Converting Information into Intelligence

Evolution of the French compliance framework

By Lilia Rusnac, Compliance Department Manager – FLA Consultants

On March 23, French President inaugurated in Paris the new French Anti-Corruption Agency as the keystone of the law called Sapin II promulgated last December.

The new structure will have the task of ensuring that anti-corruption standards are respected by large companies in France, in particular through ethical charters and internal codes of conduct.

The Agency, which is empowered by legislation to impose fines for non-deployment of these now mandatory measures, will not be able to initiate criminal prosecutions, its role being to alert the National Financial Office to the alleged failures. Finally, it is the authority which could make the concerned companies to pay the price of negligence in this matter, up to 30% of the average turnover over the last three years.

On the same day, The Constitutional Council ruled on the law concerning the duty of vigilance of companies concerning risks, which could result from their own business operations, as well as those of the companies they control directly or indirectly, and the subcontractors and suppliers with which the company deals. It approved in principle the law with the obligation of vigilance of the companies, but not the penalties provided for its implementation.

What does this mean for companies? First of all, they are well obliged to draw up a vigilance plan and publish it in the annual management report. And that the mechanism of formal notice is validated as well as "the possibility for the judge to subject the concerned company to an injunction and the possibility to commit its responsibility in case of breach of its obligations".  

On the other hand, by removing the possibility of imposing a civil fine in the event of a breach, the Constitutional Council reduces the scope of an emblematic law in terms of corporate social responsibility, which for the first time included a repressive part. This could amount to 10 million euros if the plan of vigilance was not established, or even 30 million euros if a serious violation of the fundamental rights was found.  

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