UKRAINE INTRODUCES CRIMINAL LIABILITY OF BUSINESSES

DLA Piper Ukraine LLC, Kyiv, Ukraine
Monday, August 12, 2013

On 1 September 2014, criminal liability of legal entities will be introduced in Ukraine. The President of Ukraine signed a relevant law, under which amendments to the Criminal Code and the Criminal Procedure Code of Ukraine come into effect.

Criminal liability arises if an authorized person (such as, director or other persons entitled to act on behalf of a legal entity) commits any of the following offences on behalf and for the benefit of a legal entity:

 legalization (laundering) of the proceeds of crime;

 use of funds resulting from illicit traffic of drugs, psychotropic substances, precursors, toxic or potent substances or toxic or potent medicines;

 bribing of the officials of other legal entities or persons engaged in professional public services, such as, auditors, appraisers, notaries, arbitrators, etc.;

 offering or giving undue advantage to an official, or undue influence.

If a legal entity is found guilty of commitment of any of the above crimes, it shall be punished with a penalty from UAH 85,000 to UAH 1,275,000 (i.e. approximately from USD 10,000.00 to USD 160,000.00).

If an authorized person is found guilty of committing a terrorist act, engaging or facilitating a terrorist act, making public calls to a terrorist act, creating of a terrorist group or organizing or funding of terrorism on behalf of a legal entity, the latter shall be liquidated under the court decision and its property shall be confiscated.

The Law envisages that governmental authorities, local self-government bodies, as well as organizations created by them, social insurance funds and international organizations cannot be brought to criminal liability.

It should be noted that, in contrast to Ukraine, Russia and most of the post-Soviet states, legislation of the majority of foreign countries provides for criminal liability of legal entities. In particular, it exists in the US, England and such European countries as Austria, Belgium, Holland, France, Portugal, etc. Criminal liability of businesses was relatively recently introduced in the Baltic countries, Georgia and Moldova.

Should you have any questions on the above, please contact DLA Piper Ukraine LLC.