Czech Republic: Management and compliance program

Each individual case of failure on the part of a company’s employee also represents a truly fundamental risk for the company itself and for its credibility and trustworthiness in the market, and as such may have fatal consequences for the further growth of business and for the company’s very existence. Among other things, a well-oriented and well-configured compliance program is an integral part of the toolbox for curbing the risk of such failure.

The term ‘compliance’ does not have a clearly defined legal meaning – indeed, it is rather a corporate term than a legal one. In practice, compliance programs are usually understood to mean a set of rules and measures aimed at preventing the violation of laws and legal regulations – as well as the breach of ethical standards – by companies and their employees.

The usual elements of such compliance programs include measures concerning the observance of competition rules, AML and anti-corruption measures (concerning both the public and the private sector), rules concerning the protection, integrity, and transparent processing of know-how and other data (including personal data), OSH rules and rules ensuring proper working conditions, anti-discrimination rules and rules aimed at the prevention of other wrong and undesirable behavior within the context of employment relations but also outwardly e.g. vis-a-vis clients and customers.

Effective compliance is of fundamental importance for all companies: under Sec. 8 (2) (b) of the Corporate Criminal Liability Act, criminal offenses are attributable to a legal entity if the latter has failed to implement such measures as may reasonably be expected, i.e., in particular, if it has failed to perform prescribed or necessary checks of its employees’ actions, or to take the requisite steps to avoid or at least mitigate the adverse consequences of criminal wrongdoing. In other words, an effective compliance program is able to defuse the danger that a legal entity may be held responsible for criminal offenses committed within its ambit.

In the ideal case, the authors of compliance programs accomplish a well-balanced system of internal standards (and of control mechanisms to monitor their observance) so that all actions which are attributable to the company are always fully conforming to internal and external rules and regulations. At the same time, these standards should be manageable in scope, easy to grasp and to internalize, and should present no obstacle to the further development of the company’s business. Attaining these goals is a daily challenge for everyone whose responsibilities include the area of Legal & Compliance.

Source: Act No. 418/2011 Coll., as amended (Corporate Criminal Liability Act).

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