16 Jul Is your business ready for Loi Sapin II?
The Loi Sapin II is the colloquial name given to a new piece of French anti-corruption legislation. The new law, which came into force on 1st June 2017, is designed to foster transparency, anti-corruption, and economic modernisation. The law stipulates that companies must establish anti-corruption programmes to identify and mitigate corruption risks.
Which companies are affected?
Sapin-II applies to companies and corporate groups that:
- Are incorporated or headquartered in France;
- Have at least 500 employees;
- Have annual revenues or consolidated revenues of at least EUR 100m.
Who is affected?
- Members of the executive board, presidents, and directors of companies accountable under French law;
- CEOs and presidents of French public entities.
Sapin II extends the reach of the French authorities in corruption cases. It removes the previous extraterritorial requirements that the victim should be a French citizen, or that the alleged offender should be a French citizen and the conduct at issue was an offense in both France and the territory in which the conduct was alleged to have taken place. These were high thresholds. The removal of these requirements means that the French authorities will now be able to enforce corruption offenses with the same degree of vigor as their U.S. and British counterparts. Accordingly, any company which does business in France or has a connection with France should assess its response to the new legislation.
New legal requirements for compliance programs
According to Sapin II Compliance Guide, companies subject to the Sapin II law must:
- Evaluate their corruption risks through risk mapping and adequate due diligence of third parties.
- Educate employees and third parties most exposed to corruption risks by providing adequate training and implementing a strong code of conduct.
- Establish sanctions controls, including clear whistle-blower mechanisms, a disciplinary regime, accounting controls, internal controls and monitoring systems. The law outlines eight clear measures companies must follow to develop or enhance their compliance programme.
The law outlines eight clear measures companies must follow when developing their compliance programme:
- Code of Conduct: Develop and implement a strong code of conduct.
- Internal Whistle-blower Mechanisms: Establish an internal whistle-blower system.
- Risk Mapping: Develop a risk mapping of the company’s exposure to corruption risks.
- Third-Party Due Diligence: Carry out an assessment of third parties (clients, intermediaries, providers, etc.) based on the risk mapping.
- Strong Accounting Controls: Establish accounting controls to ensure that the company’s books and accounts do not conceal any violations such as bribery, the giving, and receipt of gifts or other dubious transactions.
- Compliance Training Programme: Design a compliance training programme that targets CEOs, presidents, managers, and employees most exposed to corruption risks.
- Disciplinary Regime: Establish disciplinary sanctions to be applied in cases where the company code of conduct has been breached.
- Internal Controls: Set up internal controls to evaluate and monitor the effectiveness of the company compliance programme.
How to prepare for Sapin II?
The introduction of Sapin II means that companies must update and adapt their compliance programmes to ensure that they are in line with the French legislation and to avoid any sanctions in the future. Many companies have already taken steps in this direction. So what are the priorities?
- Perform a gap analysis
Companies will need to assess their exposure to potential corruption risks, their work procedures and the resources required to handle the implications of the new law. Compliance consultants can help companies carry out this risk assessment.
- Engage independent auditors in France
Independent French auditors offer certification for compliance with Anti-Corruption Agency (AFA) guidelines, thereby mitigating risk under the new legislation. The role of theses auditors is likely to expand, depending on how the AFA issues standards. One thing is certain: companies may want to start discussions with their auditors now.
- Provide training for employees in high-risk positions
Employee training is an integral part of any anti-corruption programme. Employees should undergo anti-corruption training both as part of their induction and as part of their in-service training.
- Create and update the Code of Conduct
The compliance function unit is responsible for organising and implementing a company’s anti-corruption efforts. Best compliance practices incorporate an effective code of conduct or code of ethics. The code forms an integral part of corporate culture. It provides a set of rules and standards established by the company to help employees understand how to act in a given situation. Moreover, any risk of corruption and malpractice diminishes once board members, directors, CEOs, presidents, and employees understand that any non-compliance is punishable by law.
If you do not already have a code of conduct in place, you will have a lot of work to do. You will have to devise a code of conduct from scratch that is fit for purpose and establish procedures to ensure that it is properly implemented.
- Set up internal and external whistleblowing mechanisms
Sapin II also requires that companies establish internal and external whistleblowing mechanisms that allow employees to report behaviours that violate the corporate code of conduct and the law. Companies are free to choose their own ways of implementing these mechanisms. They can, for example, use a telephone hotline, or the Internet.
Reporting mechanisms must ensure the confidentiality of the whistle-blower’s identity, the identity of the report’s subject and the information collected.
How we can help
SDL can undertake all content creation and translation needs in relation to compliance with Sapin II. We can do this in an efficient and cost-effective manner. We have over 30 years of industry experience, have access to over 6,000 professional linguists globally and can offer you 24-hour service 365 days a year. We can also help you with the creation of any web, computer or classroom-based learning materials. Working with us allows you to reduce your workload, free up time for e-Learning, focus on your training goals and connect with your workforce in ways that enhance productivity, profitability, and cohesion. We manage this process for you as if we were part of your team. We can also help you convert your whistleblowing content into documents that optimise your compliance with the law.
Failure to comply with Sapin II may lead to severe financial penalties (€200,000 for individuals and up to €1 million for companies). Failure to comply also entails significant reputational damage. It is essential for companies to take stock of these new regulations. By doing so, you benefit by rooting out corruption, malpractice and unethical conduct, reducing the risk of incurring crippling financial penalties for non-compliance, safeguarding your reputation and strengthening your marketing position by demonstrating zero tolerance for violations of anti-corruption legislation to your customers and investors.
Contact SDL to find out how we can help you comply with the new legislation.
This blog post is for information purposes only. SDL does not provide legal advice and does not hold itself out to be a legal adviser. You must obtain your own independent legal advice or rely on your judgment when complying with your regulatory obligations.