Anti-corruption: Spain: cross-border joint ventures

Anti-Corruption

1. What are the main legislation and regulatory provisions relevant to bribery and corruption? Is the applicable legislation extraterritorial?

The main laws and regulations applicable to bribery and corruption in Spain are as follows:

• Act 10/1995 of the Criminal Code (Criminal Code). This sets out the most relevant provisions regarding bribery and corruption from a criminal perspective. For an up-to-date version of this law, see www.boe. es/buscar/act.php?id=BOE-A-1995-25444.
• Act 3/2015 dated 30 March on Politic Parties Economic and Financial Activity Control (Ley de control de la actividad económica-financiera de los partidos políticos). This includes new surveillance measures on the financial and economic activity of political parties, and is intended to provide a higher level of control over political parties. It also features an administrative sanctioning procedure led by the Spanish Audit Court. For an up-to-date version of this law, see www.boe.es/diario_boe/txt. php?id=BOE-A-2015-3441.
• Act 19/2013, dated 9 December, for Transparency, Access to Public Information and Good Governance (Ley de Transparencia, Acceso a la Información Pública y Buen Gobierno). The scope of this law is threefold:

1. increasing and reinforcing transparency in public activity;

2. recognising and guaranteeing access to information; and

3. establishing both the good governance obligations to be fulfilled by civil servants, and the legal consequences for any breaches of those obligations.

For up-to-date version of this law, see www.boe.es/ buscar/doc.php?id=BOE-A-2013-12887

• Act 8/2007 dated 4 July regarding the financing of political parties (Ley de Reforma de la Ley Orgánica 8/2007, de 4 de julio, sobre financiación de los Partidos Políticos) (Financing of Political Parties Act). This law sets out several measures aimed at preventing bribery within political parties. For an up-to-date version of this law, see www.boe.es/buscar/ doc.php?id=BOE-A-2007-13022.
• Royal Legislative Decree 3/2011 dated 14 November passing the Restated Text of the Act on Public Sector Contracts (Real Decreto Legislativo que aprueba el Texto Refundido de la Ley de Contratos del Sector Público) (Act on Public Sector Contracts). This law bans companies convicted of bribery or corruption offences from entering into public administration contracts. An up-to-date version of this law is available at www.boe.es/buscar/act. php?id=BOE-A-2011-17887.

In relation to the extraterritorial application of the above legislation, corruption offences committed between individuals or within international economic transactions by Spanish citizens or foreigners outside Spain will be considered to fall within Spanish jurisdiction if any of the following conditions are applicable:

• Legal action is brought against a Spanish citizen.
• Legal action is brought against a foreign citizen whose regular place of residence is in Spain.
• The offence was committed by a director, administrator, employee or collaborator of a commercial undertaking, company, association, foundation or organisation based in Spain or with a registered address in Spain.
• Legal action is brought against a legal entity, undertaking, organisation, group or any other body or association of people whatsoever, which is based or has a registered address in Spain.

Please note that the current wording reflects the recommendations that the Organiation for Economic Co-operaiton and Development (OECD) Working Group on Bribery made in this regard in December 2012.

2. What international anti-corruption conventions apply in your jurisdiction?

The most relevant international anti-corruption conventions enforceable in Spain are as follows:

• OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997 (Bribery Convention). All measures set out in this convention (such as considering matters on bribery of foreign civil servants, or criminal responsibility of legal persons as criminal offences) have been incorporated by the Spanish legislator through subsequent amendments to the Criminal Code. For an up-to-date version of this convention, see www.oecd.org/daf/anti-bribery/ ConvCombatBribery_ENG.pdf.
• UN convention against corruption 2003. The main purpose of this convention is to promote and strengthen measures to prevent and combat corruption more efficiently, as well as to promote, facilitate and support international co-operation and technical assistance both in the prevention of and fight against corruption, including in relation to asset recovery. For an up-to-date version of this convention, see www.unodc.org/documents/ brussels/UN_Convention_Against_Corruption.pdf.
• Strasbourg Criminal Law Convention on Corruption 1999 and its protocol 2003. With this convention, the parties agreed to develop a common criminal policy aimed at protecting society against corruption by adopting the appropriate legislation or relevant preventive measures. Most of these measures have already been taken in by the Criminal Code. For an up-to-date version of this convention, see www. gov.uk/government/uploads/system/uploads/ attachment_data/file/273305/6958.pdf.

3. What are the specific bribery and corruption offences in your jurisdiction? Can both individuals and (incorporated or unincorporated) entities be held liable for criminal offences? At what level of management will an (incorporated or unincorporated) entity be responsible for the actions of its employees?

The following specific bribery and corruption offences within the Spanish legislation are applicable:

• Passive bribery of civil servants (cohecho pasivo). The Criminal Code provides that authorities or civil servants will commit an offence if, for their own or a third party's advantage, by themselves or through a third party, they:

1. receive or solicit gifts, favours, remunerations or rewards (the bribe) of any nature; or accept an offer or promise to carry out an act contrary to their duties or to unfairly delay or to not carry out duties inherent to their office (cohecho pasivo propio); or
2. receive or solicit gifts, favours, remunerations or rewards (the bribe) of any kind; accept an offer or promise to carry out duties inherent to their office; receive or solicit such gifts, favours or remunerations as a reward for the aforementioned conduct; or accept gifts, favours, remunerations or rewards offered to them due to their position (cohecho pasivo impropio).

• Active bribery of civil servants (cohecho activo). This offence is intended for private individuals. Such a person will commit an offence if he/she:

1. offers or delivers a gift to an authority or civil servant (including officers of the EU and foreign civil servants) in order to induce them to carry out an act against the duties inherent to their office; or to carry out, not to carry out or delay an act that should be carried out due to their office; or
2. delivers the gift or remuneration following a request from the authority, civil servant or person who participates in the exercise of public duties.

• Private corruption (corrupción entre particulares). This offence is intended for the following individuals:

1. directors or employees of trading companies or firms who, by themselves or through a third party, receive, request or accept an unjustified benefit or advantage of any nature, in order to favour them or a third party, as a consideration for unduly favouring others in the acquisition or sale of goods, services or commercial relationships;
2. persons who promise, offer or grant, by themselves or through a third party, to directors or employees of trading companies or any other firm an unfair benefit or advantage of any nature, in order to favour those companies or for a third party, as a consideration for unduly favouring those persons or a third party against others in the acquisition or sale of goods, services or commercial relationships; and
3. persons who promise, offer or grant, by themselves or through a third party, an unfair benefit or advantage of any nature to an authority or public officer, in order to make them act or refrain from acting in relation to their duties, in order to obtain or keep a contract, business or competitive advantage on thewhen carrying out international economic activities.

• Influence peddling (tráfico de influencias). This offence is intended for the following individuals:

1. civil servants or authorities who influence other public officers, civil servants or authorities, availing themselves or taking advantage of the powers of their office or of any other situation arising from their personal or hierarchical relationship with the latter, or with any other officers or authorities, in order to find/obtain a solution/decision that may directly or indirectly generate a financial benefit for themselves or a third party;
2. persons who influence a civil servant or authority, taking advantage of any situation derived from their personal relationship with the latter, or with any other officers or authorities, in order to obtain a resolution/decision that may directly or indirectly generate a financial benefit for themselves or for a third party; and
3. persons who, offering to behave in the manner described above, request from third parties gifts, presents or any other remuneration from third parties, or accept offers or promises.

• Illegal funding for political parties (financiación ilegal de partidos políticos). This offence is intended for the following persons:

1. persons who receive donations or contributions meant for a political party, federation, coalition or group of voters (agrupación de electores) in violation of the Financing of Political Parties Act; and
2. persons who participate in structures or organisations, regardless of their nature, aimed at the funding of political parties, federations, coalitions or groups of voters, in violation of the law. 

Both individuals and incorporated entities can be liable for criminal offences. This is because the Criminal Code foresees that a legal person can be responsible for the same offences as a natural person regarding all kinds of corruption.

Unincorporated entities cannot have direct criminal liability. However, they are subject to ancillary criminal consequences: although unincorporated entities cannot be held criminally responsible, they can be subject to the same penalties as incorporated entities.

In relation to the level of management at which an (incorporated or unincorporated) entity would be responsible for the actions of its employees, the Criminal Code foresees that where an entity is deemed responsible for an offence, the entity's directors may also be responsible, even if they do not fulfil the conditions, qualities or relationship that the relevant definition of felony or misdemeanour requires to be an active subject of, if all the following conditions are met in relation to their behaviour:

• The director took the initiative.
• The director should also have monitored the company's activity.
• The director behaved with deceit.
• The director acted against the purpose of the law.

When we refer to "directors" this includes both legal "de facto" or "shadow" ones. According to case law, de facto or shadow" directors refers to persons who have a real, effective and lasting relationship with the company, without being subject to higher bodies (even if those bodies were made up by figureheads).

4. Can associated persons (such as spouses and close relatives) and agents be liable for bribery and corruption offences and in what circumstances?

Associated persons can be liable for bribery and corruption offences. Their liability will depend on their degree of involvement on the commission of the offence (in descending order):

• Perpetrator: when the associated person commits the felony jointly with the briber.
• Inductor: when the associated person induces the offender to commit the crime.
• Necessary co-operator: when the associated person takes part on the commission of the felony with relevant actions, without being the perpetrator of the felony.
• Accomplice: when the associated person takes part on the felony without relevant actions, with the knowledge of their participation on the commission of the felony.

As a special case, the Criminal Code provides that associated persons (in particular, the spouse or other person bound by a similar stable emotional relation, or by any ascendant, descendant, biological or adopted sibling or similar of the same degree) can be liable for bribing civil servants on criminal proceedings if the bravery is intended to favour the main accused. In this case, the briber will be subject to a sentence of imprisonment of six months to one year.

5. What are the potential penalties (e.g. criminal, regulatory or administrative) for participating in bribery and corruption? Can matters be resolved by a deferred prosecution agreement (or similar alternative to formal prosecution) or civil settlement?

Depending on the type of offence, the following penalties are applicable:

• Passive bribery of civil servants. This offence is punishable with:
• Cohecho pasivo propio. A prison sentence ranging from three to six years, a fine ranging from 12 to 24 months (with the daily amount ranging from EUR2 to EUR400 for individuals, and EUR30 and EUR5,000 for legal persons, with the duration determined by the judge), a special disqualification from exercising public office and a ban on the right to stand as a candidate in elections for a period ranfing from nine to 12 years. All this notwithstanding the relevant punishment for the perpetrated, omitted or delayed action due to the remuneration or promise (if that constitutes a separate offence).
• Cohecho pasivo impropio. A prison sentence ranging from two to four years, a fine ranging from 12 to 24 months (with the daily amount ranging from EUR2 to EUR400 for individuals, and EUR30 and EUR5,000 for legal persons, with the duration determined by the judge), a special disqualification from exercising public office and a ban on the right to stand as a candidate in elections for a period ranging from five to nine years. Where the authorities or civil servants accept gifts, favours, remunerations or rewards offered to them due to their position, the offence will be punishable with a prison sentence from six months to one year and special disqualification from exercising public office from one to three years.
• Active bribery of civil servants. For this offence, the briber can be punished with the same prison sentences and fines as the corrupt authority, officer or person. If the offence relates to contracting proceedings, subsidies or auctions called by public administrations or institutions, the penalties will be handed down to the natural persons and, when appropriate, the company, partnership or organisation concerned, by way of a ban on the ability to obtain public subsidies and aid, enter contracts with public sector institutions, companies or bodies, and enjoy tax and social security benefits or incentives, for a period ranging from five to up to seven years.

• Private corruption. This offence is punishable with a prison sentence ranging from six months to four years, a special disqualification from working in industry or commerce for a period ranging from one to six years and a fine of up to three times the value of the benefit or advantage. Where the benefit or advantage is aimed at an authority or public officer, the offence is punishable with a prison sentence ranging from three to up to six years, a fine ranging from 12 to 24 months (with the daily amount ranging from EUR2 to EUR400 for individuals, and EUR30 and EUR5,000 for legal persons, with the duration determined by the judge), except when the benefit would be higher than the resulting amount (in which case the fine will be three times the value of the benefit). Furthermore, in the latter scenario, the punishment may also entail a ban on the ability to enter contracts with public sector institutions, obtain public subsidies and aid and enjoy tax and social security benefits or incentives from seven to 12 years.

• Influence peddling. Where the offence is committed by an authority or civil servant, it is punishable with a prison sentence ranging from from six months to two years, a fine up to two times the benefit obtained, a special disqualification from public employment and office and a ban on the Where the offence is committed by an individual, it is punishable with a prison sentence ranging from from six months to two years, a fine of up to two times the benefit obtained and a ban on the ability to obtain public subsidies and aid, enter contracts with public sector institutions, companies or bodies, and enjoy tax and social security benefits or incentives for a period ranging from six to ten years. Lastly, where the person requests the gift or remuneration, the offence is punishable with a prison sentence ranging from six months to one year and, if committed by an authority or public servant, the punishment will include a special disqualification from exercising public office and a ban on the right to stand as a candidate in elections for a period ranging from one to four years.

• Illegal funding for political parties. In the case of persons who receive donations, the offence is punishable with a prison sentence ranging from six months to four years and a fine that ranges from three to five times the benefit intended or obtained.

In the case of persons who participate in structures or organisation, the offence is punishable with a prison sentence ranging from one to five years. The Financing of Political Parties Act bans the receipt of donations from states, public bodies or foreign public institutions.

• Administrative sanctions. In addition to the penalties above, offenders can also be punished by the following administrative proceedings:

1. sanctions under the Financing of Political Parties Act. This Act provides that the Court of Auditors can impose fines up to two times the benefit that was unlawfully received for the commission of serious breaches.
2. sanctions under the Act on Public Sector Contracts. This Act bans contracting with public administration for companies convicted of bribery or corruption offences during the period set out on the sentence or decided by the Ministry of Treasury (if the duration is not set out in the ban).

In Spain, a deferred prosecution agreement is not possible. This is because in the Spanish legal system there is no principle of opportunity. Instead, prosecution is governed by the principle of legality, where the prosecutor is obliged by law to act against the offender in all public and almost all private offences. Therefore, under the current legislation, the public prosecutor is not allow to decide whether to open or not open the prosecution procedure. Furthermore, criminal prosecution is not monopolised by the public prosecutor in Spain, there also are popular or collective and individual actions. Therefore, even if an opportunity principle were to exist in Spain, its effectiveness would be limited, because even if an agreement was reached, prosecution can continue if the people holding the popular or collective and individual actions (if any) want it to continue.

On another note, the only settlement allowed under Spanish law is the one that permits the accused to agree with the penalty sought by the prosecutor, in which case the court will give judgment in accordance with the agreed penalty, unless the magistrate considers that the penalty is lower than it should.

6. What defences, safe harbours or exemptions are available (if any) and who can qualify? Are there any specific examples of payments being permitted by law, for example facilitation payments?

For natural persons, the Criminal Code provides that if a natural person who has coincidentally obtained a gift or other remuneration made by an authority or public officer reports this fact to the investigating authority before proceedings commence, they will be exempt from punishment for the offence of corruption, provided no more than two months have passed since the date of the event.

Since July 2015, when the last amendment of the Criminal Code came into force, legal persons can be exempt from criminal liability derived from offences committed by their directors or employees if they have effectively adopted and executed a criminal compliance programme prior to the commission of the offence. The programme should include suitable measures of oversight and control to prevent offences or significantly reduce the risk of the commission an offence, in compliance with the following conditions:

• The supervision of the compliance model is entrusted to a body of the legal entity that has independent powers of initiative and control, without omission or inadequate exercise of functions of supervision, oversight and control. For small-scale legal entities, these functions can be directly assumed by the governing body, on the understanding that small-scale legal entities are authorised to submit an abbreviated income statement.
• The individual perpetrators must have committed the offence by fraudulently evading the organisation and prevention models. If the above circumstances can only be partially accredited, they will be taken into consideration in attenuation of the penalty.
• If the offence is committed by those who, being subject to the authority of the natural persons referred to above, were able to perform such actions due to a serious breach by the former of their duties of supervision, oversight and control of their activity in accordance with the specific circumstances of the case, the legal entity will be exempt from liability if, prior to the commission of the offence, the entity adopted and effectively executed an organisational and administrative model which would:
• be appropriate in order to prevent offences of the nature of that committed; and/or
• significantly reduce the risk of the offence being committed.

The organisational and administrative models referred to above must fulfil the following requirements:

• They must identify the activities in which the offences to be prevented could be committed.
• They must establish protocols or procedures specifying the legal entity's decision-making process regarding the offences.
• They must have appropriate financial resource management models in place to prevent the commission of the offences.
• They must impose the obligation to report potential risks and breaches to the body responsible for oversight of the functioning of compliance with the prevention model.
• They must establish a disciplinary system which appropriately penalises any breaches of the measures established by the model.
• They must perform a periodic verification of the model. The model should also be modified when significant violations take place or there are changes to the organisation, supervisory structure or activity that made these modifications necessary.

In addition, several extenuating circumstances are set out in the Criminal Code in favour of the legal persons. Some of these include:

• Confessing the offence to the relevant authorities before having knowledge of the judicial proceedings against him or her.
• Collaborating with the judicial inquiry, by providing new and relevant evidence for the clarification of the criminal liabilities that arose from the events at any time in the course of the proceedings.
• Giving remedy to or decreasing the damages and harms caused by the offence at any time on the proceedings and before the oral trial (juicio oral).
• Having adopted effective measures before the start of the oral trial in order to prevent and uncover offences committed on the company in the future.

There are examples of gifts that are permitted by law. These gifts must take place in circumstances that are considered reasonable according to social customs (for example, courtesy gifts). However, since the law is not specific in relation to the assessment of such gifts, several city councils, regional governments as well as the Spanish Federation of Municipalities and Provinces have developed several Good Governance Codes. These generally restrict permission for gifts to be given if they are assessed to be worth more than EUR90 (for the Regional Government of Galicia) and EUR150 (for the City Council of Madrid).

Finally, facilitation payments are considered as bribery under the Criminal Code.

7. What do companies usually do to mitigate their anti-corruption risk in your jurisdiction (e.g. do they implement anti-corruption policies and procedures and roll-out training programmes for employees)?

It is increasingly common for companies to implement corporate criminal compliance programmes. This is because if these programmes are adopted and effectively executed by the management body prior to the commission of the offence, they can allow for an exemption or mitigating circumstance (see Question 6). However, it should be noted that widespread deployment of such programmes began only recently, since criminal liability of legal persons has only been in effect since 2010 and the possibility of an exemption for having compliance programmes has only been in place since 2015.

8. Which authorities have the powers of investigation, prosecution and enforcement in cases of bribery and corruption? What are these powers and what are the consequences of non¬compliance? What are the possible outcomes of any investigations, prosecutions and other forms of enforcement?

Judges have the power of investigation, prosecution and enforcement in cases of bribery and corruption. The preliminary investigation is conducted by the public prosecutor and the prosecutor's criminal investigation department under the judge's supervision.

If the authorities or public officers within the investigation, prosecution and enforcement of cases of bribery and corruption fail to comply with their duties (such as fail to prevent or persecute the offence or to enforce a sentence), they can be punished with a sanction of absolute barring from public employment and office for a term of up to three years.

At the end of a criminal investigation into the facts of an event which might constitute a crime, there are two possible outcomes:

• No crime has been committed. If this is the case, the investigation is closed and so are the proceedings. The proceedings end without holding a trial.
• Evidence points to the existence of a criminal offence. If this is the case, the proceedings are sent to the public prosecutor's office to file a bill of indictment and to the counsel for the defence so that the counsel can file a statement of defence. Afterwards, the judge sets a date for trial.

When the trial comes to an end, the judge delivers a judgment, which will be either:

• A judgment against the defendant.
• A judgment for the defendant.

An appeal may be filed with a Higher Court against the judgment. This is the end of the procedure.

9. Are there any circumstances under which payments such as bribes, ransoms or other payments arising from blackmail or extortion are tax-deductible as a business expense?

The Spanish taxation system does not provide for the possibility of deducting payments such as bribes, ransoms or other payments arising from blackmail or extortion. In fact, Act 27/2014 dated 27 November 2014 on Corporate Tax expressly states that expenses derived from actions contrary to the Spanish legal system are not tax-deductible under any circumstances. In this regard, Spanish legislation follows the Bribery Convention, which establishes that member countries must explicitly disallow tax deductibility from bribes to foreign public officials, for all tax purposes in an effective manner.

10. Is there any formal duty to report suspicions of bribery or corruption to the authorities under either criminal or regulatory law? What penalties are in place for a failure to report?

The Criminal Code and the Criminal Procedure Act both establish a general duty to report any witnessed offences. Failure to report may involve a penalty of a fine up to EUR288,000.

11. Are there any whistleblowing protections?

There are not thorough and comprehensive regulations regarding whistleblowing in Spain. In this sense, the most similar provision to a law or regulation for the protection of whistleblowing would be Act 19/1994 dated 23 December on Protection of Witnesses and Experts Regarding Criminal Issues (Act for the Protection of Witnesses) that provides several measures for the protection of witnesses. However, this Act has been widely criticised, due to both its apparent lack of practical efficacy and the fact that the Spanish authorities have not enacted a regulation that appropriately develops the Act in order to create a modern, effective and complete system that actually contributes to the protection of witnesses and experts, and overcomes its shortcomings.

In addition, there is a provision in the Criminal Code that incentivises whistleblowing, as it exempts from the punishment derived from bribery to those individuals that, having answered the request of a gift or remuneration by an authority or civil servant, communicate it to the competent authority before the opening of the procedure, provided the communication takes place within two months of answering the request. Furthermore, employees who face retaliation for denouncing infringements of the law can opt to accuse the employer of a coercion offence or an infringement of their moral integrity right.

In the employment field, the Spanish Courts have granted protection to employees who face retaliation for denouncing infringements of the law. In this sense, the courts have stated several times that employees that prepare or directly execute legal actions based on legal infringements against their employers cannot be subject to retaliation, as their right to effective judicial review would be infringed. For this reason, on one occasion, a court ordered an employer to re-admit an employee that media whistleblowed certain security shortcomings at his workplace (the court considered that he communicated truthful information which felt was within his freedom of speech right) and, on another occasion, another court ordered an employer to re-admit an employee that had filed a complain before the Labour Inspection Authority and was subsequently dismissed in retaliation.

There are several international organisations such as Transparency International or the OECD, that has indicated that the level of protection granted to whistleblowers in Spain should be in line with other European countries such the UK, where these sorts of provisions are more developed. Several Spanish parliamentary groups representing the majority of the parliament recently agreed to adopt a law for fighting corruption and promoting whistleblowing protection and, in fact, this initiative has been incorporated into the political agendas of most political parties.

12. Are anti-corruption representations, warranties and/or undertakings inserted in shareholders' agreements (or in any other relevant joint venture documents)? What is their usual wording?

Anti-corruption representations, warranties and/ or undertakings can be inserted into shareholders' agreements, especially so when one of the parties to the agreement is a US or UK company (and are therefore subject to the US Foreign Corrupt Practices Act of 1977 and the UK Bribery Act 2010, respectively) or a Spanish listed company. However, in our experience, these are quite unusual and their inclusion cannot be considered market practice in Spain.

Please find below two examples of clauses which may be included in a Shareholders' Agreement and in a Sale and Purchase of Shares Agreement. "Anti-Bribery and Corruption laws" and "Affiliates" are terms that should be defined in the relevant document and which definition may vary depending on the transaction. For example, "Anti-Bribery and Corruption Laws" may be defined as "Any Anti-Bribery and Corruption Laws or regulations of any jurisdiction to which the company and each of its shareholders are subject" and "Affiliates" may be defined as "Any entity which is controlled by, controlling or under common management or control with the relevant Shareholder or any of the subsidiaries and parent undertakings of such Shareholder".

• "Each Shareholder severally warrants and undertakes to the other shareholder and to its Group that it has implemented, maintained and monitored, and shall continue to maintain and monitor, policies and procedures designed to ensure, and which are reasonably expected to keep on ensuring, continued compliance with Anti-Bribery and Corruption Laws by the same and its Affiliates".

• "That the Buyer, its Affiliates and its and their directors, officers, employees and agents, are in compliance with applicable anti-corruption laws or anti-bribery laws and, in particular, in connection with the transaction foreseen by this Agreement have not:

(i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; or

(ii) made any direct or indirect unlawful payment to any foreign or domestic government employee or official from corporate funds.

In addition, the Buyer has instituted and maintained, and will continue to maintain, policies and procedures reasonably designed to promote and achieve compliance with such laws by all of the foregoing Persons and to prevent situations described in (i) and (ii)".

13. Are there any other provisions that should be, or are commonly, set out in a shareholders' agreement (or in any other relevant joint venture documents) in relation to anti-corruption?

 A shareholders' agreement, and especially a sale and purchase agreement, will contain a representation that the parties agree to act in accordance with the applicable law] (which would implicitly include any applicable anti-corruption laws).

14. Would your answers with respect to Questions 12 and 13 be different depending on whether the joint venture is a 50:50 relationship between the parties or a majority/ minority shareholder relationship?

 The answers would be the same regardless of the relationship between the shareholders.

15. What are the remedies for a "material breach" of anti-corruption representations, warranties and/ or undertakings?

It is unusual to introduce specific remedies for material breaches of anti-corruption representations. The remedy could be included in the clause setting out the remedies for breach of the representations and warranties (in general terms). However, we have never come across a special remedy for a material breach of anti-corruption representations, warranties and/or undertakings.

16. Is it common for any matter to be reserved to the shareholders' approval?

We have not come across any matters related to compliance with anti-corruption or bribery law which are deemed in Spain as reserved matters for shareholders' approval.

17. Is there any effective mechanism available to the victims of bribery and corruption (for instance, the company and its shareholders whose assets have been diverted by the company's directors to corrupt government officials) to trace and recover assets?

The Criminal Code provides the following means of recovering diverted assets for victims of bribery and corruption:

• Confiscation. The Criminal Code provides that a judge can rule for the confiscation of all benefits, goods and income obtained by a person sanctioned with bribery and corruption offences without any evidence supporting its hypothetical licit origin, if there is evidence that the benefits, goods and income were obtained as a result of bribery and corruption.
• Precautionary measures. According to the Criminal Procedure Act and the Criminal Code, several precautionary measures can be taken to ensure the effects of a hypothetical condemnatory sentence. For example, the judge can trace and freeze the assets of the offenders, or rule for provisional imprisonment for the offenders, if they consider that there are risks for the tracing and recovery of the diverted assets.

 

This article first appeared on Practical Law online, and is reproduced with the permission of the publisher, Practical Law.