Over the past years the theme of compliance and development of anti-corruption laws has been brought up to the top priorities of most multinational companies. Most corporations have developed their compliance programs based on the US Foreign Corrupt Practices Act and the UK Bribery Act in view of the absence of a specific local legislation to hold legal entities responsible for acts of corruption.
Although this is a recent phenomenon, many emerging countries are also adopting their own anti-corruption laws and regulations in an important move aiming at reducing corruption cases.
It was not different in Brazil, which approved an anti-corruption law known as the Brazilian Clean Companies Act - Law No. 12,846/2013 - which is set to be in effect on January 29, 2014 ("BCCA"). Overall, the BCCA provides for administrative and civil strict liability of legal entities for the practice of acts against the Brazilian and foreign public administration.
The law also extends liability to the entity's officers, directors, employees and agents who perform, participate or aid in the performance of the unlawful act. Unlike the strict liability of legal entities, the managers shall be liable to the extent of their culpability.
The penalties imposed by the BCCA in the administrative sphere are based in the peculiarities of the case and in the gravity and nature of the infractions and can amount up to 20% of the company's gross income or, if it is not possible to ascertain the gross turnover, fines may range from R$6,000 to R$60,000,000. In case of judicial proceedings, civil penalties may encompass suspension or partial interruption of activities, compulsory dissolution of the company and prohibition from obtaining incentives, donations or loans from government bodies and financial institutions. In addition to the penalties referred herein, the legal entity may be ordered to indemnify the loss suffered by the relevant government body.
The responsibility of managers provided in the BCCA is in line with the rules set forth in the Brazilian Corporations Law - Law No. 6,404/1976 - ("BCL"). According to the BCL, as a general rule, managers (officers and directors) of Brazilian companies are not personally liable for the obligations entered into by them on behalf of the company and for acts practiced in the ordinary course of business. Managers, however, are liable for damages caused when (i) they acted within the scope of his authority, fraudulently or negligently; or (ii) they acted in breach of the law or the By-laws of the company.
The BCL also provides that a manager shall not be liable for unlawful acts of the other managers, except when acting in connivance with them, when neglecting to investigate such acts or when, despite having knowledge of them, he or she fails to take action to prevent such acts. In addition, the managers shall be jointly and severally liable for the losses caused by failure to comply with the duties imposed by law to ensure the regular operation of the company even when, according to the bylaws, such duties are not incumbent upon all managers.
Due to the risk of the managers having their personal assets affected, it is important that the companies develop an effective compliance program, which should include specific components focused on mitigating the risks of procurement violations when they are involved in transactions with the public sector. In addition to the benefits of reducing the risks that a violation may occur, the creation of an effective compliance program will also be recognized as a mitigating element under the BCCA when determining the penalties applicable to the legal entity.
As the BCCA recognizes the companies that act diligently, by taking that into account within the application of sanctions, the legal entities will certainly be stimulated to invest in prevention, mainly by developing a code of conduct and internal policies that convey the company's commitment to a position of integrity in which bribery and corruption are strictly prohibited and subject to a severe punishment.
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