Companies on the penalty bench – the rules are changing

Barta Péter

Can companies also be punished?

It is little known that criminal proceedings cannot be conducted exclusively against the private individual who committed the crime, or that criminal sanctions cannot be applied exclusively against the private individual who committed the crime. The current regulation has allowed since 2004 that if a company’s manager, member, employee, or supervisory board member commits a crime for the benefit of the company or using the company, then not only the perpetrator, but also the company can be punished at the same time. The assumption behind this is that the company gains an illegal competitive advantage over others due to the crime committed (e.g., it obtains goods at an excessively low price compared to others, as they are VAT-fraudulent goods; or the manager wins a tender over others due to his corrupt behavior), therefore he should be punished along with the perpetrator.

If guilt is proven, companies are typically required to pay a fine, and in rare cases their activities are restricted (e.g., they cannot carry out a specific activity, cannot participate in public procurement procedures, or cannot receive state subsidies). Ultimately, they may even liquidate the company.

The relevant legal regulations have only undergone minor changes since 2004. In the meantime, however, both the economic circumstances surrounding us and the nature and organization of economic and online crimes have changed significantly. Lawmakers have recognized all of this and will significantly revise the system of criminal measures applicable to companies from 2026. The aim of the reforms is, on the one hand, to bring many more companies to justice, and on the other hand, to impose more proportionate criminal sanctions on companies.

Negligent commission may also be sufficient

“A striking change is that while previously criminal measures could only be applied against companies in the event of intentional crimes, next year it will also be possible in the event of negligent commission,” explains Péter Barta, group leader attorney. So, while previously it was not possible to apply criminal measures against a company, if, for example, a colleague was injured as a result of a preventable workplace accident, according to the new regulation, not only the manager can be convicted for endangering his/her job, but the company can also be punished and realistically face a fine.

In fact, a company can now face criminal consequences even if the crime was committed not by the company manager, but by one of the company’s employees, and the company manager was unaware of it because he/she negligently failed to take the necessary measures to prevent it (until now, criminal sanctions could only be applied to the company if the company manager intentionally failed to take preventive measures). A typical example is when a subcontractor is able to enter the company by returning money to the purchasing manager in an envelope (or building the manager’s vacation home), and the managing director has not sufficiently supervised the employee’s work, has not adopted an anti-corruption policy, and has not trained colleagues to prevent corruption crimes. In such cases, the purchasing manager, the managing director, and the company itself can all be punished.

Now, newly founded and foreign companies can also be punished

From 2026, criminal proceedings can also be initiated against companies that were only established after the crime was committed. The regulation, which may seem rather strange at first, is mainly intended to resolve the case where the act of corruption – the promise of an illegal advantage (e.g. “if you get the construction or environmental permit quickly, you will get several million forints”) – is committed for the sake of a later contract that is only concluded after the company has been founded. In such a case, the company will no longer be able to defend itself by saying that the corruption crime was committed when it did not even exist yet.