Introduction

Scope of application

Compliance program

Protection of whistleblowers

Audit and sanctions

Rules arising from the Sapin II Law

EU law

French law

Rules derived from competition law

Sapin II Law/Competition

Scope ratione personae

Scope ratione materiae

Scope

Development of plan

Measures included in plan

Inclusion in management report

Vigilance plan

Injunctions

Civil liability

Sanctions

Duty of vigilance (devoir de vigilance)

CSR programs

Reporting

Communication

Reporting and communication

Judicial sanctions

Risk to reputation, strategy and stability

Corporate Social Responsability (CSR)

Middlenext Code

IFA Corpus

AFEP - MEDEF Code

Types

Principles of governance

Principles incorporating CSR values

Principles

Comply or explain

Binding force

Private codes of conduct

Compliance

The Sapin II Law expects the governing body to commit to ensuring that the organization's tasks, competencies and activities are carried out in a way that is free from breaches of probity. According to the French Anti-corruption Agency (Agence française anticorruption- AFA), respecting this commitment is the first pillar and founding element of any compliance program .

What is covered under “governing body”?

Article L. 23-12-1 of the Commercial Code provides that a governing body  is any body set up within a company, by any corporate act or practice, for the purpose of regularly assisting the general management bodies in the performance of their duties. The governing body referred to in the Sapin II Law refers to the persons placed at the head of the organization and responsible for managing it in accordance with its bylaws and the standards in force , i.e. the chairpersons, managing directors, general managers or members of the executive board  of companies with at least five hundred employees, or belonging to a group of companies  whose parent company has its head office in France, with a workforce of the same size, and whose sales, or consolidated sales, exceed EUR 100 million, or chairs and managing directors of public industrial and commercial establishments meeting the same criteria, or belonging to a public group  of the same size . In addition, the AFA specifies that, although the members of boards of directors or other supervisory or control bodies do not constitute a governing body in the strict sense of the term, the anti-corruption system and its updates must nevertheless be presented to them periodically, as part of their task of monitoring the undertaking's activities, to ensure the existence, relevance and effectiveness of the measures taken by management to comply with their legal obligations .

What concrete measures are expected of the governing body?

The governing body's commitment is demonstrated not only by its willingness to prevent and detect any breach of probity within its organization, but also by the mobilization of resources tailored to the undertaking's risk profile. This implies implementing a zero-tolerance policy towards any form of corruption or influence peddling, as well as promoting and disseminating a culture of anti-corruption compliance within the undertaking and towards third parties, by giving priority to the prevention and detection of breaches of probity . On the one hand, the governing body itself must behave in an exemplary manner in terms of integrity and probity, and comply with these principles when making decisions for which it is responsible. Secondly, with regard to the undertaking and third parties, it must define a risk identification and management strategy, and implement the measures and procedures that make up the anti-corruption system. Although it may delegate the operational implementation of the system to a compliance officer, who has the necessary knowledge and is suitably positioned to carry out this task , the governing body must personally participate in the operational implementation of certain measures and procedures making up the anti-corruption system, for example, when validating the mapping of risks of breaches of probity, when making decisions following the evaluation of certain third parties, or when determining the sanctions to be imposed in the event of a breach of the code of conduct or of facts likely to be classified as breaches of probity. It must also communicate in a personal capacity on the anti-corruption system, both internally and to third parties with whom it intends to enter or remain in contact, and firmly reiterate its unwavering commitment to ethics and integrity. The governing body must also ensure that a disciplinary system is in place and that appropriate sanctions are taken in the event of corruption. Finally, it verifies, by means of indicators and control and audit reports, that the anti-corruption system is organized, effective and up to date.

The AFA also recommends that top management ensure that anti-corruption measures are integrated into risk procedures and policies, such as human resources management  or sales and purchasing policy .

Implementing an anti-corruption system requires human and financial resources commensurate with the undertaking's risk profile. These resources must cover, in particular, the anti-corruption compliance team, the use of external consultants or service providers, where appropriate, the implementation of tools for assessing the integrity of third parties, internal alert systems, risk management, monitoring, e-learning, etc., the management of anti-corruption training and the production of periodic reports and evaluations.

When the governing body appoints a compliance officer, he or she must have the requisite skills, such as the ability to perform a cross-functional function and knowledge of anti-corruption compliance regulations, as well as knowledge of the undertaking's activities and risk management techniques. He or she must also have the resources to carry out his or her duties, coordinate the functions concerned and report to the governing body. In the case of groups of companies, the AFA recommends appointing a compliance officer at central level, and compliance officers for each subsidiary, country or business unit.The role of the central compliance officer will be to encourage the implementation of anti-corruption measures in subsidiaries, and to assist them in this process, notably by disseminating common methodologies and policies, to be adapted where necessary to local constraints.The person in charge must, at all times, have access to all information relevant to the performance of his or her duties, enabling him or her to have a true picture of the undertaking's business, independence of action towards other undertaking functions and the ability to have a real influence on them, and access to the governing body, in order to obtain its attention and support. Regardless of his or her position in the organization chart, the compliance officer must be able to maintain a direct and regular link with the undertaking's governing body, and have easy access to the board of directors. He or she must also be involved in the implementation of strategic projects and structuring decisions, such as the conclusion of new contracts, mergers and acquisitions, major investments, the prospecting or formation of partnerships, or the design and marketing of new products or services.The independence of the compliance officer does not go hand in hand with an absence of control. He or she is accountable to the undertaking's governing body.

AFA recommendations designed to help public and private legal entities prevent and detect corruption, influence peddling, misappropriation of public funds and favoritism of 4 December 2020, JORF of 12 January 2021, pts 16 and 17.

The AFA recommends that the governing body ensures that trade discounts, rebates and discounts to customers are not granted for corrupt purposes, and that suppliers are put in competition with each other in order to control the risks inherent in the purchasing function.

Public limited companies governed by Art. L. 225-57 C. com.

Cons. constit., 8 December 2016, LawLex202300011724JBJ, holding that “ group of companies ” must be understood as meaning the whole formed by a company and its subsidiaries within the meaning of Art. L. 233-1 C. com. or as the group formed by a company and those it controls within the meaning of Art. L. 233-3.

Ibid, noting that “public group” refers to bodies so classified by law.

Recommandations from the AFA, pts 93 to 95.

The AFA recommends that the recruitment and appointment process for the most exposed managers and staff should include an assessment of their integrity, and encourages managers' initiatives to promote the prevention and detection of corruption among their teams.

29. Leading role of the governing body