

Collective liability proceedings may be conducted separately or jointly with criminal proceedings against a natural person. The grounds for conducting proceedings against a collective entity shall be public interest. The application procedure was abandoned. Therefore, the proceedings shall be obligatory if the two following conditions are met: there is a justified suspicion of a prohibited act constituting a basis for collective entity’s liability and it is in the public interest.

The draft of the Act on the Liability of Collective Entities is criticised by entrepreneurs and managers. Among those who submitted their position on the draft Act is the Council of Entrepreneurs for Small and Medium-sized Entrepreneurs, whose Head of the Team is Izabella Żyglicka, Vice-President of the Regional Chamber of Commerce in Katowice and the Spokesperson for the Entrepreneurs’ Rights at the Regional Chamber of Commerce. The Team established under Izabella Żyglicka developed a common position of the Council with regard to, among other things, discrepancies between the provisions of the project and the main principles of the Constitution for Business.

Adoption of the draft Act on the Liability of Collective Entities by the Government is the first stage of the legislative process, which shall now be moved to the relevant Sejm Committee. The parliamentary work shall shape the future form of the act. We will keep you up to date with all the news related to this Act.