Key takeaways
- New Greek law allows legal entities to be held criminally liable for bribery of government officials
- Fines can reach double an entity’s annual turnover
- Liability survives corporate reorganization or M&A
- Increased compliance efforts and due diligence needed for asset transfer transactions
Until recently the concept of criminal liability for a legal entity did not exist under Greek law, and only the legal entity’s management could be held liable for a criminal offence such as bribery of government officials.
By virtue of new Law no. 5090/2024, effective as of 23 February 2024, a distinct independent legal liability for legal entities has been introduced for bribery offences, in accordance with the OECD Anti-Bribery Recommendation and along the lines of the U.S. Foreign Corrupt Practices Act and the UK Anti-Bribery Act.
Under the new law, if bribery of a public employee, politician or judge is committed by an individual for the benefit or on behalf of a legal entity, acting singly or as a member of the entity’s management, the legal entity is held liable for a fine that may reach double its annual turnover. In addition, the legal entity’s permit may be revoked or suspended for a period of one month up to two years, or the legal entity may be forced to cease operations.
If the bribery offence is committed by a subordinate, assignee or intermediary of the legal entity due to a lack of supervision, the fine may reach as high as the entity’s annual turnover, and its permit may be revoked or suspended for a period of up to one year.
These sanctions are independent of any civil, disciplinary or criminal liability of the individuals involved and survive any corporate reorganisation, restructuring or acquisition that the legal entity may undergo. In other words, the successor of the legal entity or the party acquiring its assets continues to be liable up to the value of the acquired entity or assets.
In light of the new legislation, investors should be vigilant of such potential exposure. When engaging in M&A or asset transfer transactions involving Greek undertakings, they should conduct in-depth due diligence on the target’s interactions with government officials. At the same time, it is expected that Greek companies will enhance their internal policies to reinforce audits throughout their organisation and business network, ensuring effective supervision and regulatory compliance.
Newsflash 2024-052