Category: News

Corporate Investigations: Understanding the Concept

Corporate investigations, though a relatively new concept in Romania, are increasingly becoming common among large companies operating in the country. The purpose of corporate investigations is to enable management to identify any irregularities that have occurred within the company or in relation to the company’s business. These investigations are different from formal investigations conducted by national or EU authorities, as the two types of investigations have different functions and purposes.

Reasons for Conducting Corporate Investigations

Corporate investigations are usually conducted as a result of management’s need to understand and react appropriately to situations such as suspected breaches of the law (corruption, money laundering, fraud, among others), or issues related to certain official procedures carried out by the authorities. In some cases, the lack of an investigation may itself constitute an irregularity or may worsen the liability of the legal person or management, especially where the law obliges legal entities to conduct such investigations.

The Specifics of Corporate Investigations in Romania

In Romania, there are many legal and technical difficulties specific to the process of understanding what actually happened in relation to an irregularity, in order to find out who is responsible, how the deeds were committed, what the consequences are, and what the legal path to follow so as to limit the consequences and recover any damages. Each jurisdiction has specific limitations and rules that guide corporate investigations. In Romania, for instance, there are rules and limitations concerning evidence and how it can be obtained within corporate investigations. These limitations include obtaining and handling electronic records or documents, gaining access to employees’ laptops and office emails, or interviewing employees. Expert legal assistance is, therefore, needed to avoid interference with active legal obligations that could affect the viability of the investigation and whose violation may entail negative consequences.

Choosing the Investigation Team

The success of a corporate investigation depends on putting together the right team. Corporate investigations usually require a joint effort of several specialists with knowledge in different fields, depending on the industry in which the targeted company operates. The appropriate internal and external team needs to be set up, which may include a legal department and/or lawyers, IT and/or HR staff, forensic specialists, and people who have the necessary industry and organizational knowledge to facilitate an understanding of how fraud was committed within the company. The involvement of Legal Counsel in internal investigations is crucial, at least for compliance with the legal requirements of the investigation. Additionally, choosing a lawyer for leading or supervising an investigation can also be beneficial from the perspective of confidentiality that the law offers to such an investigation, since in Romania and at European level, professional secrecy between lawyer and client is protected by law.

Key Takeaways

• Corporate investigations are necessary and particularly useful tools that allow management to react appropriately to suspected breaches of the law or related issues.
• Conducting corporate investigations require a joint effort of several specialists with knowledge in different fields, and the right team must be put together to ensure the effectiveness of the investigation.
• Expert legal assistance is also required to avoid interference with active legal obligations that could affect the viability of the investigation and whose violation may entail negative consequences.

Personal note of the author: Benefits of being a Criminal Defense Lawyer and the first practicing lawyer to earn the Certified Fraud Examiner credential.

As someone who is both a criminal defense lawyer and a Certified Fraud Examiner, I have been able to consolidate the knowledge I have gained over the years in criminal law with a specialization in White-Collar Crimes, particularly in preventing, identifying, and understanding economic crimes. At the same time, my CFE accreditation has also contributed to diversifying my caseload by increasing my involvement in cases of corporate criminal liability.

Having a CFE accreditation confirms my expertise in the field of corporate investigations, from the beginning of an investigation to its conclusion. This certification complements my skills as a criminal lawyer who helps multinational companies investigate complex internal fraud cases. I also work with multidisciplinary teams of lawyers at act Botezatu Estrade Partners to manage corporate investigations that cover several practice areas.

While we engage in various criminal prevention activities, such as reviewing AML/anti-fraud/anti-corruption compliance policies and conducting necessary training with employees and management, corporate investigations play a critical role. These investigations have a deterrent effect and even contribute to criminal prevention by creating certainty within companies that any suspicions of irregularities will be investigated, and those found responsible will be reported to the judicial authorities and sanctioned accordingly.

Corporate investigations conducted by a specialized lawyer with experience in criminal defense and fraud examination can be an invaluable tool for companies to detect and prevent financial crimes.

The Platform Group – the pioneer in the field of online platforms (including DocGreen, Stylefy, Taschen24 etc.) becomes a new major shareholder in fashionette AG with the acquisition of 2.4 million shares. The leading online platform for high-quality fashion accessories and perfume & cosmetics in the premium and luxury segment has a turnover of EUR 165 million and continues to grow steadily. The Platform Group, whose origins date back to 1882, still belongs to the family office of Benner Holding and has meanwhile connected 4,000 partners in 16 different industries, is thus consistently expanding its portfolio.

Advisors to The Platform Group on Finance: act AC Tischendorf Rechtsanwälte, Marcus Columbu (lead), Swantje Columbu

Dr. Sven Tischendorf, MBA and Dr. Alexander Höpfner were appointed to the management board on 13 December 2022 and, together with the two other managing directors Jens Keller and Jens Peter Klatt, have since ensured the successful and unrestricted continuation of both traditional companies.

Please click here for more details (article in German language only).

The Platform Group – the pioneer in the field of online platforms (a.o. DocGreen, Stylefy, Taschen24 etc.) has acquired the mobility platform Cluno Deutschland from the listed Cazoo GROUP, UK, with its shareholding ViveLaCar. With the acquisition of several thousand vehicles, subscribers, 50 employees as well as the offices in Munich, ViveLaCar is now the largest car subscription platform in the DACH region and The Platform Group one of the largest fleet owners in Germany, behind Sixt, Hertz, etc.

With the acquisition of several thousand vehicles, subscribers, 50 employees as well as the offices in Munich, ViveLaCar is now the largest car subscription platform in the DACH region and The Platform Group one of the largest fleet owners in Germany, behind Sixt, Hertz, etc.

Advisors to The Platform Group: act AC Tischendorf Rechtsanwälte, Marcus Columbu (Project Management, Finance), Dr. Fabian Brocke, LL.M. (M&A)
Advisors ViveLaCar GmbH: Dr. Michael Inhester (M&A), Poellath, München
Advisors Cazoo Group: Anthony Cross, Luise Meyer-Lindemann (both M&A), Eversheds Sutherland, Munich

What exactly is the issue?

BaFin is currently consulting on an amendment to MaRisk, which will probably be implemented in Q1/Q2 2023.

Subject of the implementation

The 7th MaRisk amendment adopts in particular the requirements of the EBA guidelines on loan origination and monitoring (EBA/GL/2020/06) and thus a large number of additions to the design of credit processes as well as the consideration of ESG factors.

Furthermore, provisions on the handling of real estate business, in particular set-up organization, processes in real estate business, especially in acquisition/establishment, processing and monitoring of real estate projects are introduced.

Changes affecting all institutions

One of the most significant changes in the 7th MaRisk amendment relates to the consideration of ESG risks in the definition of risk-bearing capacity and its analysis, the design of the business strategy, risk management and controlling processes, and the ICS of an institution, including risk reporting.

Institutions must align their business strategy in an economically sustainable manner and develop it on the basis of a forward-looking analysis. To this end take into account changing environmental conditions and the transition to a sustainable economy. To this end, a business model analysis, including stress tests, must be carried out.

In the future, the institute’s capital planning must take into account operational business planning.
The use of models for decision-making (e.g. risk classification and quantification procedures, stress tests, valuation models, etc.) is subject to new requirements in terms of data sources, adjustments and reliability. The Ma-Risk amendment does not affect models that require approval by the competent authorities and fall within the scope of Regulation (EU) No. 575/2013 (CRR).

Innovations in lending

When granting loans and valuing loan collateral, ESG risks must be taken into account and the EBA Guidelines on Lending and Monitoring (EBA/GL/2020/06) must be followed. Loans and loan collateral shall be analyzed at least annually for enforceability and default risks.

Leveraged Transactions

Institutions with a portfolio of leveraged transactions shall also comply with the requirements of the EBA Guidelines on Lending and Supervision (EBA/GL/2020/06), Section 4.3.2 (Leveraged Transactions) when defining their strategy.

Changes in the lending business

If an institution is active in the real estate business (investment volume of more than EUR 10 million per year and/or 2% of total assets), MaRisk defines in the new Special Part BTO 3 requirements for the organizational structure, processes in the real estate business, in particular for acquisition/construction and the further processing and monitoring of real estate projects as well as the monitoring of real estate projects.

Effects on practice

All changes must be reflected accordingly in the organizational guidelines. This means that you not only have to implement the changes, but also document that you will implement them in the future.
We will be happy to support you in adapting your organizational guidelines and manuals in a way that fits the scope of your business model and reflects your corporate culture.

Complaints about product governance

BaFin has examined product providers as well as distributors, i.e. portfolio managers, investment advisors, etc., and found numerous reasons for objections. The complaints relate in particular to the following topics:

PRODUCT PROVIDER

Target market identification

When determining the target market, product providers must specify exactly what knowledge, experience, risk appetite, etc. the investors must have who are to be suitable for the product in question. The more complex a product is, the more extensive and in-depth the individual characteristics of the potential target customers must be designed (proportionality principle) to ensure that only customers within the target market are eligible for purchase.

BaFin has found that product providers rarely base their target market definition on the proportionality principle. There is a need for improvement here.

Costs and fees

The cost and fee structure must also fit the target customers. Costs, for example, must not eat up the expected return. Product providers must calculate and evaluate this accordingly when designing the product.

DISTRIBUTORS

Target market identification

For distributors, the target market must be determined individually against the background of the company’s own customer base. An independent target market definition must therefore be carried out; an unchecked takeover from the product provider is not sufficient. The following also applies to this target market definition: the more complex a product is, the more extensive and in-depth the individual characteristics of the potential target customers must be (principle of proportionality).

RESPONSIBILITIES, IMPLEMENTATION

Responsibilities

The responsibility for proper target market determination in compliance with the proportionality principle lies with the respective product provider or sales company. They cannot therefore delegate these tasks in one direction or the other.

Implementation in organizational guidelines

The best way to counter BaFin’s objections is to include appropriate requirements in your organizational guidelines.

We have years of experience in drafting them and therefore know exactly what is important and how you can implement them in a way that fits your corporate culture. Please feel free to contact us at any time and arrange a meeting.

• Energy trendsetter acquires 49 percent stake in PV plant in Biehla near Kamenz (Saxony)
• Installed capacity to be expanded to a total of around 1.75 MWp by spring 2023

With the acquisition of its first own solar park, Germany’s largest green energy discounter eprimo is actively driving forward the energy transition. The PV park in Biehla (Saxony) will supply almost 590 households with climate-friendly energy. From April 2023, eprimo will make the electricity generated available to its customers via a direct purchase agreement (Power Purchase Agreement).

From now on, 49 percent of the solar park in Biehla near Kamenz in Saxony will be owned by eprimo, while RenExpert GmbH will hold a 51 percent share. The PV plant, whose first construction phase has been in operation since October 2021, currently generates an output of just under 750 kWp. This year, the expansion will start with a planned additional output of around 1 MWp. Commissioning is scheduled for spring 2023. The solar park will then have a total yield of 1.8 GWh. With an average consumption of around 3,100 kWh per household, this plant alone is expected to supply around 590 households with green electricity.

Due to the direct purchase agreement, the electricity is purchased in such a way that the customers of the eprimo Green Power Community (GSC) are directly supplied with the generated energy. This means that GSC customers can use the locally produced green power even if they do not generate their own electricity. For every kWh consumed by the GSC, eprimo provides 0.3 cents and thus promotes the further expansion of renewable energies with the eprimo Sonnencent. The PV park in Biehla is the first PV plant financed with the Sonnencent.

About eprimo

eprimo, the energy changer. As Germany’s green energy discounter with the most customers, eprimo is a provider of green electricity and green gas and brings the energy turnaround to over 1.7 million households. All customers are offered numerous opportunities to actively participate in the expansion of renewable energies: Through attractive additional payments for prosumers, the promotion of new PV systems with the Sonnencent, and participation in citizen energy projects, their customers become #energiewendemachers. As a company, eprimo also acts sustainably and is climate-neutral in all its business activities.

Advisors eprimo

act AC Tischendorf Rechtsanwälte – Marcus Columbu (Lead Partner; Regulatory & Finance); Dr. Fabian Brocke, LL.M. (M&A); Dr. Fabian Laugwitz, MBA, LL.M. Eur. (Real Estate); Sarah Landsberg (Corporate)