Germany: Compliance issues arising for companies in Germany due to the new Coalition Agreement

In brief

The coalition agreement (Koalitionsvertrag) adopted this week by the future German federal government – which governs the cooperation of the joint coalition government during the upcoming legislative period until 2025 – comprises a number of legislative proposals relevant to corporate compliance and governance structures. Although these legislative proposals are only vaguely described in the coalition agreement, it is clear that the new German government intends to further regulate entrepreneurial activity in the following aspects in the coming years:


Corporate Liability Act

The new government intends to protect honest companies from unlawful competitors by introducing a German Corporate Liability Act (Verbandssanktionengesetz). The rules on corporate sanctions, including the level of sanctions, are to be improved in the coming years to provide companies with legal certainty regarding their compliance obligations and to create a more precise legal framework for internal investigations. Since the previous draft law was mainly driven by the Social Democrats, chances are high that a similar version will be passed in the near future.

We are re-activating our online commentary regarding the draft law (www.verbandssanktionengesetz.de) to provide you with relevant updates to this key legislation.

Whistleblower

The new German government still has to implement the EU Whistleblower Directive until the end of the year. The government intends to surpass the EU Whistleblower Directive and plans to protect whistleblowers from legal disadvantages not only when reporting violations of EU law, but also in case of significant violations of laws and regulations or other significant misconduct if the disclosure is in the public interest. In addition, the enforceability of claims for reprisals against the whistleblower is to be improved, and the government intends to examine advisory and financial support for whistleblowers.

Supply Chain Legislation

In addition to the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz), which will come into force in 2023, the new German government supports the planned EU Supply Chain Directive to enhance the human rights and environmental standards to be complied with by companies along their value chain. The Supply Chain Act will remain unchanged and will only be amended if appropriate. Moreover, the future government intends to support the EU's proposed ban on imports of products from forced labor.

The legislative proposals of the new German government outlined above mean that German companies and German subsidiaries of foreign companies should already consider, how they can adapt their compliance and governance structures in these areas.


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