14 July 2017

The Sapin II law, a new source of liability for companies and individuals

Bastille Day Newsletter 2017 - Legislative Updates


The “Sapin II” law has been designed as a defensive law against the extraterritoriality of foreign legislation (FCPA, UKBA). This new legislation is aimed at strengthening French judicial sovereignty by preventing – through the consolidation of the anticorruption framework – the sanctioning of French companies by foreign judicial and regulatory authorities. The law also aims at avoiding leaking of strategic information and economic espionage when a foreign monitor is appointed.

Starting on June 1st, 2017, large French companies and foreign subsidiaries of French groups (over 500 employees and an average annual turnover over €100 million) have to implement mandatory compliance programs to prevent and detect corruption (code of conduct, internal reporting procedure, risk mapping, etc.).

Compliance with these provisions will be monitored and sanctioned by the new French Anticorruption Agency (AFA) – whose organization is somewhat clarified by the Decree of March 15, 2017 – endowed with increased resources and headed by judge Charles Duchaine. The AFA will have the power to impose injunctions and fines of up to 200.000€ for individuals and €1 million for legal persons.

An additional compliance-related penalty (monitorship) may also be imposed to legal persons convicted for offences of corruption or influence peddling.

If medium and small-sized companies do not yet fall within the scope of this compliance obligation, they are already subject to the implementation of internal reporting procedures.

Companies with over 50 employees will have to ensure whistleblower protection (broadly defined by the law) and implement graduated internal reporting procedures under the penalty of incurring civil or criminal liability. Companies will have to guarantee the anonymity of the whistleblowers and of the person identified as well as the confidentiality of information.

The “Sapin II” law also introduces into French law the possibility of signing a convention judiciaire d’intérêt public (‟French DPAˮ) – proposed by the Public Prosecutor before the initiation of criminal proceedings or by the investigating magistrate when an instruction is ongoing – for select probity offences [See on this topic “CJIP: the French DPAˮ].

The “Sapin II” law also provides a framework for lobbyists with the creation of a digital register of “interest representatives” (i.e., lobbyists) to the High Authority for the transparency of public life (HATVP). The draft Decree which has been leaked to the press, however, shows significant shortcomings. Interest representatives will have no obligation to mention their public statements, the names of parliamentarians met or the date of their meetings, and the information covered by the register would only be published once a year.

The “Sapin II” law finally prohibits all – direct or indirect – advertisements for high-risk financial products sent by email and likely to reach individual investors. Operators incur a fine of up to €100.000. The French Financial market authority (AMF) recently defined the categories of financial contracts covered by this measure (binary options, contracts for difference (CFD) and financial currency contracts (Forex)).

These new compliance obligations imposed on companies are part of a wider trend towards transparency and corporate accountability, as outlined by the enactment of the law No 2017-399 on the duty of care of mother companies on March 27 [See on this topic “Duty of care of parent and contracting companies law”].

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