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Compliance in general

New Developments on the Recovery of Corporate Fines from the Management

If fines are imposed on companies for illicit conduct, the question arises as to whether the companies can seek recourse against the responsible managers. The question is controversial. However, the higher fines become, the more important the question becomes. Because of their exorbitant amount, it is in particular fines for violations of European and national antitrust law which fuel the debate. Two very recent - contradictory - rulings of the Dortmund Regional Court and the Düsseldorf Higher Regional Court, as well as the German lawmaker, are giving new impulses to the discussion.

The article sums up the new decisions and draws the consequences for practice. As long as the issue has not been decided by the court of last instance, supervisory bodies have to decide on the assertion of claims. They cannot refrain from asserting the claims solely on the grounds that recourse is not legally possible. Furthermore, they must also observe the rules on the statute of limitations that the Dortmund Regional Court and Düsseldorf Higher Regional Court have drawn up on the commencement and the end of the limitation period. Furthermore, the question of how the situation stands under EU law remains open. Last but not least, the draft amendments to the new German BISG also gives new impetus. In the end, the question must be asked as to whether the overall system of corporate fines is not suffering from a systemic flaw.

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The EU's ESG Rules: Multiple Combined Encroachments on Companies with Disproportionate Consequences

On June 1, 2023, the EU Parliament adopted a joint position on the draft Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD is to become a further central pillar of the regulatory building for "Corporate Social Responsibility" (CSR) and "Environment/Social/Governance" (ESG) that the EU is currently establishing. The following will first provide an overview of the regulations. The regulations significantly expand and sharpen the concept of "sustainability" and harness accounting and company law tools. The legislative purpose is to guide investment, transform the entire EU economy, hold companies accountable to this end, and give third parties means to enforce the relevant obligations. The rules impose high costs and other burdens on companies. In many cases, however, the rules are neither necessary nor suitable for the protection of the climate, the environment and human rights; this applies in particular to the rules addressing governance issues. This brings into focus the principle of proportionality, which sets limits for legislators at the EU and national levels. Companies should insist in the upcoming political process that proportionality is maintained. This does not only apply to the CSDDD, but also to the Corporate Sustainability Reporting Directive (CSRD) and its implementation.

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