Section 2 – Definitions; offences committed abroad

(1) For the purposes of this Law

1. a corporation:

(a) a legal person governed by public or private law

(b) a society without legal personality,

(c) a partnership with legal personality,

2. a person in charge:

(a) a member of a representative body of a legal person

(b) a member of the board of directors of a society without legal personality,

(c) a partner in a partnership with legal personality who is authorized to represent the company,

(d) a general agent and, if he/she holds a management position, an authorized signatory and an authorized representative of a corporation,

(e) any other person who is responsible for the management of the establishment or enterprise of a corporation, including the supervision of management or the other exercise of supervisory powers in a managerial capacity

3. a corporate crime: a criminal offence by which the obligations affecting the corporation have been violated or by which the corporation has been or should be enriched.

(2) An act to which German criminal law does not apply shall be deemed equivalent to a corporate crime if

1. the act would be a criminal offence under German criminal law

2. the act at the scene of the crime is punishable by a penalty or the scene of the crime is not subject to criminal jurisdiction

3. at the time of the offence, the corporation has a seat in Germany, and

4. the other conditions of Section 1(3) are fulfilled.

Table of Contents

I. Corporation (Para. 1 No. 1)

Sec. 2 para. 1 Nr. 1 CLA-D defines a corporation as a legal entity under public and private law (a), an corporation without legal capacity (b) and a partnership with legal capacity (c). The provision is based on  Sec. 30 para. 1 nos. 1 to 3 AOA. It covers in particular

  • Public limited company, partnership limited by shares, limited liability company, European company (Societas Europaea), cooperative society;
  • corporations and foundations with legal capacity;
  • OHG, limited partnership, GmbH & Co KG, EEIG, partnership companies, (external) GbR;
  • public-law corporations, institutions and foundations. 17

Foreign legal entities fall under the definition if the type of association is comparable to a German legal entity or corporation of persons. 18

Explicitly not covered is a group (Sec. 17, 18 GSCA). However, if the association is part of a group, the group turnover may become relevant for the sanctions framework (Sec. 9 CLA-D).  Sec. 9 (2) sentence 2 CLA-D is based on the economic unit. The draft bill understands the economic unit as the combination of those legal entities which are under uniform management with the association concerned in a group of companies.

This definition is to be read in connection with the regulatory area in Sec. 1 CLA-D. The scope of regulation of the Association Sanctions Act only covers associations “whose purpose is directed towards an economic business operation. Whether an economic purpose exists shall be based on principles developed to Secs. 21, 22 GCC. 19 Therefore, especially non-profit corporations and other corporations which do not maintain business operations as well as governmental agencies shall not fall within the scope of regulation. These continue to be subject to the law on administrative offences. 20 The restriction to commercial business operations is the subject of the current hearing of corporations. Although the higher sanctions would not apply, neither would the greater scope for action in sanctioning.

If sovereign powers are exercised, corporations sanctions against corporations under public law are excluded (Sec. 5 No. 3 CLA-D). The liability of the legal successor (Sec. 6 CLA-D) and the liability of affiliated corporations (Sec. 7 CLA-D) is regulated separately.

Supervising person (Para. 1 No. 2)

The term “manager” is based on Sec. 30 (1) AOA. The decisive factor is a formal position as a member of an executive body with power of representation (a and b), partner (c) or general agent (d). 21 Individual managing directors and executive board members are included.

The person who actually performs a performance function is also considered to be a manager. 22 The decisive factor is whether the person “manages” or “supervises” independently. Based on the establishment of a guarantor position, the actual assumption of a management function should be the decisive factor. This includes supervisory boards as well as de facto managing directors of a GmbH or the managing director of the general partner GmbH of a GmbH & Co. KG. 23 In addition, persons who are responsible for a delimitable division of the company or for a delimitable part of the operational activities should also be included. The draft bill gives the following examples: 24

  • Auditor,
  • environmental or data protection officers with powers of instruction,
  • Compliance officers and
  • chief financial officer

III. Corporation Offence (Para. 1 No. 3)

Acts of corporation are criminal offences by which either obligations which affect the corporation have been violated or by which the corporation has been or should be enriched. The responsibility of the corporation (Sec. 3 CLA-D) as well as the corporation sanctions (Sec. 8 CLA-D) tie in with the corporation act.

The offence must have been committed in a criminal, unlawful and culpable manner. Only the offence, but not the perpetrator must be established. 25

The draft bill clarifies that any criminal offence can constitute an act of corporation, provided that the criterion of enrichment of the corporation or the violation of an obligation of the corporation is fulfilled. 26 The scope of application is not limited to certain groups of offences such as property or tax offences. The draft itself cites examples of punishable human rights violations such as human trafficking for the purpose of labour exploitation (Sec. 233 CC) or environmental offences under Secs. 324 et seq. Somewhat concealed in connection with the amendment of the Competition Register Act, there are further criminal offences which may constitute offences of corporation: punishable restrictions on competition (Sec. 123 LaCR), fraud and subsidy fraud (Secs. 263, 264 CC), social security contribution fraud (Sec. 266a CC), tax evasion (Section 370 AO), submission fraud (Sec. 298 CC) as well as punishable violations of the Act to Combat Undeclared Employment or the Act on the Provision of Temporary Workers. 27

The examples given in the draft bill are not exhaustive. In particular, the variant of the violation of obligations of corporations opens the scope of application for a multitude of possible acts of corporation. The secondary criminal law contains an extensive catalogue of offences that are related to the obligations of an corporation. This link takes you to a list of offences that are likely to be classified as corporation offences.

Obvious offences that are likely to constitute an corporation offence are Money laundering (Sec. 261 CC), data protection (Sec. 201 et sqq. CC, Sec. 42 FDPA, Sec. 148 TA), violations of foreign trade law (Secs. 17, 18 FTaPA), company law (e.g. Secs. 399 et sqq. GSCA, Secs. 82 et sqq. GmbHA), the Product Safety Act (Sec. 40 PSA), or – currently – violations of the Infection Protection Act (Sec. 74 IPA). In addition, the employer’s obligations such as regular driver’s license checks when vehicles are given to employees are also subject to punishment (Sec. 21 para. 1 no. 2 RTA). It remains to be seen how cases of sexual harassment in the workplace are dealt with. In this respect, the employer has a duty of care towards all employees before sexual harassment (Sec. 184i CC in conjunction with Secs. 12, 3 para. 4 GETA).

An enrichment of the corporation (which has taken place or is intended) should be present if the economic value of the corporation’s assets should be or has been increased. 28 The principles developed for the law on administrative offences should be transferable (Sec. 30 para. 1 Var. 2 AOA). Therefore, indirect economic advantages such as saved expenses or an improved competitive situation are sufficient. The advantage must be unlawful. Claims for compensation by third parties due to the offence do not compensate for an (insofar only temporary) enrichment of the corporation. 29

Excluded are crimes that are (exclusively) directed against the corporation, such as embezzlement or theft. 30

IV. Foreign Offence (Para. 2)

Compared to Sec. 30 AOA, Sec. 2 (2) CLA-D extends the possibility of sanctioning corporations. Up to now, the corporation was only liable if a manager committed a criminal offence abroad and German law applied to the offence. If the person providing the service was not a German citizen, German law was often not applicable (Sec. 7 para. 2 no. 1 CC). As a result, the corporation was no longer liable.

An corporation is liable for foreign offences if it has its registered office in Germany. This can be the administrative headquarters or the registered office. In the case of several administrative seats, it is sufficient if one administrative seat is located in Germany. 31

The possibility to discontinue the prosecution according to Sec. 38 CLA-D shall counteract a double prosecution of the act of the corporation. The new regulation has no influence on the criminal liability of natural persons. 32

Notes:

  1. Draft of the speaker, page 73
  2. Referee's draft, page 72
  3. Referee's draft, page 71; BGH, NJW 2017, 1943
  4. Referee's draft, page 71
  5. References] Referee's draft, pages 73 f.
  6. Ref] Referee's draft, pages 73 f.
  7. Referee's draft, page 74
  8. Ref. draft bill, page 75; cf. also KK-AOA/Rogall, 5th edition 2018, AOA Sec. 30 marginal no. 84
  9. Referee's draft, page 75
  10. Referee's draft, page 75
  11. Referee's draft, page 145
  12. Referee's draft, page 76
  13. Referees' draft, page 76
  14. Referee's draft, page 75
  15. Referee's draft, page 76
  16. Referee's draft, page 76
  17. Draft of the speaker, page 73
  18. Referee's draft, page 72
  19. Referee's draft, page 71; BGH, NJW 2017, 1943
  20. Referee's draft, page 71
  21. References] Referee's draft, pages 73 f.
  22. Ref] Referee's draft, pages 73 f.
  23. Referee's draft, page 74
  24. Ref. draft bill, page 75; cf. also KK-AOA/Rogall, 5th edition 2018, AOA Sec. 30 marginal no. 84
  25. Referee's draft, page 75
  26. Referee's draft, page 75
  27. Referee's draft, page 145
  28. Referee's draft, page 76
  29. Referees' draft, page 76
  30. Referee's draft, page 75
  31. Referee's draft, page 76
  32. Referee's draft, page 76