NEWS

Regulation on Legal Entity Supervision Published by the Ministry of Justice and Human Rights

On September 26, 2024, the Ministry of Justice and Human Rights published the Regulation governing the supervision of Legal Entities (hereinafter, the “Regulation”), in accordance with Law No. 21,595 on Economic Crimes (hereinafter, the “Law”).

The Regulation aims to establish the requirements for serving as a supervisor of a Legal Entity, the procedure for appointment and replacement, and the process for determining the supervisor's remuneration.

  1. Purpose of the Legal Entity Supervisor

The supervision of a Legal Entity involves appointing a supervisor by the court, who is responsible for ensuring that the legal entity develops, implements, or improves an adequate crime prevention system and monitors such development, implementation, or improvement for a minimum of 6 months and a maximum of 2 years.

Supervision will be imposed by the court when the absence or serious deficiency of an effective crime prevention system makes it necessary to prevent the commission of new offenses.

The appointment of a Supervisor will proceed in the following cases:

  1. As a penalty for both crimes and misdemeanors, as provided in No. 4 of Article 8 of the Law.
  2. As a precautionary measure, if requested by the Public Prosecutor’s Office after the investigation has been formalized, under the terms set out by law.
  3. As a condition for the suspension of proceedings, provided there is no conviction or another suspension of proceedings in place for the Legal Entity charged with any offenses under Law No. 20,393.

The Supervisor will have the authority to issue mandatory instructions and impose operating conditions solely regarding the crime prevention system, as determined by the court. The Supervisor is not permitted to interfere in other aspects of the legal entity's organization or activities.

The Supervisor will have the authority to issue mandatory instructions and impose operating conditions solely regarding the crime prevention system, as determined by the court. The Supervisor is not permitted to interfere in other aspects of the legal entity's organization or activities.

The Supervisor will have the right to obtain all necessary information for their duties, including access to all facilities and premises, and may conduct interviews or take statements from individuals within the legal entity, including employees and service providers. These functions will always be limited to the crime prevention system.

The supervised legal entity must provide the Supervisor with all necessary information, comply with the Supervisor’s instructions and conditions, and grant access to facilities when requested. Failure to comply with the Supervisor’s instructions may result in the court imposing restrictions on the legal entity's ability to enter into contracts or conduct transactions involving assets. In cases of severe or repeated non-compliance, the court may order the replacement of its governing bodies.

The Supervisor will be required to report to the court according to the terms and deadlines it establishes.

  1. Requirements to Serve as a Supervisor

The Regulation sets out specific requirements for an individual to serve as a Supervisor:

  1. Hold a professional degree from a program of at least 10 semesters.
  2. Have at least 5 years of professional experience.
  3. Have experience in roles requiring knowledge of risk management, process evaluation, or controls related to crime prevention models.
  4. Have experience in roles requiring knowledge of the legal framework applicable to crimes under Law No. 20,393.

The Regulation also establishes prohibitions and disqualifications for serving as a Supervisor.

Prohibitions: The following individuals are not allowed to serve as Supervisors:

  1. Individuals convicted of crimes or misdemeanors.
  2. Individuals holding elected public office.
  3. Individuals employed by the Public Prosecutor’s Office or the Judiciary.

These last two prohibitions extend for 12 months after the person leaves the position.

Disqualifications: These refer to the appointment of a Supervisor in a specific criminal case:

  1. Anyone related to the legal entity being charged or convicted.
  2. Anyone who has participated in, provided services for, supervised, or had any involvement in the activities related to the commission of the crime.
  3. Anyone who has participated in the design, review, or supervision of the crime prevention model or internal controls in place at the time of the offense.
  4. Anyone who directly or indirectly receives economic or other benefits from the charged or convicted legal entity or other related entities.
  • Procedure for the Appointment of a Supervisor

The court must hold a special hearing to appoint a Supervisor. The presence of the defendant, their defense counsel, and the Public Prosecutor’s Office is mandatory. Each party may propose up to three candidates, indicating their preferences and providing evidence of the candidates' qualifications and impartiality, along with a preliminary work plan. The proposed Supervisor must meet the Regulation’s requirements and will be responsible for their team, which must also comply with the same prohibitions and disqualifications.

The defendant and the Public Prosecutor’s Office may jointly propose a Supervisor, who will be appointed by the court if they meet the requirements and are not subject to any prohibitions or disqualifications. If the parties cannot agree, the court will select one of the proposed candidates by reasoned decision.

The court will provide the Supervisor with precise instructions regarding their role, powers, and limitations. This will depend on the need to implement or improve the crime prevention system. The court will also determine the supervision period, which must be between 6 months and 2 years, considering the size, income, and complexity of the company.

  1. Determining the Supervisor’s Remuneration

The remuneration for the appointed Supervisor will be set by the court according to market criteria and will be the responsibility of the legal entity, as provided by law.

This remuneration will cover all expenses related to the position, including the Supervisor’s fees and those of any advisors they may hire.

For further information on this matter, please contact Macarena Naranjo (mnaranjo@jdf.cl) or María Sofía Ortúzar (msortuzar@jdf.cl).

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