Corporate Criminal Liability

What Corporate Criminal Liability Means

Legal Framework. The Act on Criminal Liability of Legal Entities (ZTOPO) governs the conditions under which a company bears criminal liability, the penalties that may be imposed on it, and how criminal proceedings against a legal entity are conducted. The scope of the Act is very broad – it applies to all legal entities in both the private and public sectors (commercial companies, cooperatives, associations, foundations, schools, hospitals, etc.). The exception is the Czech Republic and territorial self-governing units (municipalities, regions) in the exercise of public authority, which cannot be prosecuted. However, if the state or a municipality acts through its own company or has an ownership interest in a commercial company, such a company does bear liability.

Corporate Criminal Offences. The Act originally contained a list of 84 criminal offences for which a legal entity could be prosecuted. However, a 2016 amendment brought about a fundamental expansion: the ZTOPO now provides a negative list of a few criminal offences that a legal entity cannot commit (typically, these are offences of a personal nature, e.g., bigamy, dangerous stalking, brawling, or prison riots).

All other criminal offences listed in the Criminal Code can be attributed to a company if they are committed under the conditions set out in the ZTOPO. This expanded the number of potential corporate offences 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 Act has thus "levelled the playing field" in the treatment of offenders – today, both a natural person and, if the legal conditions are met, a legal entity can be held liable for most criminal offences.

We maintain a separate, continuously updated text with a current overview of the criminal law risks for companies that are a real threat in 2026 and in which sectors.

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 offence, it does not mean that the company's liability arises in their place – on the contrary, both can be convicted. The Act explicitly states that the criminal liability of a legal entity is not affected by the liability of natural persons. A company can therefore be prosecuted even when the specific perpetrator from among its employees is not known, convicted, or is, for example, legally insane or has died.

The Supreme Court confirmed this as early as 2016 (the CAFOUREK, s.r.o. case, file no. 5 Tdo 784/2016): even if the specific employee who committed the act cannot be identified, the company can be convicted if there is evidence that some person within the circle of responsible employees committed an illegal act in the company's interest. For law enforcement authorities, it is therefore sufficient to prove that a criminal offence occurred and that the perpetrator must have been someone from the company's management or staff – it is not always necessary to individually convict a specific person for the company to also bear liability.

Conditions of Liability: When a Company Can Be Prosecuted for an Individual’s Actions

Attribution of Conduct. For a specific illegal act of a natural person to be attributed to a legal entity (a company), the statutory conditions defined in Section 8 of the ZTOPO must be met. First and foremost, it is a matter of who committed the act and in whose favour or context they acted. A company does not have its own "will"; it always acts through people. The Act therefore defines the circle of persons whose actions "count" as the company's actions. This includes, in particular, persons in executive and managerial positions:

• A statutory body or its member, or another person authorised to act on behalf of the company (e.g., an executive director of a limited liability company, a 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 they are not a statutory body (e.g., a member of the supervisory board, a senior manager, etc.).

• A person exercising decisive influence over the company's management, typically a so-called controlling person (e.g., a dominant shareholder or beneficial owner who gives instructions even without a formal position).

• An employee or a person in a similar position in the performance of their work duties – this includes any company employee in the course of their duties. For rank-and-file employees, however, the Act requires an additional prerequisite to be met: they must either act on the instruction or with the approval of the aforementioned senior persons, or the senior persons neglected mandatory supervision or preventive measures that could be reasonably required of them to prevent such conduct. In practical terms, a company is liable for an employee's criminal offence either if the management ordered or sanctioned it, or if the management failed to implement controls, training, and rules (compliance) that would have prevented such illegal behaviour. This condition highlights the importance of prevention within the company: if the company can prove it had effective internal measures and controls, it may be exonerated from liability for an employee's excess of authority – we discuss this further below.

For members of statutory bodies, this means that their own actions are also the company's actions—and both can be charged. We discuss the specific steps that can be taken to limit the personal liability of a statutory body member before any problem arises in a separate article.

In addition to the circle of persons, the second key condition is the purpose and context of the conduct. The Act requires that the act must be committed in the interest of the legal entity or in the course of its activities. This limits the company's liability only to situations where the illegal act is related to the business or operations of that company and is also intended (at least potentially) to bring it some benefit (pecuniary or non-pecuniary). Example: If an employee commits fraud to unjustly enrich the company or improve its market position, this is an act in the company's interest.

Similarly, if a manager breaks the law during the company's normal business activities (e.g., when concluding contracts, managing waste, keeping accounts, etc.), this is an act in the course of the company's activities. Conversely, if someone misuses their position in the company purely for personal gain and this brings or is intended to bring no benefit to the company, it is a so-called excess of authority by an individual, for which the company is not liable. For example, if an employee secretly accepts a bribe in exchange for concealing a client's complaint about a defective product from management, they are not acting in the company's interest (but rather to its detriment).

Concurrency with Individual Liability. As already mentioned, the company's liability does not preclude the prosecution of the specific perpetrator. Section 9 of the ZTOPO states that the criminal liability of a legal entity is not dependent on the outcome of the prosecution of the natural person. A company can therefore be convicted even in a situation where, for example, the culprit from among the employees is not convicted or cannot be punished (e.g., they have died or are unknown). For company owners, the opposite aspect is also important: if their employee or manager commits a criminal offence, both may face charges (the company and the individual).

Liability is therefore parallel. Law enforcement authorities commonly conduct joint proceedings against a natural person and a legal entity simultaneously if their actions are related. From a defence perspective, this means that the company and the employee each have their own procedural status as the accused and each must defend their own interests (they often coordinate their actions, of course, but legally they are different subjects). The independence of the prosecution also has a practical consequence: one cannot rely on the acquittal of an employee automatically absolving the company of guilt, or vice versa. Each liability is assessed separately – albeit based on the same act.

Summary of conditions: A company can be held criminally liable if someone from its management or staff commits an intentional (or, where the law allows for the given offence, negligent) criminal offence and does so for the benefit of the company or in the course of its activities. It must not be a purely private act of an employee outside the scope of their work. If the perpetrator is a regular employee, the law considers whether the company neglected necessary preventive measures – which either convicts it of a so-called organisational failure or, conversely, can save it (see the chapter on compliance below).

Meeting these criteria then leads to a situation where the legal entity is charged with the criminal offence alongside the specific perpetrator (if known). In the subsequent proceedings, the company (usually represented by its defence counsel) acts similarly to an accused natural person – for example, it can propose evidence, file appeals, etc. A specific feature is that the company cannot be represented in court by its statutory body if that body itself is charged; in such a case, the court appoints a guardian for the company for the given proceedings. This can have an unpleasant impact on the owners – they temporarily lose control over how their company acts in the process because a court-appointed representative (typically a lawyer) acts on its behalf. This is another reason why it is better to avoid criminal prosecution in the first place, rather than dealing with such crisis situations.

Typical Criminal Offences and Risk Areas for Companies

In the more than ten years that the ZTOPO has been in effect, it has become clear that certain types of illegal conduct occur most frequently in legal entities. Below are examples of typical criminal offences that companies commit or for which they have been prosecuted and convicted in practice:

Corruption and Bribery:

This is one of the most common areas of prosecution. It includes bribery and indirect bribery, manipulation of public tenders, subsidy fraud (misuse of grants or subsidies), and the related breach of duty in the administration of third-party property. Many companies have been charged, for example, with bribing public officials to win a contract, providing commissions to intermediaries in violation of the law, or participating in carousel VAT fraud. According to case law, bribery and corruption offences are among the most common for which legal entities are prosecuted in the Czech Republic.

Economic and Financial Offences:

This category mainly includes fraud (e.g., entities created for the purpose of fraudulently obtaining money or credit), tax evasion or non-payment of mandatory contributions (VAT, income tax, social security contributions, etc.), loan fraud (obtaining a loan based on false information), money laundering (legalisation of proceeds from criminal activity through corporate accounts), and also distortion of accounting records.

An example could be a company that systematically keeps two sets of books and conceals income, or a company that purposefully gets rid of its documentation (so-called "paper tunnelling"). These economic offences are risky for companies, as the motivation to "save" on taxes or improve financial statements can lead to the criminal prosecution of the entire corporation. Case law has already confirmed the guilt of companies, for example, for distorting data on their financial situation precisely by intentionally concealing accounting records.It is precisely in the area of white-collar crime that companies most often encounter criminal proceedings—and where the defence has its own rules, as it stands or falls on accounting, expert opinions, and an extensive case file. We discuss what a defence in white-collar crime cases looks like in practice in a separate article.

Environmental Crimes:

The Act allows for the prosecution of legal entities for all environmental crimes. Typical examples include unauthorised waste management (e.g., operating an illegal landfill 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 the company's activities.

A practical case: In 2019, a company was convicted of the misdemeanour of damage to and endangerment of the environment when it illegally landfilled construction waste, including asbestos, on its property, which led to a landslide and permanent pollution of a watercourse. The court imposed the penalty of forfeiture of the land used for this activity. This case (3 To 14/2019) clearly shows that even environmental offences can result in very severe penalties for a company.

Workplace Safety and Endangerment of Health:

Although less publicised, violations of occupational health and safety regulations can also lead to the criminal prosecution of a company – typically if a serious injury or death of an employee occurs as a result of a systemic neglect of safety duties. Such conduct can be classified, for example, as the criminal offence of public endangerment by negligence or manslaughter by negligence.

An example from practice: 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 investigate whether the company (through its managers) breached important duties, and if so, it can be prosecuted along with the specific manager.

Other Criminal Offences:

Companies can commit a whole range of other criminal offences if the conditions of attribution are met. These can include, for example, infringement of intellectual property rights (a company systematically sells counterfeit goods), harming consumers (placing dangerous or deceptively labelled products on the market), offences in the area of 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 nature of the act excludes it (see the negative list, e.g., a company cannot actually commit bigamy).

From the examples above, it is clear that the most exposed areas are corruption and white-collar crime. This is also confirmed by statistics on convicted legal entities: the most common offences involve bribes, tax evasion, and subsidy fraud. However, environmental offences should not be underestimated – although they are not as frequent, the penalties in case of conviction can be ruinous for a company (remediation of damages, loss of reputation, high fines, possible suspension of activities). Managers should therefore identify which specific criminal offences are a threat in their line of business (e.g., construction companies and ecology, IT companies and intellectual property, transport companies and safety, etc.) and focus on prevention in these areas.

So far, we have talked about criminal offences as a separate category. However, in regulated industries, it doesn't work that way: criminal prosecution is often the final stage of an escalation that began with an administrative inspection. A supervisory authority finds a deficiency, imposes a fine, the company pays it and changes nothing—and upon the next finding, the issue is no longer just an administrative offence, but whether the management knowingly tolerated an illegal state of affairs.

We typically see this with companies subject to the supervision of the Czech National Bank, with providers of services related to virtual assets, in the energy sector, with traders of sensitive commodities, or in healthcare. A fine in the order of hundreds of thousands of crowns is unpleasant, but survivable. It is dangerous because it creates written evidence that the company knew about the problem—and in a later criminal proceeding, this will become a key basis for proving intent or negligent supervision.

The practical conclusion for management: every decision by a supervisory authority must be taken as a warning, not as a settled invoice. Paying a fine without rectifying the identified deficiency is the worst possible reaction from the perspective of criminal liability. Conversely, documented rectification after the first inspection is precisely the type of evidence that supports exoneration under Section 8(5) of the ZTOPO.

Lessons from Case Law: Key Court Cases

During the time the Act has been in effect, a number of decisions by the Supreme Court (as well as High and Regional Courts) have been issued, clarifying the interpretation of the ZTOPO in problematic situations. Here are a few important lessons from case law:

Failure to Identify the Perpetrator Will Not Save the Company:

In its decision file no. 5 Tdo 784/2016 (the CAFOUREK case), the Supreme Court stated that a company can be convicted even if the specific employee-perpetrator cannot be identified. If the evidence proves that a certain (though unidentified) person from the circle defined in Section 8 of the ZTOPO committed a criminal offence 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 that the evidence presented shows at least that someone acted illegally on behalf of the company – a company cannot be convicted purely on the basis that "a crime happened" without it being clear at all whether someone from its people committed it.

In the CAFOUREK case, the company was initially acquitted because the lower courts had doubts as to whether the executive director had intentionally concealed the accounting records (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 for certain that the illegal act occurred and was committed by a person in a position according to the law.

Temporal Scope and Continuing Criminal Offences:

The principle of prohibition of retroactivity (the prohibition of the retroactive effect of criminal law) also applies to companies – a company cannot be criminally prosecuted for conduct that ended before 1 January 2012, i.e., before the ZTOPO came into effect. In practice, however, there have been cases where illegal activity straddled this date. The Supreme Court dealt with, for example, a case of fraud involving solar power plant licences, which occurred partly in 2010–2011 and partly continued after 2012. In its resolution file no. 7 Tdo 327/2020, the Supreme Court explained that the decisive factor is when the conduct was completed – if a substantial part of the illegal conduct took place after 1 January 2012, the company can be prosecuted, even if the "roots" of the conduct reached into the past. Thus, what matters is not when the harmful consequence arose, but when the perpetrator acted.

Consequence: If a company (through its people) exploits an illegal situation established before 2012 after that date, it may be committing a new criminal offence. In the aforementioned case, 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 began before the Act came into effect. The Supreme Court upheld the company's conviction, stating that this did not violate the prohibition of retroactivity, as the company was committing the crime even after the Act became effective.

Excess of Authority vs. Company Interest – The Practical Line:

The courts have also addressed the question of what can be considered conduct "in the interest" or "in the course of the activities" of a company. In general, the benefit to the company does not have to be only pecuniary (monetary), but can be any other advantage or the maintenance of a good position. For example, in environmental offences, the company's interest may be manifested in cost savings (the company does not have to pay for environmental measures or waste disposal). Conversely, conduct that is objectively disadvantageous to the company and serves only the personal benefit of the perpetrator should be considered that excess of authority excluded from the liability of legal entities.

An illustrative case was handled by the Regional Court in Prague in 2021: an employee accepted payments from a competitor for passing on his company's trade secrets (thus acting for a third party's interest and against the interests of his employer). The court concluded that such conduct cannot be attributed to the employer company, as it lacks the element of acting in its interest – the company itself was the victim, not the perpetrator. Thus, criminal liability was limited only to that natural person-employee. This example shows that a careful assessment of motivation and benefit is crucial for a fair determination of whether the company will bear liability or not.

Penalties for Serious Offences Can Be Ruinous:

Case law shows that if a company commits a serious offence or repeatedly violates the law, courts do not hesitate to resort to very strict penalties. For example, in the above-mentioned case of the illegal landfill with asbestos, the courts ordered the forfeiture of property – the company lost the land on which it had conducted its illegal business.

In other cases, companies have faced a prohibition of activity (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 the imposition of a monetary penalty in the order of millions of crowns on a company convicted of corruption, even though the company argued that it would ruin it financially – the courts stressed that the penalty should be tangible and preventive. These examples underscore that a criminal conviction can have fatal consequences for a company's existence (see the following chapter on sanctions and consequences for more detail).

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

 Prevention: How to Protect the Company (Compliance Programmes)

The most important part of this entire issue is prevention – that is, the effort to prevent criminal activity from occurring in the company in the first place. From the perspective of owners and executive directors, prevention has a dual meaning:

1. To prevent the harmful phenomena themselves (criminality within the company or for its benefit), thereby helping the company avoid legal penalties and potential losses.
   

2. If a crime does occur, to have the option to be exonerated from criminal liability by meeting the so-called exculpatory conditions.
   

Section 8(5) of the ZTOPO contains a clause according to which a legal entity will not be punished if it proves that it has made all the effort that could be reasonably required of it to prevent the commission of the illegal act. This possibility of exoneration from liability (exculpation) applies to criminal offences committed by any person attributable to the company (including a statutory body member or manager).

This is a kind of "grace for the active and diligent" – the law gives decent companies a tool to effectively defend themselves against punishment. If a company proves in court that it had implemented real and functional measures to prevent crime and yet an individual error or failure still occurred, the company can be acquitted. Conversely, if it had no measures or they were merely formal, it will not escape liability.

Compliance Programme. In practice, that "all effort" is equivalent to implementing a so-called criminal compliance programme 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 company's daily operations. This includes, for example:

• A Code of Conduct and internal policies, clearly defining what behaviour is unacceptable (bribes, conflicts of interest, manipulation of accounts, discrimination, etc.).
  

• Training and education of employees and management on relevant legal obligations (e.g., training on anti-corruption, competition rules, workplace safety, etc.).
  

• Control and supervision mechanisms – e.g., the four-eyes principle for approving transactions, regular internal audits of accounting, checks on compliance with environmental obligations, independent contract reviews.

• Background checks on new hires — for positions with access to money, sensitive data, or decision-making powers, verifying the integrity of employees is a basic preventive measure. However, the law does not permit requiring a criminal record extract for every position, so it is necessary to know when it is possible and how to document it.
  

• A reporting system (whistleblowing) – allowing employees to report suspicions of illegal conduct within the company anonymously or confidentially, with a guarantee that the report will be investigated and the whistleblower will not be penalised.
  

• A body or person responsible for compliance – in larger companies, establishing the function of a compliance officer or an ethics committee to oversee compliance with the rules and advise employees in dilemmatic situations.
  

• Sanctions and responses – setting up internal disciplinary sanctions for violations of compliance rules and consistently applying them (tolerance of "minor" transgressions undermines the functionality of the programme).
  

• Regular updates – a compliance programme is not a one-off document; it must be reviewed and adapted according to legislative developments and risks in the industry.

Regarding the reporting system, one thing that distinguishes it from the other items on the list needs to be emphasised: it is not voluntary. The Whistleblower Protection Act requires employers with over 50 employees to establish an internal reporting system, designate a competent person, receive reports, notify the whistleblower within specified deadlines, and, above all, protect the whistleblower from retaliatory measures. Failure to comply is punishable by a fine from the labour inspectorate.

This has a dual significance for criminal liability. A functional reporting channel is one of the strongest pieces of evidence that the company has made all the effort required under Section 8(5) of the ZTOPO—and conversely, its absence in a company that was supposed to have one will be used against it in proceedings. A missing system is not just an administrative offence, but also an argument that the management neglected its mandatory supervision.

In practice, the most common failure is not the existence of the channel, but what follows after a report is made. A company sets up an email address and that's the end of it—it has no designated competent person, no described investigation procedure, keeps no records, and cannot prove that it did not penalise the whistleblower in any way. But it is precisely the record of the investigation that will stand up in court, not the mere existence of the address. We discuss how to set up a reporting channel and the subsequent investigation in our article on internal investigations and the whistleblowing system.

The key is that this programme does not just remain on paper, but truly comes to life in the day-to-day corporate culture. As one expert aptly noted: "There is a difference between formal training with an attendance sheet and a real change in how the company operates." Management can either just formally write a code, hold a one-off training session, and think they have fulfilled their duty, or they can embrace the compliance programme as a real opportunity to improve the company's internal operations.

Law enforcement authorities will be very strict when assessing exoneration – they will examine whether the measures the company presents as evidence of its innocence are not just a formal part of its paperwork, but whether the company truly lives by them. In other words, whether the ethical and control mechanisms have actually been integrated into daily processes.

Implementing an effective compliance programme not only minimises the risk of criminal activity occurring in the first place, but also has side benefits: it improves communication within the company, increases discipline and process accuracy, and can enhance the business's reputation with partners. Conversely, companies that ignore these issues expose themselves to a much higher risk of punishment. Unfortunately, the awareness of many entrepreneurs about this issue is still low – many do not realise that they are at real risk of criminal prosecution and have no idea what to do if they were to receive a notice of charges in their data box.

And yet, "yesterday was too late" – every owner or executive director should assess as soon as possible whether their company has sufficient internal safeguards against illegal conduct. If not, it is appropriate to implement a compliance programme, or review existing internal regulations and strengthen them where they are weak. By doing so, the company gains a shield that protects it both from crime itself and from criminal punishment – and ultimately, it can also increase its efficiency and credibility.

Summary: Prevention is an investment in the stability and good name of the company. The law directly motivates companies to behave responsibly by offering "relief" to those who have done their utmost for prevention. 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 a possible criminal proceeding, but also the reputation and prosperity of the business.

When an Offence Has Already Occurred

Effective Repentance and Extinction of Criminal Liability

Prevention is the ideal state. But reality is often different: the owner learns about a problem only when a notice of charges arrives in their data box. In such a situation, it is crucial to know that criminal liability is not necessarily irreversible.

For some criminal offences, the law allows for liability to be extinguished if the perpetrator themselves rectifies the harmful consequence. This is most practical for tax offences. If a company evades tax and then pays the additionally assessed tax, including penalties, its criminal liability may be extinguished—even if proceedings are already underway. The law thereby prioritises the return of money to the state over the punishment itself.

Timing is everything. Effective repentance has legal conditions and cannot be invoked at any time—once the proceedings reach a certain stage, the option closes. This is precisely why the worst reaction to being charged is to wait and see. If a company discovers a problem itself, before the tax authority does, it has the strongest position it can have in the entire process.

The decision whether to take this path is not just a legal one. Paying the back taxes means admitting wrongdoing and has tax and cash-flow implications. It is therefore always considered alongside a defence on the merits of the case—and the decision should be made in the first few days, not after months.

Ways to End Proceedings Without a Conviction

Even where liability is not extinguished, the proceedings do not have to end with a conviction. Criminal law knows so-called diversions—ways to close a case outside of a standard trial. For a company, they are crucial because the difference between a diversion and a conviction is the difference between a manageable episode and a record that will exclude it from public tenders.

Conditional discontinuation of criminal prosecution is an option for less serious offences if the company compensates for the damage and takes measures to prevent the conduct from recurring. This is where a compliance programme proves its worth a second time: its implementation or strengthening is precisely the step that the public prosecutor evaluates. A settlement is an instrument where the company pays for the damage and an amount determined by the state, and the proceedings are stopped. An agreement on guilt and punishment then allows for negotiating the outcome with the public prosecutor and avoiding a lengthy trial and media attention.

They have three things in common. They presuppose active action by the company, not a passive defence. They are only available at a certain stage of the proceedings. And in all three cases, how the company reacted in the first few weeks is decisive—which is why the defence strategy is decided at the beginning, not in court.

Consequences and Risks of a Company Being Charged or Convicted

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

The Course of Criminal Proceedings: If criminal proceedings are initiated against a company (the company becomes the accused), a representative must act on its behalf. As already mentioned, if a statutory body member is also charged, the court appoints a guardian for the company for the proceedings. The company has the right to a defence counsel (a lawyer), and in practice, it is essential for it to be represented by a qualified lawyer – criminal proceedings are complex and the sanctions are serious.

You can find guidance on how criminal proceedings work—from the initiation of actions through the pre-trial phase to the main hearing and appeals—in a separate article. Knowing which stage the case is in is a prerequisite for every subsequent decision.

The mere notification of charges can be a shock for a company and may become public (e.g., through the media, if it is a major company or a serious offence). At that moment, the company's reputation may begin to deteriorate – partners and customers become uncertain.

Measures During Proceedings: Authorities often use instruments such as the seizure of assets of the accused legal entity (e.g., freezing bank accounts or real estate) for the purpose of future execution of a sentence or compensation for damages. This can have an immediate impact on the company's cash flow and operations – frozen funds cannot be used, which can complicate payments to suppliers, wages, etc. Furthermore, the court may impose certain preventive measures during the proceedings, such as a prohibition on disposing of certain assets (e.g., if the company were to continue using a machine with which it committed the criminal activity). In an extreme case, if the company were to continue its illegal activities even during prosecution, the court could, at the public prosecutor's request, decide on the suspension of the company's activities by a preliminary measure.

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

• Dissolution of the legal entity – the court dissolves the company (typically through liquidation) if the nature of the committed offence requires its termination (e.g., the company was established primarily for the purpose of committing crimes). This penalty is extreme, but real.
  

• Monetary 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 natural persons, but for companies, it can be millions to tens of millions of crowns depending on the size of the company and the nature of the offence. A monetary penalty is common for corruption and economic offences and has a significant repressive and preventive effect.
  

• Forfeiture of property – the court may decide that all or part of the 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 the criminal activity (e.g., forfeiture of a warehouse with illegal goods, machinery used for criminal activity, etc.).
  

• Forfeiture of a thing or other property value – similar to the above, but applies to specific items or financial amounts that were used to commit the criminal offence or as a reward for it. For companies, this could be, for example, the forfeiture of a bribe, proceeds from criminal activity, illegally mined material, etc.
  

• Prohibition of activity – a ban on performing a certain activity or business for up to 20 years. The court imposes this penalty if the criminal offence was related to that activity. For example, if a security agency commits a criminal offence (say, unauthorised handling of weapons), it may be banned from providing security services. For the company, this could mean the effective end of its business in that sector.
  

• Prohibition on participating in public procurement and tenders – also for up to 20 years. This penalty is critical for companies dependent on government contracts: a convicted company may not participate in public tenders for the specified period. This can mean the loss of key revenues and an exit from the market.
  

• Prohibition on receiving grants and subsidies – again, for up to 20 years. The company is prevented from drawing any public support or grants. For businesses in sectors dependent on subsidies (agriculture, research, etc.), this would be very keenly felt.
  

• Publication of the judgment – the court may order that the conviction (or part of it) be published in the press or in another manner at the company's expense. This is a sanction aimed at punishing the reputation – the public learns of the company's conviction through official channels, which can deter business partners. The publication of a judgment usually follows in serious corruption cases or for offences where there is a public interest in being informed of the entity's guilt.

In addition to these main penalties, the court can also impose protective measures, such as the confiscation of a thing (e.g., confiscation of illegally held items) or the confiscation of part of the property if forfeiture of property was not imposed. The company also bears the obligation to compensate for the damage caused to the injured parties (which is more of a civil consequence, but is often dealt with within the criminal proceedings).

Reputational and Business Impacts: For many companies, the mere charge represents a significant reputational risk. A conviction can then be devastating to their good name. In the business world, a criminal conviction means a loss of trust: suppliers and clients may terminate their cooperation, banks may call in loans or tighten financing conditions, and new customers will be reluctant to enter into a contract with a "convicted" company. Especially in cases of corruption, companies risk ending up on so-called blacklists (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.

A loss of reputation can manifest as a decrease in the company's value, the departure of key employees (who do not want to work for a "criminal" company), or difficulties in attracting new talent. Negative publicity can deter customers in the long term – especially if the offence 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 defence in a criminal trial itself costs considerable resources (lawyer's fees, expert opinions, etc.). Managers spend time preparing the defence instead of running the company. These are all indirect economic losses that prosecution brings. 

Overall, it can be said: Criminal prosecution, and certainly a conviction, of a legal entity is a critical situation for a company that can threaten its very existence. Moreover, the reputational damage often surpasses even the direct penalty – a company may survive paying a fine, but it will have a harder time rebuilding the trust of its business partners. That is why prevention and a careful compliance approach are so important.

Conclusion: Credibility Through Legal Prevention

The criminal liability of legal entities has become a firm part of the Czech legal environment. For company owners and executive directors, the lesson is clear: it is no longer possible to rely on the idea that "a company can't go to jail" and leave internal controls aside. On the contrary, modern B2B standards place emphasis on transparency and credibility – companies that actively attend to 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 for the prosecution of companies for almost all serious offences. We have explained the circumstances under which a company bears responsibility for the actions of its managers or employees and when, conversely, it may be an excess of authority outside the company's interest. We have provided typical scenarios – from corruption and tax evasion to environmental damage – which show how real this risk is. The court cases mentioned have confirmed that the law takes the punishment of companies 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 path to salvation – through consistent prevention and compliance programmes. Companies that proactively implement and adhere to measures against criminal activity can not only minimise the probability of something happening, but if something does happen, they have a chance to be exonerated. As was said, no court will believe paper declarations – it must be a genuine effort by which the company proves its good will and diligence.

In conclusion, we can recommend to companies: pay due attention to the area of criminal liability, consult your risks with lawyers, invest in training and internal controls. Such expenses are negligible compared to the consequences that a criminal charge or conviction would bring. Building a corporate culture of legal compliance pays off – it will increase the peace of mind of managers, protect the value of the business, and strengthen the trust of business partners and the public.

Criminal law does not have to be a bogeyman if you actively confront it: the best defence is to commit no crime and to have a shield of prevention in case of an individual's failure. Today's legal framework can thus paradoxically lead to a positive effect – 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, which will be appreciated both by law enforcement authorities (should it ever come to that) and by your business partners and customers right now. Be one step ahead – prevention is always better than a reactive response. Your company will thereby gain a figurative immunity and you will gain peace of mind for its further development. After all, credibility and clear adherence to rules form one of the pillars of long-term success in the B2B world.