LIABILITY OF LEGAL ENTITIES FOR THE ABUSE OF

LIABILITY OF LEGAL ENTITIES FOR THE ABUSE OF EU FUNDS IN BULGARIA: A COMPARISON WITH OTHER EU MEMBER STATES Assoc. Prof. Ralitsa Ilkova, Ph. D

WHERE ARE WE?

NATURE OF LIABILITY OF LEGAL ENTITIES FOR CRIMES IN THE EU MEMBER STATES 3 5 19 Criminal Administrative criminal Quasi-criminal

RESPONDENTS’ OPINIONS ABOUT THE CORPORATE LIABILITY IN BULGARIA 13% 20% 67% Criminal Administrative criminal Civil

REGULATORY FRAMEWORK FOR THE LIABILITY OF LEGAL ENTITIES FOR CRIMES IN THE EU MEMBER STATES 2 9 15 Criminal Code Special law Administrative Violations Act

RESPONDENTS’ OPINIONS ABOUT THE REGULATORY FRAMEWORK FOR CORPORATE LIABILITY IN BULGARIA 7% 7% 40% In a special law In the Administrative Violations and Sanctions Act In the criminal law Other

STRENGTHS AND WEAKNESSES OF THE REGULATORY FRAMEWORK IN BULGARIA

STRENGTHS ü Expanding the scope of liable persons; ü A broad scope of criminally liable persons for whose acts a legal entity bears liability; ü Correspondence of the property sanction to the OECD requirements; ü Forfeiture of the direct and indirect benefits from a crime; ü A legal definition of direct and indirect benefits; ü Possibility to initiate proceedings against a legal entity regardless of the outcome of the proceedings against the responsible natural person; ü Competence of the general courts to hear a prosecutor’s proposal

WEAKNESSES ü Brief provisions for the liability of legal entities; ü Imprecise catalogue of crimes entailing the liability of a legal entity; ü Lack of alternative or cumulative sanctions along with the property sanction; ü Lack of rules to individualise the property sanction; ü Lack of rules as to whether the liability of legal entities elapses due to the statute of limitation; ü Lack of rules for the effect of the substantive law – Article 83 а AVSA in time (ratione temporis);

WEAKNESSES ü Lack of adequate mechanisms against changes in the legal status and legal organisational form of the legal entity in order to hamper the proceedings or circumvent the liability of the subject; ü Lack of provisions regarding winding up, merger, acquisition, separation of the legal entity after the act but before the sanction is imposed; ü Imprecise provisions for the powers of the competent judicial instances.

BEST EUROPEAN PRACTICES

THE ROMANIAN MODEL ü A broad range of additional sanctions; ü A broad range of interim measures; ü Rules for the concepts of limitation and rehabilitation of legal entities; ü Special rules for representation of legal entities; ü Special rules in the event of merger, acquisition, separation or spin off of the legal entity at the different stages of the proceedings.

THE SLOVENIAN MODEL ü Alternative sanctions for legal entities; ü Special grounds to exclude or reduce the liability of legal entities; ü Interim measures to ensure unhampered flow of the proceedings; ü The legal concept of statute of limitation; ü Special rules for the proceedings with regard to legal entities; ü Special rules in the event of merger, acquisition, separation or spin off of the legal entity at the different stages of the proceedings.

RECOMMENDATIONS

TO THE LEGISLATOR ü Providing for the liability of legal entities in a separate statutory act; ü Regulating the effect of the substantive law – Article 83 а AVSA in time (ratione temporis); ü Complementing the catalogue of crimes entailing the liability of legal entities; ü Providing for additional sanctions along with the main one – property sanction; ü Providing for rules on how to individualise the property sanction; ü Regulating for the relationship between the taking away of the benefit under CC, AVSA, IAFA;

TO THE LEGISLATOR ü Setting out a prohibition to enter changes in the status of the company during the proceedings; ü Providing for liability in the event of winding up, merger, acquisition, separation, spin off of the legal entity after the act; ü Providing for whether the liability of legal entities elapses due to the statute of limitation; ü Change in territorial jurisdiction; ü Improve the provision of Article 83 d, para 8 AVSA.

TO THE LAW ENFORCEMENT AUTHORITIES ü Review all cases suspended or terminated and those which ended with a sentence in order to establish prerequisites to initiate proceedings under Article 83 а AVSA; ü Encourage supervising prosecutors to check pending cases for prerequisites to prepare a proposal to the court to impose a sanction on a legal entity; ü The Prosecutor General to prepare methodological guidelines to notify the persons who submitted signals about proposals under Article 83 b AVSA, about the refusal to file a proposal and the results of the court proceedings initiated;

TO THE LAW ENFORCEMENT AUTHORITIES Conduct joint training for judges and prosecutors on the topics of: ü Applying the legal concept of the liability of legal entities for crimes against EU funds; ü Imposing interim measures in the course of sanction proceedings – proceedings under CPC and those under Article 83 а AVSA. THANK YOU FOR YOUR ATTENTION! The opinions and views expressed in this presentation reflect solely the author’s views and the European Commission is not responsible for the way in which the information could be used.