Criminal Liability of Legal Entities

The previous practice was often destructive for companies. If an employee or manager committed an offense, the criminal prosecution affected the entire company. However, the new rules effective from this month give legal entities the chance to resolve misconduct without causing fatal disruption to their everyday business.

Similar to the new rules for corporations, employers will also have to meet new obligations from July 1, 2026, which may affect their operations New employer obligation from July 1, 2026. But this is an area of labor law; here we are talking about criminal liability.

Lawyers from ARROWS law firm point out that this change does not represent a general pardon for illegal activity. It is a rational tool inspired by Western models, rewarding transparency and proactive management approach.

In the context of these changes, it is important for companies to correctly set responsibility during sales, which includes declarations and warranties. You can read about this in our article How to correctly set responsibility during company sales (declarations and warranties). Here too, the issue plays a role.

How do diversions and agreements work in practice?

The main pillar of the new regulation is the so-called diversion in criminal proceedings. This technical term refers to a procedural alternative to traditional court proceedings.

The second key term is corporate compliance. It is a comprehensive system of internal anti-corruption, audit, and control measures. The existence and functionality of this system determine whether the state evaluates your company as a trustworthy partner for concluding an agreement.

Similar to corporate compliance, when managing a Czech company from abroad, it is important to follow the correct procedures and rules Managing a Czech company from abroad.

If your company finds itself in a situation where it faces investigation by the police, specialists from ARROWS law firm will help you assess whether you meet the conditions for this procedural step and safely guide you through the entire negotiation.

Practical risks associated with management inactivity

Relying on the possibility that potential misconduct in the company will be "covered up" is nowadays the shortest path to insolvency or forced administration. If management does not actively address misconduct, it risks severe sanctions, which the new legislation continues to maintain for non-cooperative entities.

The biggest threats include the loss of negotiating position before law enforcement authorities and the subsequent convicting judgment. This carries not only financial penalties but also a ban on fulfilling public contracts, which can be fatal for many suppliers.

International reach and preventive measures

The new Czech regulation is strongly inspired by foreign institutes such as Deferred Prosecution Agreements (DPA) known from Anglo-Saxon law. If your company operates in the international market, it is necessary to consider the cross-border impacts of criminal proceedings.

Thanks to the international network ARROWS International, ARROWS law firm can handle even complex cases with a foreign element and coordinate defense or compliance strategy across multiple jurisdictions.

Final summary

The new legislation effective from July 1, 2026, offers companies the opportunity to avoid destructive penalties if they face the problem head-on. The possibility of concluding an agreement with the state instead of undergoing a court process requires perfect preparedness, a functional compliance program, and an immediate expert response at the first sign of a problem.

For business owners, CEOs, and CFOs, this means one thing – the law no longer forgives formal solutions. If you do not want to risk losing contracts, reputation, or costly legal disputes, entrust the review of your internal processes to experts.