Compliance With Anticorruption Laws In India., The Need And Significance
Legal News & Analysis - Asia Pacific - India - Regulatory & Compliance - Insolvency & Restructuring
5 June, 2019
Corporates must comply with domestic and international anticorruption laws of the jurisdictions where they do business, while facing growing public expectations of integrity and ethical conduct and pressure from stakeholders to be more transparent. Corrupt practices of the Indian business arm resulting in contravention of anticorruption laws in India can have global ramifications for foreign companies doing business in India, in light of the laws applicable to their parent and group entities that are registered in the foreign countries, especially in countries like UK, France and USA.
Enforcement of anticorruption laws is becoming increasingly stringent across jurisdictions. The Prevention of Corruption Act, 1988 is the principal anticorruption law in India. The Prevention of Corruption Act, 1988 (“POCA”) has been substantially amended vide the Prevention of Corruption (Amendment) Act, 2018 (“Amendment Act”) which has been brought into effect from July 26, 2018. The Amendment Act, amongst other changes, classifies the act of bribe giving, as an offence and does not merely treat it as abetment, which was the case under the previous framework. The Amendment Act removes the blanket immunity afforded to bribe giver who makes a statement in the judicial proceedings against the bribe taker and limits it only to cases when the bribe giver was compelled to give a bribe provided he reports such an act, in a timely manner.
Further the Amendment Act, provides an express provision imputing liability on the commercial organisation (including companies) for acts of giving bribe to public servant, by individuals (including employees) associated with the organisation and imputes vicarious liability upon directors of a company, in certain cases. Furthermore, the Amendment Act introduces stringent penalties and provisions on attachment and seizure of property, in the event, such property is obtained as a result of commission of offences punishable under this Act.
Additionally, there is a duty to inform the police or investigating officer, in briberycases,underthecriminal laws. In terms of the provisions of Section 39 of the Code of Criminal Procedure, 1973, every person who is aware of the commission of an offence under POCA is duty bound to give information available with him to the police.
Thus, it has become increasingly important for companies to practice the highest standards of ethical conduct during business dealings and effectively demonstrate compliance with anticorruption laws. A compliant and corruption free image enhances brand equity, contributes to shareholder confidence and bolsters positive market sentiment.
For further information, please contact:
Vineet Aneja, Partner, Clasis Law