Legislative Decree 1352 was issued on January 7, 2017, introducing major changes to Law 30424 regarding autonomous liability of legal entities for acts of corruption. It establishes a new system for imputing criminal offences to companies, which will become effective on January 1, 2018, and whose highlights include:
- As of January 1, 2018, legal entities may be autonomously investigated, prosecuted and penalized – independent of the individual liability of its representatives, administrators, executives or employees – for criminal bribery of public officials and money laundering. Specifically, the new regulation imputes liability to the following organizations:
- Private law entities organized under any of the categories set forth in the Peruvian General Corporations Law: closed corporations, ordinary and open corporations; limited liability companies, individual limited liability companies. It includes non-registered, de facto companies.
- Private law entities organized under any of the categories set forth in the Civil Code: associations, foundations, and committees, including non-registered entities.
- Administrative bodies of autonomous estates.
- State-owned companies
- Partially government-owned companies
- Autonomous liability attributable to legal entities consists of:
Making it possible to investigate, prosecute and penalize corporations (and legal entities in general) for certain crimes committed as part of its business activities, even if the individuals involved in perpetrating the crime have not been prosecuted and/or convicted.
- The autonomous liability system applicable to legal entities refers solely to the commission of the following crimes and forms:
- The legal entity is autonomously liable for the above crimes, provided they were committed: (i) on behalf or at the request of the organization, (ii) for the direct or indirect benefit of the organization, and (iii) by the following individuals:
(i) The associates, directors, de facto or legal administrators, and legal or contractual representatives of the organization, or of its affiliates or subsidiaries.
(ii) Individuals acting under the control or authority of the organization’s governing bodies, provided they committed the crime at the request or as authorized by said bodies (e.g. employees without administrative or representation duties, service providers).
(iii) Individuals acting under the control or authority of the organization’s governing bodies, provided they committed the crime due to a failure to supervise and monitor their actions (e.g. employees without administrative or representation duties, service providers).
The Law stipulates that parent companies will be liable and be penalized only if the executives or employees of its affiliates or subsidiaries who commit criminal acts of corruption or money laundering acted under said parent’s orders, authorization or with its consent
- The investigation and prosecution of legal entities charged with acts of corruption and/or money laundering will be conducted in accordance with the provisions of the Criminal Procedure Code (Legislative Decree 957). The penalties applicable to legal entities found to be liable (upon conclusion of the criminal proceedings) are the following:
(i) Fine of no less than two and no more than six times the benefit obtained, or expected to be obtained by committing the crime. When the expected or obtained benefit cannot be quantified, the following criteria apply to determine the amount of the fine: (a) if the organization’s annual income is up to 150 tax units (“UIT”, for its Spanish acronym), the fine is no less than 10 and no more than 50 UIT; (b) if the organization’s annual income is 150 to under 1,700 UIT, the fine is no less than 50 and no more 500 UIT, and, (c) if the organization’s annual income is over 1,700 UIT, the fine is no less than 500 and no more than 10000 UIT; and/or,
(ii) Suspension of the organization’s activities for no less than 6 months and no more than 2 years; and/or,
(iii) Ban from future activities in the same categories as those in which the crime was committed, facilitated or covered up. This ban may be permanent or temporary (in which case, it may be no less than 1 year and no more than 5 years); and/or,
(iv) Perpetual ban from entering into agreements with the government; and/or,
(v) Cancellation of licenses, concessions, rights, and other administrative or municipal authorizations; and/or,
(vi) Permanent or temporary closure of establishments or facilities (temporary closure for no less than 1 year and no more than 5 years); and/or
(vii) Dissolution of the legal entity.
Changes to the legal entity’s business or corporate name, or the reorganization, transformation, division, merger, dissolution or liquidation of the organization, or any other act that may modify its legal status, do not prevent liability from being imputed to said legal entity, nor the application of the penalties set forth in the Law.
In the event of corporate acquisitions or mergers by absorption, it is stipulated that the acquiring company may not be penalized for the actions of the acquired organization, provided that the former performed a proper due diligence process. The law defines due diligence as implementing reasonable actions intended to verify that the acquired or spun-off organization has not committed any of the crimes that generate autonomous liability (e.g. bribery of public officials and money laundering).
- Legal entities will not be liable for criminal acts of corruption and/or money laundering committed as part of their business activities, if they effectively implemented a crime prevention program (Criminal Law Compliance Program) prior to the commission of said crimes.
The prevention program (or Criminal Compliance Program) is a system of measures, controls and procedures that seek to prevent crimes that may be committed on behalf or for the benefit of the company, or significantly reduce the risk of their being committed. The Law expressly states that the legal entity involved in the commission of any of the indicated crimes shall be exempted from liability if, prior to the commission of said crimes, it adopted and implemented a prevention program within the organization suited to its nature, risks, needs, and characteristics.
If, despite having implemented an effective crime prevention program, the organization’s representatives, administrators, executives or employees were able to evade it in order to commit criminal acts of corruption and/or money laundering, criminal liability will be limited to the individuals involved in committing the crime, and will not extend to the organization itself.
- The effectiveness of the implemented crime prevention program is assessed by authorities in the Government Attorney’s Office and the Judiciary responsible for investigating and prosecuting the crimes, respectively, with the prior, binding opinion of theSecurities Market Administration (SMV, for its Spanish acronym).
The Law provides as a pre-requisite to initiating criminal proceedings against the organization, that the Government Attorney’s Office obtain a technical report from the SMV, even with regard to companies not listed in the Securities Market. If the technical report from the SMV concludes that the prevention program works properly, the public attorney must close the case.
- The Law that establishes the autonomous liability system applicable to legal entities for criminal acts of corruption and money laundering becomes effective on January 1, 2018. Therefore, it will only apply to events occurring as of that date, and as a criminal law, may not be applied retroactively.
Please contact our Corporate Compliance team with any further questions:
- José Reaño (Partner): firstname.lastname@example.org
- Fernando Molina (Partner): email@example.com
- Italo Carrano (Counselor): firstname.lastname@example.org
- José Medina (Associate): email@example.com