BMJ presents Draft Bill on Criminal Law for Enterprises

Implementing the corresponding agreements in the coalition agreement (see already here), the Ministry of Justice (“BMJ“), after a number of disputes (cf. here for more details (in German)), has now submitted the expected draft bill (“Ref-E“) of the “Act to Combat Corporate Crime” (“Gesetz zur Bekämpfung der Unternehmenskriminalität”) on 22 August 2019, the core of which is the “Association Sanctions Act” (“Verbandssanktionengesetz” or “VerSanG“). The draft is now to go through the usual coordination processes in the various inter-governmental departments before it is published. However, the draft is already circulating in various committees, so that specialist media at least feel obliged to comment on it (see only here at “Juve” (in German)), whereby critical voices far outweigh positive ones. In the following, the first findings shall therefore be summarized:

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The German economy in August 2019 – downhill we go…

As a blogger-colleague colourfully pointed out recently, if people in the locker-room of a swimming pool start to talk about “recession” and “inverted yield curve”, the recession “is mainstream”. Accordingly, even German forecasting instutions, rather (in)famous for not spotting recessions correctly, are at least now considering an – albeit short – recession for Germany (namely, the “Institut für Weltwirtschaft” (IfW), cf. here). Hence, the question is not, if and when the crisis will hit the German economy (as asked last month, here), but how hard and how long the impact will be and last. And this is a rather difficult question. But, let’s look into it in some more detail:

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Receivables management – before you get “on the high seas”

Seemingly, the worsening economic situation (see only here) is already leading to poorer payment morale. For an entrepreneur, however, it helps little to complain about the general “moral decline” (as is done here (in German)). Rather, you should proactively take action well before a possible default in order not to fall victim to the (very German) motto “in court and on the high seas one is in God’s hands” or even to become a candidate for one of the notorious “domino insolvencies” yourself if a large customer falls into insolvency. Over the past twelve months, I indeed noticed an increase of requests to consult on how to react to outstanding payments – right up to being instructed to plan and implement a complete receivables management system. Enough reason to sum-up all the bits and pieces in one post.

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Startups in troubled waters

While the public hype about “start-ups”, i.e. (more or less) innovative business start-ups that pursue aggressive growth strategies, is unbroken, a current PwC study shows that in recent years numerous so-called “fintechs” (i.e. start-ups that (at least allegedly) want to introduce disruptive business processes into the financial world through digitalisation) have already run out of steam (here). However, the awakening after bankruptcy can, though accompanied by less public fanfare than the start, sometimes be very bitter for the former founders. Namely, when it comes to personal liability. In this context it is worthwhile noticing that the German Federal Supreme Court (“Bundesgerichshof”, “BGH”) in a decision of 2007, which still dealt with the consequences of the so-called “New Economy” imploding at the beginning of this century, explicitly raised the duties for managing directors of start-ups in the crisis. Against this background, the following brief might help to avoid a rude awakening.

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Embezzlement – legal “delicatessen”?

If executives are suspected of having enriched themselves at the expense of the company, a criminal liability according to § 266 StGB (“Strafgesetzbuch“, German Criminal Code) is regularly brought into play. Since two fundamental decisions of the German Federal Constitutional Court (“Bundesverfassungsgericht“, “BVerfG“) in 2010 and 2012, however, the courts have been considerably more hesitant with a corresponding conviction. This tendency is exemplified by the recent decision of the LG Hamburg to discontinue the proceedings against the imposition of money charges (here) despite the previous annulment of the acquittals against various bankers of the failed HSH Nordbank, and by a recent decision of the Berlin Court of Appeals (“Kammergericht“, “KG“) which cleared three former functionaries of the Kassenärztliche Vereinigung (a body of medical professionals organising the payment processes for the profession) of the allegation of breach of trust (here).

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The German economy in May 2019 – severe cracks

It seems that the silver lining at Germany’s economic sky in March (here) and April (here) were indeed nothing more than the lights of the (recessionary) train advancing fast. Already a superficial review of Germany’s economic data shows some severe cracks in the success story of the last years – although it still stands to question whether an actual downturn is already “around the corner”. Still some indicators (insolvencies, ZEW) are positive:

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