article / 15 Oct 2019
Update Compliance & Investigations – Newly proposed regulation concerning stricter criminal sanctions on companies
More stringent regulations on company fines will enter into force on 1 January, 2020. Also, the Swedish courts will be given jurisdiction over all international bribery issues related to Swedish companies.
Swedish companies are wise to intensify their efforts to prevent corruption and other violations such as economic sanctions or environmental violations in their operations, as the maximum company fine [Sw. företagsbot] will increase from 10 million SEK to 500 million SEK by the turn of the year. The purpose of the increase is to ensure that the company fine will have a deterrent effect also on larger companies. Additionally, in certain situations, the new regulations on company fines will result in the government and the municipalities becoming subject to company fines.
At the same time, the Swedish jurisdiction over bribery committed by Swedish companies abroad will be extended. Hence, it will no longer be possible for a Swedish company to avoid responsibility (and thus also company fines) by claiming that an act has been committed by foreign citizens, agents or other consultants.
The changes are in line with the underlying trend of stricter regulations and increase Swedish companies’ exposure in relation to what constitutes bribery and in regards to potential company fines.
Naturally, to be able to claim that reasonable efforts to prevent a crime were taken, effective compliance programs are becoming even more important.
The new rules are proposed to come into effect on 1 January, 2020 and will only be applied to events thereafter.
The proposed regulation
The government submitted proposal 2018/19:164 on stricter criminal sanctions on companies on 5 September, 2019. There are three main changes to be highlighted:
- Company fine for government and municipalities in certain situations
In the proposal, the scope of the company fine is extended to include public activities comparable to business operations, as well as any activities that a company conducts outside of its business operations, if the crime was intended to bring economic benefits to the com-pany. The violation may not be a business operation as such, but it is seen as such when the purpose of the activity was to, for instance, cut costs on the work environment. Thus, municipal activities conducted in competition with private actors, schools etc. shall fall under the regulations on company fines, just as private companies conducting similar activities.
- Maximum company fine increases to 500 million SEK
Both the Swedish company fine system and the company fine levels have received strong criticism from the EU and OECD, due to neither of them being severe enough to act as a deterrent. This is particularly relevant to bribery, money laundering, etc. where other countries have had completely different levels of company fines and other penalties.
Therefore, it is now proposed that an “increased company fine” will be imposed in particularly serious cases if the calculated penal value exceeds 500 000 SEK (the current maximum sanction being 10 million SEK). The penal value is determined through an overall assessment of the underlying penal value for the actual crime, if the crime entails a risk or harm to life, health or the environment and if the company’s management has been involved in the crime, either through active participation, support or lack of supervision. Together, these parameters provide a total penal value, which when exceeding 500 000 SEK triggers the possibility to impose an increased company fine.
In the proposal, larger companies are defined in accordance to the definition in the Annual Accounts Act. Thus, a company that either has more than 50 employees or more than 80 million SEK in turnover shall be subject to the new regulations.
- Extended Swedish jurisdiction over bribery
The proposal includes an extended jurisdiction for Swedish courts over offences of bribery that Swedish companies commit in the context of their activities abroad. This regulation means that the company becomes subject to Swedish jurisdiction if the company participates in the trading of influence or acts of bribery, either through employees or through consultants, and regardless of whether the employees or consultants are Swedish or foreign citizens. This essentially means that Swedish companies participating in bribery abroad will no longer be able to avoid punishment by hiding behind employees or consultants who are foreign citizens. The change is in essence an adaptation to the criticism received from the OECD regarding the Swedish corruption legislation.
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