Law on corporate liability: a significant step or a formality?

During the event “International Standards of Corporate Liability for Corruption Offenses: Challenges and Prospects for Implementation in Ukraine,” organized by the Ukrainian Bar Association (UBA), representatives of the business and expert community discussed Ukraine’s Law No. 4111-IX on corporate liability for corruption offenses.

Lana Sinichkina, Partner at Arzinger Law Firm and Member of the UNIC Executive Committee, provided a detailed analysis of Law No. 4111-IX and its compliance with the standards of the Organisation for Economic Co-operation and Development (OECD).

She emphasized that the adoption of Law No. 4111-IX was an important step toward harmonizing Ukrainian legislation with OECD international standards. However, the law lacks a number of critically important provisions necessary for its real effectiveness.

Key issues with the law:

• Lack of effective autonomous corporate liability. The law establishes a very limited list of cases in which separate proceedings against a legal entity are possible, while granting prosecutors broad discretion. This complicates the practical implementation of anti-corruption norms and contradicts OECD principles.

• No consideration of internal corruption. The law only addresses the bribery of foreign officials, leaving the issue of domestic corruption unaddressed.

• Absence of clear compliance obligations. The law focuses solely on sanctions, while the introduction of compliance obligations could serve as an effective preventive tool against corruption in business.

UNIC continues to explain the key aspects of the new law so that the business community understands its impact and risks. Moreover, the Network calls for further improvement of enforcement mechanisms to make the fight against corruption genuinely effective rather than merely formal.

We already see that this law will not deliver the expected results unless the necessary changes are introduced. The OECD will evaluate not only the fact of adopting the law but also its actual enforcement. If we want reforms, we need to work on mechanisms, not create a formality, concluded Lana Sinichkina, Partner at Arzinger and Member of the UNIC Executive Committee.

UNIC invites the business community to join the discussion on the impact of the new legislation and the necessary changes to effectively address domestic corruption in Ukraine.