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Instead of a conviction, the public prosecutor or the court sets a probation period of 6 months to 2 years for the company, and in certain cases up to 5 years. If the legal entity does not engage in any unlawful conduct during the probation period and fulfills the obligations imposed on it, the public prosecutor or the court will decide that the entity has proven itself.
Once the decision that the entity has proven itself becomes final, it will no longer be possible to initiate criminal prosecution against that entity for the act in question. So even if the company did engage in unlawful conduct, it may ultimately not be convicted, and no penalty may be imposed on it.
“In essence, this follows the same logic we know from the conditional discontinuance of criminal prosecution. The company meets the conditions set by law and avoids a judgment,” says attorney Petr Motyčka.
What is specific, however, is that criminal prosecution can be conditionally waived even before criminal prosecution begins – already at the pre-trial verification stage, and even where the evidence would allow criminal prosecution to be initiated. At the same time, the mechanism can also be used for more serious criminal activity – that is, even for felonies.
For such a diversion to be used, the conditions set by law must be met; however, they do not differ fundamentally from the conditions for the conditional discontinuance of criminal prosecution.
The legal entity must consent to this procedure. This does not mean, however, that it is confessing to the criminal offense. The distinction between the legal entity’s consent to this procedure and a confession may then be crucial if the legal entity fails to prove itself during the probation period and criminal prosecution is initiated or, as the case may be, continued.
“In practice, this difference is key. With the conditional discontinuance of criminal prosecution, a confession is part of the diversion, and if a person fails to prove themselves during the probation period, the defense is already in a different position – the law enforcement authorities work on the basis that the accused person has previously admitted to committing the offense. With the conditional waiver of criminal prosecution, the law does not require a confession; consent to the procedure is sufficient. For a company, this means that even after the diversion it retains more room to maneuver in its defense should it ultimately fail to meet the conditions,” adds attorney Motyčka.
Furthermore, the legal entity should compensate for the damage, if the act caused any, or at least enter into an agreement with the injured party on compensation. Likewise, the entity should surrender any unjust enrichment. However, it is also possible to take other necessary measures to compensate for the damage or surrender the unjust enrichment.
The legal entity must also undertake to take appropriate measures to remedy or eliminate the harmful consequences of the criminal offense.
Finally, the legal entity should pay a sum of money to the state intended to help victims of crime, and the amount must not be clearly disproportionate to the seriousness of the offense and the circumstances of the legal entity. The amount will therefore depend on the circumstances of the case and the financial performance of the company in question.
Depending on the nature and seriousness of the criminal offense, the public prosecutor or the court may also impose further obligations on the legal entity. Most often, this will be an undertaking to refrain, during the probation period, from the activity to which the criminal offense related, and an obligation to prepare and implement an effective set of preventive and remedial measures – a functioning compliance program. This obligation may also include monitoring of compliance with the compliance program.
According to the explanatory memorandum to the amendment, monitoring is intended to serve a dual purpose: to regularly track how the company implements and adheres to the measures, and to contribute to the recovery of its corporate culture and to creating safeguards against further criminal activity.
“If the legal entity is required to undergo monitoring, it chooses the monitor itself, i.e. an auditor or a lawyer specializing in this type of monitoring. However, the monitor must be approved by the public prosecutor or the court,” says attorney Patrik Šimonek.
In practice, the procedure is therefore that the company’s representative submits a list of 3 persons who could act as the monitor. The public prosecutor or the court reviews the list and, if it considers that a given person would carry out the monitoring properly, approves them.
The company then chooses one of the approved persons. If none of the persons is approved, the company has no choice but to submit a new list. The monitor oversees whether the company is properly preparing and implementing the preventive and remedial measures and, at least once a year, unless otherwise specified, submits a report on the monitoring to the public prosecutor or the court.
Conditional waiver of criminal prosecution should thus move compliance programs from the level of formalities to that of a real tool usable in criminal practice. It gives companies a tangible incentive to implement measures and keep them functional, rather than merely declaring them in a code of ethics. In practice, what will matter is whether the company actually complies with its obligations.
This article was prepared by Petr Motyčka, an endors partner specializing in criminal law. If you are dealing with a similar situation, contact us at trestni@endors.cz or call us at +420 721 208 275 We respond within 24 business hours.
Patrik is a lawyer specializing in litigation and criminal matters; he also advises on intellectual property law, contractual obligations and property crime.
Hana worked for several months as a judicial assistant in the criminal division of the District Court for Prague 4 and now focuses primarily on criminal law, both in defending individuals and legal entities and in representing injured parties.
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