Navigating New Horizons: Ukraine’s Foreign Bribery Law and Its Implications for Global Business

On 26 December 2024, a new law came into effect in Ukraine to improve mechanisms for holding legal entities accountable for bribery of foreign officials.[1] This aligns with Organisation for Economic Co-operation and Development (OECD) standards and is a part of Ukraine’s efforts towards OECD membership.

The law extends corporate liability to acts of corruption committed against foreign government officials and officials of international organisations. This new framework establishes that a legal entity’s liability for foreign corruption is independent of its authorised representative’s prosecution. Previously, liability required proof of an authorised representative’s guilt in committing a corruption offence on behalf of the company. Now, it is sufficient to demonstrate that the legal entity’s representative committed an act exhibiting signs of corruption without tying the liability directly to the individual’s guilt.

Legal entities can now be held liable for corruption committed by authorised persons, founders, beneficiaries, or supervisory board members on behalf of and/or for the entity’s benefit. This includes failure to ensure effective anti-corruption measures, leading to the commission of corruption offences; lack of oversight of employees or representatives resulting in corruption offences; and corruption committed with the knowledge of authorised persons, beneficiaries, or other officials. These provisions specifically target crimes involving money laundering and corruption offences.

In addition to existing measures such as fines, confiscation, and liquidation, the law introduces non-financial criminal sanctions: temporary restrictions on activities, such as bans on public procurement, privatisation, bond purchases, or advertising; and temporary restrictions on rights and benefits, such as denial of state benefits or assistance. These measures are tailored to the severity and circumstances of the offence, focusing on prevention and deterrence.

The amendments significantly raise the financial penalties for legal entities. Minor offences result in fines ranging from EUR 3,919.90 to EUR 7,839.80,[2] while special grave offences result in fines ranging from EUR 29,399.28 to EUR 2,939,928.61.[3] This is a significant raise for Ukraine, but it is still very far from the penalties in other jurisdictions for similar offences, like those following US FCPA violations.

To reinforce autonomous liability, the law also introduces procedural changes: independent initiation of criminal proceedings against a legal entity by a prosecutor; pre-trial investigations conducted within 6 to 12 months; and submission of a prosecutor’s application to the court to apply criminal measures against the entity.

This landmark legislation introduces robust mechanisms to hold legal entities accountable for foreign bribery and corruption, enhancing Ukraine’s compliance with international anti-corruption standards. For tailored advice on how these changes may impact your business, please contact Olga Vorozhbyt, Partner, at ovorozhbyt@sk.ua, or Oleksandr Zub, Associate, at ozub@sk.ua.

[1] Law of Ukraine "On Amendments to the Criminal Code of Ukraine, the Criminal Procedural Code of Ukraine, and Other Legislative Acts of Ukraine Regarding the Improvement of Mechanisms for Holding Legal Entities Accountable for the Bribery of Officials of Foreign States” No. 4111-IX dated 4 December 2024.

[2] From UAH 170,000.00 to UAH 340,000.00, according to the official exchange rate of the National Bank of Ukraine as of 20 January 2024, which is UAH 43,3684 for EUR 1.00.

[3] From UAH 1,275,000.00 to 127,500,000.00, according to the official exchange rate of the National Bank of Ukraine as of 20 January 2024, which is UAH 43,3684 for EUR 1.00.