Corporate criminal liability under the VbVG: representation, service and sanctions

Section 1 VbVG covers legal persons, registered partnerships and European economic interest groupings. The Act applies to offences subject to judicial punishment under federal or state law. Financial offences are included only where the Financial Offences Act provides for this.

Under section 3 VbVG, the offence must have been committed for the benefit of the entity or must have breached duties incumbent on it. For a decision maker, the decision maker must have committed the unlawful and culpable offence in that capacity. For an employee, the offence must also have been enabled or substantially facilitated by a decision maker's failure to exercise the required and reasonable care, especially by omitting essential technical, organisational or personnel measures.

The entity's responsibility and the natural person's criminal liability do not exclude each other. The defence must therefore distinguish facts concerning the individual offence from facts establishing attribution to the entity.

The VbVG regulates representation of the entity for the proceedings. A member of the body authorised to represent the entity externally receives service and supports the proper exercise of the entity's procedural rights. Depending on the legal form, this may be a managing director or a board member.

A conflict arises when the authorised representatives themselves are suspected of the attributed offence. If every member of the body is affected, the court must appoint defence counsel for the entity ex officio under section 16(2) VbVG. Counsel must take the steps necessary for proper representation until a representative or chosen defence counsel takes over.

Individual defence and entity defence have different reference points. Under section 17 VbVG, decision makers and employees suspected of the offence or already convicted of it are summoned and questioned as suspects. Before questioning, they must be informed of the offence alleged against the entity and of their right to make a statement or remain silent and to consult defence counsel.

Section 15 VbVG generally links jurisdiction to the proceedings against the natural person suspected of the offence. The same public prosecutor and court conduct the proceedings together where the Code of Criminal Procedure permits this. The entity also has the rights of a suspect in the proceedings against the natural person.

For key procedural documents, section 16 VbVG requires service on the entity itself into the own hands of a member of the body authorised to represent it externally. This includes notice of the investigation, an application for an entity fine, the summons to the first-instance trial and a judgment in absence.

For practical time-limit control, preserve three details: the date of attempted or completed service, the person and representative function of the recipient and the complete contents of the envelope. Whether service was effective depends on the statutory requirements and the actual procedure. An email notice alone cannot answer that question.

Section 4 VbVG provides for an entity fine. It is calculated in daily rates. Depending on the penalty applicable to the attributed offence, the statutory maximum number ranges from 40 to 180 daily rates. The amount of one daily rate is based on the entity's earnings and other financial capacity. For profit-making entities, the statutory amount per daily rate ranges from 50 to 30,000 euros. For non-profit, humanitarian or ecclesiastical entities and other entities not pursuing profit, the range is 2 to 1,500 euros.

Section 5 VbVG requires aggravating and mitigating circumstances to be balanced. Greater harm or danger, a greater benefit obtained and tolerated or encouraged unlawful conduct may increase the number. Measures taken before the offence, a substantial contribution to establishing the truth, compensation and effective steps against similar offences may be mitigating factors.

Financial records are therefore part of the defence. Relevant material may include current financial statements, a comprehensible presentation of earnings and evidence of the consequences of the offence. The daily rate cannot be reduced to a fixed percentage of turnover.

Section 19 VbVG permits withdrawal from prosecution under the conditions of the Code of Criminal Procedure. Depending on the form, this may involve payment of an amount of up to 50 daily rates, a probation period of up to three years or community service within a specified period. The entity must in particular compensate the harm caused by the offence and remedy other consequences where the chosen resolution requires this.

If the matter reaches trial, section 22 VbVG regulates the relationship between the proceedings against the natural person and the entity. In a joint proceeding, the court first hears and decides the case against the natural person. It then addresses the requirements for entity responsibility and the circumstances relevant to the fine.

Under section 24 VbVG, the remedies available under the Code of Criminal Procedure against judgments are also available against a judgment concerning the entity, including in separate proceedings. The required step and deadline depend on the judgment, the court and the specific remedy. Record the service date of the judgment immediately.

For an initial legal review, keep the notice of investigation or application for an entity fine, proof of service, powers of attorney and current corporate documents together. Also preserve the material showing the alleged offence, the benefit to the entity or the duty said to have been breached.

For attribution, the allocation of responsibilities, control and approval processes, documented training and reports are relevant. A policy created after the event does not by itself show which reasonable measures existed before the offence.

The sanction review also requires financial records, information on compensation and evidence of improvement measures. Preserve documents unchanged and record their date of receipt and origin. For the applicable statutory text, consult the current VbVG version in RIS.