Corporate criminal liability: legal framework, examples, and prevention

Criminal liability of legal entities is a key issue in corporate law, which has been gaining importance in the Czech Republic since the adoption of Act No. 418/2011 Coll. This legal framework allows companies to be prosecuted for a wide range of criminal offenses, from corruption to environmental crimes, even if the specific perpetrator is not identified. At the same time, it offers companies the possibility of exemption from liability if they can prove that they have made every effort to prevent unlawful conduct through an effective compliance program. This article focuses on the legal aspects of corporate criminal liability, specific examples, and practical steps to avoid legal risks while protecting the reputation and stability of the company.

​Author of the article: ​ARROWS (JUDr. Kateřina Müllerová, office@arws.cz, +420 245 007 740)

What does criminal liability of legal entities mean?

Criminal liability of legal entities is a concept according to which not only natural persons (individuals) but also legal entities (e.g. commercial companies) can be charged with and convicted of committing a criminal offense. In the Czech Republic, this corporate liability was introduced on January 1, 2012 by Act No. 418/2011 Coll., on criminal liability of legal entities and proceedings against them (hereinafter referred to as ZTOPO). Until then, companies themselves could not be perpetrators of criminal offenses—only specific employees or managers could be punished. However, since 2012, criminal law has made it possible to prosecute and punish a company as such in addition to (or instead of) individuals.

Legal framework. ZTOPO regulates the conditions under which a company bears criminal liability, the penalties that may be imposed on it, and the criminal proceedings against a legal entity. The scope of the law is very broad – it applies to all legal entities under private and public law (commercial companies, cooperatives, associations, foundations, schools, hospitals, etc.). The exception is the Czech Republic and local government units (municipalities, regions) in the exercise of public authority, which cannot be prosecuted. However, if the state or municipality acts through its company or ownership interest in a commercial company, such a company is liable.

Criminal offenses of companies. Originally, the law contained a list of 84 criminal offenses for which a legal entity could be prosecuted. However, an amendment in 2016 brought about a significant expansion: ZTOPO now sets out a negative list of a few criminal offenses that a legal entity cannot commit (typically offenses of a personal nature, such as bigamy, dangerous stalking, brawling, or prisoner revolt). All other criminal offenses listed in the Criminal Code may be attributed to a company if they are committed under the conditions set out in the ZTOPO. This has expanded the number of potential corporate offenses from the original 83 to approximately 200. In practice, this means that companies can be prosecuted for a wide range of illegal acts – from corruption and fraud to environmental crimes or endangering health and safety. To a certain extent, the law has thus “equalized” the treatment of perpetrators – today, both natural persons and, under certain conditions, legal entities can be held liable for most criminal offenses.

It is also important to mention the principle of concurrent and independent liability of natural and legal persons: if an employee or other individual commits a criminal offense, this does not mean that the company's liability takes its place – on the contrary, both may be convicted. The law expressly states that the criminal liability of a legal person is not affected by the liability of natural persons. A company can therefore be prosecuted even if the specific perpetrator among its employees is unknown, has not been convicted, or is, for example, insane or deceased. The Supreme Court confirmed this in 2016 (case CAFOUREK, s.r.o. sp. zn 5 Tdo 784/2016): even if it is not possible to identify the specific employee who committed the act, the company may be convicted if there is evidence that some person within the circle of responsible employees committed an unlawful act in the interest of the company. It is therefore sufficient for the criminal justice authorities to prove that a criminal offense has been committed and that the perpetrator must have been someone from the company's management or employees—it is not always necessary to convict a specific person individually in order for the company to be held liable.

Conditions of liability: when can a company be prosecuted for the actions of an individual

Attributability of conduct. In order for a specific unlawful act committed by a natural person to be attributed to a legal entity (company), the legal conditions defined in Section 8 of the ZTOPO must be met. First and foremost, it is a question of who committed the act and in whose interest or within whose framework they acted. A company does not have its own “will”; it always acts through people – the law therefore defines a group of persons whose actions “count” as actions of the company. This includes, in particular, persons in management and executive positions:

• Statutory body or its member, or another person authorized to act on behalf of the company (e.g., managing director of a limited liability company, member of the board of directors of a joint-stock company).
• A person in a managerial position performing management or control activities within the company, even if not a statutory body (e.g., member of the supervisory board, senior manager, etc.).
• A person who exercises decisive influence over the management of the company, typically a controlling person (e.g., a dominant shareholder or beneficial owner who gives instructions even without a formal function).
• An employee or person in a similar position in the performance of their work – this includes any employee of the company in the performance of their duties. However, in the case of ordinary employees, the law requires that an additional condition be met: either they must act on the instructions or with the approval of the above-mentioned managers, or the managers have neglected their duty of supervision or preventive measures that can reasonably be expected of them to prevent such conduct. In practical terms, the company is liable for an employee's criminal offense either if the management ordered or approved it, or if the management failed to establish controls, training, and rules (compliance) that would have prevented such unlawful conduct. This condition emphasizes the importance of prevention within the company: if the company can demonstrate that it had effective internal measures and controls in place, it can be exempted from liability for the employee's misconduct—we discuss this below.

In addition to the group of persons, the second key condition is the purpose and context of the conduct. The law requires that the act must be committed in the interest of the legal entity or within the scope of its activities. This limits the company's liability to situations where the unlawful conduct is related to the business or activities of the company and at the same time is intended to bring it some benefit (financial or non-financial). Example: If an employee commits fraud to unjustly enrich the company or improve its market position, this is an act in the interest of the company. Similarly, if a manager violates the law in the normal course of the company's business (e.g., when concluding contracts, disposing of waste, keeping accounts, etc.), this is an act within the scope of the company's activities. Conversely, if someone abuses their position in the company purely for personal gain and does not bring or is not expected to bring any benefit to the company, this is considered an excess on the part of the individual, for which the company is not liable. For example, if an employee secretly accepts a bribe to conceal a customer complaint about a defective product from management, they are not acting in the interests of the company (rather to its detriment).

Concurrence with individual liability. As already mentioned, the liability of the company does not preclude the prosecution of the specific perpetrator. Section 9 of the ZTOPO stipulates that the criminal liability of a legal entity is not dependent on the outcome of the prosecution of a natural person. A company can therefore be convicted even in a situation where, for example, the guilty party among the employees is not convicted or cannot be punished (e.g., they have died or are unknown). The opposite aspect is also important for company owners: if a criminal offense is committed by their employee or manager, both (the company and the individual) may face charges. Liability is therefore parallel. Law enforcement authorities routinely conduct joint proceedings against both natural persons and legal entities if their actions are related. From the defense's point of view, this means that both the company and the employee have their own procedural status as defendants and each must defend their own interests (often, of course, they act in a coordinated manner, but legally they are different entities). The independence of prosecution also has practical consequences: it cannot be relied upon that the acquittal of an employee will automatically exonerate the company, or vice versa. Each liability is assessed separately, even if based on the same act.

Summary of conditions: A company may be criminally liable if one of its managers or employees commits an intentional (or negligent, if permitted by law for the offense in question) criminal offense and does so for the benefit of the company or within the scope of its activities. This must not be purely private conduct by an employee outside the scope of their work. If the perpetrator is a regular employee, the law takes into account whether the company neglected to take the necessary preventive measures, which either proves it guilty of organizational failure or, conversely, may save it (see the chapter on compliance below). If these criteria are met, the legal entity is charged with the criminal offense alongside the specific perpetrator (if known). In further proceedings, the company (usually represented by its defense counsel) acts in a similar manner to a natural person accused of a crime – it may, for example, propose evidence, file appeals, etc. A specific feature is that a company cannot be represented in court by its statutory body if it is itself accused; in such a case, the court appoints a guardian for the company for the proceedings. This can have unpleasant consequences for the owners – they temporarily lose control over how their company is represented in the proceedings, as it is represented by a representative appointed by the court (typically a lawyer). This is another reason why it is better to avoid criminal prosecution than to deal with these crisis situations.

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Typical criminal offenses and risk areas for companies

In the more than ten years since ZTOPO came into effect, certain types of illegal conduct have emerged as the most common among legal entities. Below are examples of typical criminal offenses that companies commit or for which they have been prosecuted and convicted in practice:

• Corruption and bribery: One of the most common areas of prosecution. This includes bribery and indirect bribes, manipulation of public contracts, subsidy fraud (misuse of subsidies or grants) and related breaches of duty in the management of foreign assets. A number of companies have been accused, for example, of bribing public officials to obtain contracts, providing illegal commissions to intermediaries, or participating in VAT carousel fraud. According to case law, bribery and corruption offences are among the most common offences for which legal entities are prosecuted in the Czech Republic.
• Economic and financial offences: These include, in particular, fraud (e.g., entities created for the purpose of obtaining money or credit), tax evasion or non-payment of mandatory payments (VAT, income tax, social security contributions, etc.), credit fraud (obtaining credit on the basis of false information), money laundering (legalization of proceeds from criminal activity through company accounts) and accounting fraud. An example would be a company that systematically keeps two sets of accounts and conceals income, or a company that deliberately disposes of documentation (so-called “paper tunneling”). These economic crimes are risky for companies, as the motivation to “save” on taxes or improve financial statements can lead to criminal prosecution of the entire corporation. Case law has already confirmed the guilt of companies, for example, for distorting financial statements through deliberate concealment of accounting records.
• Environmental crimes: The law allows legal entities to be prosecuted for all crimes against the environment. Typical examples include unauthorized waste disposal (e.g., operating an illegal dump for hazardous materials), damage to and endangerment of the environment (e.g., discharging hazardous substances into water or soil, illegal logging), or animal cruelty in the course of business activities. Practical case: In 2019, a company was convicted of the misdemeanor of damaging and endangering the environment when it illegally dumped construction waste, including asbestos, on its land, leading to a landslide and permanent pollution of a watercourse. The court ordered the company to forfeit the land used for this activity as punishment. This case (3 To 14/2019) clearly shows that even environmental offenses can result in very severe penalties for a company.
• Occupational safety and health hazards: Although less publicized, violations of occupational safety and health regulations can also lead to criminal prosecution of a company—typically if an employee is seriously injured or killed as a result of systematic neglect of safety obligations. Such conduct may be classified, for example, as a criminal offense of negligent endangerment or negligent homicide. Case study: There have been cases where a construction company faced charges after a worker died on a construction site due to inadequate safety measures. The authorities are investigating whether the company (through its managers) violated important obligations and, if so, it may be prosecuted together with the specific manager.
• Other criminal offenses: Companies may also commit a whole range of other criminal offenses if the conditions for attribution are met. These may include, for example, infringement of intellectual property rights (a company systematically sells counterfeit goods), consumer harm (placing dangerous or misleadingly labeled products on the market), cybercrime (e.g., a company uses a hacker to illegally obtain a competitor's data) or property crimes (e.g., theft and embezzlement committed for the benefit of the company). It is always important to assess whether the act in question is excluded by its nature (see the negative list, e.g., bigamy cannot actually be committed by a company).

The above examples show that the most exposed areas are corruption and economic crime. This is confirmed by statistics on convicted legal entities: the most common crimes are those related to bribery, tax evasion, and subsidy fraud. However, environmental offenses should not be underestimated either—although they are not as numerous, the penalties in the event of conviction can be devastating for a company (damage remediation, loss of reputation, high fines, possible cessation of activities). Managers should therefore identify the specific crimes that pose a threat in their field of business (e.g., construction companies and the environment, IT companies and intellectual property, transport companies and security, etc.) and focus on prevention in these areas.

Lessons from case law: key court cases

Since the Act came into force, a number of decisions have been handed down by the Supreme Court (and in some cases by higher and regional courts) clarifying the interpretation of the ZTOPO in problematic situations. Several important lessons from case law:

• Not identifying the perpetrator will not save the company: In its decision ref. no. 5 Tdo 784/2016 (CAFOUREK case), the Supreme Court ruled that a company may be convicted even if it is not possible to identify the specific employee who committed the offense. If the evidence proves that a specific (albeit unidentified) person from the group defined in Section 8 of the ZTOPO committed a criminal offense in the interest or in the course of the company's activities, the liability of the legal entity is not affected. However, it is necessary for the courts to conclude from the evidence presented that someone acted unlawfully on behalf of the company—a company cannot be convicted purely on the basis that “a crime was committed,” but it is not at all clear whether it was committed by one of its employees. In the CAFOUREK case, the company was originally acquitted because the lower courts had doubts as to whether the managing director had actually intentionally concealed the accounts (the act could not be fully proven). The Supreme Court confirmed that in such a case, the company's liability cannot be inferred – it must be established beyond doubt that the unlawful act was committed and that it was committed by a person in a position under the law.
• Temporal scope and continuing offenses: The principle of prohibition of retroactivity (prohibition of retroactive application of criminal law) also applies to companies – a company cannot be prosecuted for conduct that ended before January 1, 2012, i.e., before the ZTOPO came into effect. In practice, however, there have been cases where the unlawful activity continued beyond this date. For example, the Supreme Court dealt with a case of fraud involving licenses for a solar power plant, which took place partly in 2010–2011 and partly continued after 2012. In its ruling ref. no. 7 Tdo 327/2020, the Supreme Court explained that the decisive factor is when the act was committed – if a substantial part of the unlawful act took place after January 1, 2012, the company can be prosecuted even if the “roots” of the act date back to the past. It is therefore not relevant when the harmful consequence arose, but when the perpetrator acted. Consequence: If a company (through its employees) takes advantage of an unlawful situation established before 2012 after 2012, it may commit a new criminal offense. In the case in question, the conduct was assessed as continuing fraud—after 2012, the company issued invoices and collected payments to which it was not entitled, thereby completing the fraudulent conduct that had begun before the law came into effect. The Supreme Court upheld the company's conviction, stating that this did not violate the prohibition of retroactivity, as the company committed the crime even after the law came into effect.
• Excess vs. company interest – practical boundary: The courts also dealt with the question of what can be considered as acting “in the interest” or “within the scope of the activities” of a company. In general, the benefit to the company does not have to be financial (monetary), but can also be any other advantage or maintenance of a good position. For example, in the case of environmental offenses, the company's interest may be reflected in cost savings (the company does not have to pay for environmental measures or waste disposal). On the other hand, conduct that is objectively disadvantageous to the company and serves only the personal benefit of the perpetrator should be considered excess excluded from the liability of legal entities. An illustrative case was dealt with by the Regional Court in Prague in 2021: an employee received payment from a competitor for passing on his company's trade secrets (he was therefore acting in the interests of another and against the interests of his employer). The court concluded that such conduct could not be attributed to the employer, as it lacked the element of acting in its interest – the company itself was the victim, not the perpetrator. Criminal liability was thus limited to the natural person, i.e., the employee. This example shows that careful assessment of motivation and benefit is essential for a fair determination of whether or not a company will be held liable.
• Penalties for serious offenses can be devastating: Case law shows that if a company commits a serious offense or repeatedly violates the law, courts do not hesitate to impose very severe penalties. For example, in the aforementioned case of illegal asbestos dumping, the courts ordered the forfeiture of assets—the company lost the land on which it had been operating illegally. In other cases, companies have faced bans on their activities (e.g., a construction company was temporarily banned from performing certain construction activities because it repeatedly violated regulations and endangered safety). The Supreme Court also upheld a fine of millions of crowns imposed on a company convicted of corruption, even though the company argued that this would ruin it financially – the courts emphasized that the punishment should be tangible and preventive. These examples underscore that criminal convictions can have fatal consequences for a company's existence (see the following chapter on sanctions and consequences for more details).

The above decisions and examples serve as a warning: the boundaries of corporate criminal liability are broad and the courts apply them consistently in practice. Companies cannot therefore rely on loopholes in the law – for example, it is not possible to “hide” a criminal offense behind someone unknown, nor is it possible to escape by claiming that the offense was committed before 2012. The general trend in case law shows that if a crime is committed within a company, the courts will seek to hold the company itself liable, especially if internal control mechanisms have failed or if the company has benefited from the crime.

Prevention: how to protect your company (compliance programs)

The most important part of the whole issue is prevention – i.e., efforts to prevent criminal activity from occurring in the company in the first place. From the perspective of owners and executives, prevention has two meanings:

1. To prevent harmful phenomena (crime within the company or for its benefit), thereby avoiding legal penalties and potential losses.
2. If a crime does occur, to be able to exonerate oneself from criminal liability by fulfilling the so-called conditions of exoneration.

ZTOPO in § 8(5) contains a clause according to which a legal entity will not be punished if it proves that it has made every effort that could reasonably be expected of it to prevent the commission of an unlawful act. This possibility of exemption from liability (liberation) applies to criminal offenses committed by any person attributable to the company (i.e., including a statutory representative or manager). It is a kind of “pardon for the active and diligent”—the law gives decent companies a tool to effectively defend themselves against prosecution. If a company can prove in court that it had real and effective measures in place to prevent crime and that only individual misconduct or failure occurred, the company may be acquitted. Conversely, if no measures were in place or were only formal, the company will not be exempt from liability.

Compliance program. In practice, this “every effort” amounts to the implementation of a criminal compliance program within the company. This is a set of internal policies, processes, and controls designed to ensure compliance with legal regulations and ethical standards in the day-to-day operations of the company. These include, for example:

• Code of ethics and internal guidelines clearly defining what behavior is unacceptable (bribery, conflict of interest, accounting manipulation, discrimination, etc.).
• Training and education of employees and management in relevant legal obligations (e.g., training on the prohibition of corruption, competition rules, occupational safety, etc.).
• Control and supervision mechanisms – e.g., the four-eyes principle for approving transactions, regular internal accounting audits, checks on compliance with environmental obligations, independent contract reviews.
• Whistleblowing system – enable employees to report suspected illegal conduct within the company anonymously or confidentially, with a guarantee that the report will be investigated and the whistleblower will not be penalized.
• Body or person responsible for compliance – in larger companies, establish a compliance officer or ethics committee to oversee compliance with the rules and advise employees in dilemmas.
• Penalties and responses – establish internal disciplinary penalties for breaches of compliance rules and apply them consistently (tolerance of “minor” offenses undermines the effectiveness of the program).
• Regular updates – a compliance program is not a one-off document; it needs to be reviewed and amended in line with legislative developments and risks in the industry.

It is crucial that this program does not remain on paper, but is actually brought to life in the everyday corporate culture. As one expert aptly noted: “There is a difference between formal training with an attendance sheet and a real change in how a company operates.” Either management can just formally write a code, organize a one-time training session, and think that it has fulfilled its obligation, or it can embrace the compliance program as a real opportunity to improve the internal workings of the company. Law enforcement authorities will be very strict when assessing leniency—they will examine whether the measures that a company presents as evidence of its innocence are not just a formal piece of paperwork, but whether the company actually lives by them. In other words, whether ethical and control mechanisms are truly reflected in everyday processes.

The introduction of an effective compliance program not only minimizes the risk of criminal activity occurring in the first place, but also has additional benefits: it improves communication within the company, increases discipline and process accuracy, and can improve the company's reputation with business partners. Conversely, companies that ignore these issues expose themselves to a much higher risk of punishment. Unfortunately, many entrepreneurs are still poorly informed about this issue—many are unaware that they face the real threat of criminal prosecution and have no idea what to do if they receive a notice of charges in their data box. Yet “yesterday was too late” – every owner or executive should assess as soon as possible whether their company has adequate internal safeguards against illegal conduct. If not, it is appropriate to implement a compliance program or review existing internal regulations and strengthen them where they are weak. This will give the company a “shield” that protects it both from crime itself and from criminal prosecution – and ultimately may also increase its efficiency and credibility.

Summary: Prevention is an investment in the stability and reputation of a company. The law directly motivates companies to behave responsibly by offering “relief” to those who have done their utmost to prevent crime. Every responsible company should take advantage of this opportunity and build a culture of compliance – not out of fear, but because it is beneficial and right in the long run. At stake is not only possible criminal proceedings, but also the reputation and prosperity of the company.

Consequences and risks of a company being charged or convicted

Criminal prosecution of a company has serious consequences that can threaten its existence. Owners and managers should be aware of both the legal consequences (sanctions imposed by the court) and the business and reputational risks associated with criminal proceedings.

Course of criminal proceedings: If criminal proceedings are initiated against a company (the company becomes the defendant), its representative must act on its behalf. As already mentioned, if a statutory body is also charged, the court appoints a guardian for the proceedings. The company has the right to a defense attorney (lawyer), and in practice it is essential that it be represented by a qualified lawyer—criminal proceedings are complex and the penalties are severe. The mere notification of charges can be a shock to the company and may become public knowledge (e.g., through the media in the case of a major company or a serious offense). At that moment, the company's reputation may begin to deteriorate, and partners and customers may become uncertain.

Measures during the proceedings: Authorities often use measures such as seizure of assets of the accused legal entity (e.g., seizure of bank accounts or real estate) for the purpose of future enforcement of penalties or compensation for damages. This can have an immediate impact on the cash flow and operations of the company – seized assets cannot be used, which can complicate the payment of suppliers, wages, etc. Furthermore, the court may impose certain preventive measures during the proceedings, such as a prohibition on handling certain items (e.g., if the company continues to use the machine with which it committed the criminal offense). In extreme cases, if the company continues its illegal activities during the prosecution, the court may, at the request of the public prosecutor, decide to suspend the company's activities by means of a preliminary measure.

Penalties upon conviction: ZTOPO lists the penalties that may be imposed on a legal entity by a final judgment. The court always selects the penalty with regard to the seriousness of the offense and the circumstances of the company. The main sanctions for companies include:

• Dissolution of a legal entity – the court dissolves the company (typically through liquidation) if the nature of the offense committed requires its dissolution (e.g., the company was established primarily to commit crimes). This penalty is extreme but realistic.
• Financial penalty – a financial sanction that can reach very high amounts. The law does not set a fixed ceiling; the amount is derived from daily rates similar to those for individuals, but for companies it can range from millions to tens of millions of dollars depending on the size of the company and the nature of the offense. Financial penalties are common for corruption and economic crimes and have a significant repressive and preventive effect.
• Forfeiture of property – the court may decide that all or part of a company's property shall be forfeited to the state. This is considered for the most serious crimes or if the property was used to commit a crime (e.g., forfeiture of a warehouse with illegal goods, machines used for criminal activity, etc.).
• Confiscation of property or other assets – similar to the above, but applies to specific items or financial amounts that were used to commit a crime or as a reward for it. In the case of companies, this may include, for example, the confiscation of bribes, proceeds from criminal activity, illegally extracted materials, etc.
• Prohibition of activity – prohibition of performing certain activities or business for up to 20 years. The court will impose this penalty if the crime was related to the activity in question. For example, if a security agency commits a crime (such as unauthorized handling of weapons), it may be prohibited from providing security services. For a company, this can mean the effective end of its business in the given field.
• Prohibition on participation in public tenders and competitions – also for up to 20 years. This penalty is critical for companies dependent on government contracts: the convicted company may not participate in public tenders for a specified period. This can mean the loss of key revenues and exit from the market.
• Ban on receiving subsidies and grants – again for up to 20 years. The company is prevented from receiving any public support or grants. This would be very painful for companies in subsidy-dependent sectors (agriculture, research, etc.).
• Publication of the judgment – the court may order that the judgment (or part thereof) be published in the press or by other means at the expense of the company. This is a sanction aimed at punishing the reputation – the public learns of the company's conviction through official channels, which may deter business partners. Publication of the judgment usually follows serious corruption cases or offenses where there is a public interest in informing the public about the guilt of the entity concerned.

In addition to these main penalties, the court may also impose protective measures, such as seizure of property (e.g., seizure of illegally held items) or seizure of part of the property, unless forfeiture of the property has been imposed. The company is also obliged to compensate the injured party for the damage caused (which is more of a civil consequence, but is often dealt with in criminal proceedings).

Reputational and commercial impacts: For many companies, the mere accusation poses a significant reputational risk. A conviction can then be devastating for a company's reputation. In the business world, a criminal conviction means a loss of trust: suppliers and clients may terminate their cooperation, banks may terminate loans or tighten financing conditions, and new customers will be reluctant to enter into contracts with a “convicted” company. In the case of corruption offenses in particular, companies risk being blacklisted (lists of entities excluded from public procurement). Even without a formal ban, a conviction can effectively mean the end of business with the state or with corporations that require ethical suppliers.

The loss of reputation can manifest itself in a decline in the value of the company, the departure of key employees (who do not want to work for a “criminal” company), or difficulties in recruiting new talent. Negative publicity can deter customers in the long term, especially if the offense was related to their interests (e.g., the company was convicted of consumer fraud or endangering public health). In today's world of social media, a bad reputation spreads quickly and is difficult to repair.

Financial costs of proceedings: Even if there is no conviction, the defense in criminal proceedings itself costs a considerable amount of money (legal services, expert opinions, etc.). Managers spend time preparing the defense instead of running the company. These are all indirect economic losses resulting from prosecution.

Overall, it can be said that criminal prosecution and, even more so, the conviction of a legal entity is a critical situation for a company that can threaten its very existence. In addition, the damage to reputation often exceeds the direct penalty – a company can survive paying a fine, but it is more difficult to restore the trust of its business partners. That is why prevention and a careful compliance approach are so important.

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Conclusion: credibility through legal prevention

Criminal liability of legal entities has become an integral part of the Czech legal environment. For business owners and executives, the lesson is clear: you can no longer rely on the idea that “the company can't go to jail” and neglect internal controls. On the contrary, modern B2B standards emphasize transparency and trustworthiness—companies that actively ensure legal compliance gain a competitive advantage in the form of a good reputation and a lower risk of scandals.

This article has shown that Act No. 418/2011 Coll. allows companies to be prosecuted for almost all serious offenses. We have explained the circumstances under which a company is liable for the actions of its managers or employees and when, on the contrary, it may be an excess beyond the company's interest. We have presented typical scenarios – from corruption and tax evasion to environmental damage – which show how real this risk is. The court cases mentioned above confirm that the law takes corporate punishment seriously: companies have been convicted even where the perpetrator was not caught, or have been punished for endangering public values.

On the other hand, however, the law also offers a way to salvation – through consistent prevention and compliance programs. Companies that proactively implement and comply with measures against criminal activity can not only minimize the likelihood of something happening, but if something does happen, they have a chance to exonerate themselves. As mentioned, no court will believe paper declarations – there must be a genuine effort by the company to demonstrate its good will and care.

In conclusion, companies are advised to: pay due attention to criminal liability, consult lawyers about their risks, and invest in training and internal controls. Such expenses are negligible compared to the consequences of criminal charges or convictions. Building a corporate culture of compliance pays off – it increases peace of mind for managers, protects the value of the business, and strengthens the trust of business partners and the public. Criminal law does not have to be a bogeyman if you actively confront it: the best defense is not to commit any crimes and to have a shield of prevention in case of individual failure. Paradoxically, today's legislation can thus have a positive effect – leading to higher business ethics and better management of companies that think ahead and do not wait until it is too late. If you adopt this philosophy, your company will not only be safe from the law, but will also gain greater trust in the market, which is priceless.

A proactive approach to criminal liability is therefore a sign of modern responsible business that will be appreciated by law enforcement authorities (should the need ever arise) as well as your business partners and customers. Be one step ahead – prevention is always better than reaction. Your company will gain a kind of immunity and you will have peace of mind for its further development. Credibility and clear compliance with the rules are one of the pillars of long-term success in the B2B world.

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