Published by @mna | | Informatives | 17 . December . 2013 | 0 |

It is known that Compliance is a topic in corporate management, which is generally included within the scope of corporate governance practices, invariably connected to the idea of means to aggregate more value to the company and mitigate risks.

However, upon enactment of Law 12.846, dated August 1, 2013, which will become effective in February 2014, already known as the Anticorruption Law, attention of all corporate managers is called to the need of reviewing corporate practices, as well as correctly advising and instructing all active parties involved in their business, employees, suppliers and clients, especially as regards transactions with the public administration.

The new law provides for the administrative civil liability of legal entities and individuals, and their administrators or managers, or any individual who is liable or co-liable for, or participates in an illegal act against the domestic or foreign public administration.

Among the primary innovations introduced by the enactment of the new law, the following are underlined: (i) objective liability; (ii) jurisdictional protection by foreign public administration and international organizations, and punishment of domestic legal entities for acts performed abroad; (iii) ascription of liability to controlled, controlling or affiliated companies; (iv) possibility of leniency agreement; and, (v) provision for ostensive entry of an awarded judgment.

Pecuniary sanctions within the administrative sphere may vary from 0.1% to 20% of the gross invoicing in the year preceding the filing of the administrative procedure. Should ascertainment thereof be impossible, the fine may range from R$ 6,000.00 to R$ 60,000,000.00.

It is important to underline that enforcement of the fine does not exclude liability for full redress of the caused damage.

The new law created an express provision for the creation of compliance policies and programs in corporations.

The warning for the priority need to include the compliance agenda in corporations, regardless of the corporate type and business size, presents itself as the effective means to repress the practice of illegal acts which may be characterized as harmful to the domestic or foreign public administration.

While acts of corruption are dealt with within the criminal sphere as crimes against the Public Administration, against the Economic System, and against the Tax System, and the Official Corruption Law (Law n° 8.429/92) represses, within the civil and administrative spheres, corruptive conducts by public officers, the Anticorruption Law is the instrument to complement and close the system to fight corruption, with legal entities’ objective liability within the administrative and civil spheres.

Liability for corruption acts is not applicable exclusively to legal entities, but also to administrators and managers, to the extent of their culpability. Liability further survives in the event of amendment to articles of association, corporate transformation, consolidation, merger or split-up, limited to the liability for fine and for fully redressing the caused damage, up to the limit of the transferred assets, except in the event of duly proven sham or fraud, in which event the limit is not applicable. Finally, joint liability is established as regards controlling, controlled or affiliated companies or, within the sphere of the respective articles of association, the members thereof, in this case limited to the liability for payment of fine and full redress of damage.

Regardless of conducts established as illegal[i], and the established administrative sanctions[ii], enforceable either individually or jointly, the Compliance measures are not only an important corporate management element, but also reflect good compliance with the law. So much so, that the Law provides for Compliance instruments as criterion to dose the penalty.

Although the parameters for assessment still depend on regulation by the Executive Power, adoption of a Compliance program is a path which must be taken to minimize risks and aggregate the intangible value of reliability to the corporation before society.

Thus, the importance of the implementation by corporations of Compliance policies and compliance with rules to prevent and fight corruption, in addition to intensifying training as regards compliance with legal rules, both in the normal course of business and in operations involving strategic acquisitions and associations, is emphasized.

We remain at your disposition for any further clarifications you may require.

[i] Article 5. For the purposes of this Law, all acts performed by the legal entities referred to in sole paragraph of article 1, which attack the domestic or foreign public wealth, the principles of public administration, or the international commitments undertaken by Brazil, are acts deemed to be harmful to the domestic or foreign public administration, as follows:

I – to promise, offer or grant, directly or indirectly, undue advantage to a public agent or a third party related thereto;

II – to verifiably provide funds, pay, sponsor or in any way subsidize the practice of the illegal acts provided for in this Law;

III – to verifiably make use of an interposed individual or legal entity to conceal or dissimulate one’s actual interests or the identity of the parties benefitting from the performed acts;

IV – as regards bids and agreements:

  1. a) to frustrate or defraud, upon arrangement, agreement or any other means, the competitive character of a public bidding process;
  2. b) to prevent, disturb or defraud performance of any act in a public bidding process;
  3. c) to withdraw or attempt to withdraw a bidder by means of fraud or offering of an advantage or any type;
  4. d) to defraud a public bidding or the agreement resulting therefrom;
  5. e) to fraudulently or irregularly establish a legal entity to participate in a public bidding process or to execute an administrative agreement;
  6. f) to fraudulently secure undue advantage or benefit from amendments or extensions of agreements executed with the public administration, without authorization by law, as regards the invitations to participate in public bids or the respective agreements; or
  7. g) to manipulate or defraud the economic-financial balance of agreements executed with the public administration;

V – to hinder the activities of investigation or inspection by public agencies, entities or agents, or to interfere in the activities thereof, including within the scope of regulatory agencies and inspection departments of the national financial system.

[ii] The established sanctions are fine ranging from 0.1% to 20% of the gross invoicing in the year preceding the filing of the administrative procedure, excluding taxes, which will never be lower than the secured advantage, when estimation thereof is possible, and, should application of such criterion be impossible, the fine will range from R$ 6,000.00 (six thousand reais) to R$ 60,000,000.00 (sixty million reais), in addition to special entry of awarded judgment and publication thereof in miscellaneous means of communication. Within the civil sphere, in addition to the obligation to redress the damage, loss of assets, rights or values which represent the advantage or benefit directly or indirectly secured from breach, except for the right of the damaged party or a third party in good faith; suspension or partial disablement of activities; compulsory dissolution of the legal entity and, finally, prohibition to receive incentives, subsidies, subventions, donations or loans from public agencies or entities, public financial institutions or financial institutions controlled by the public power, for a minimum of one (1) and a maximum of five (5) years, are established.

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