Economic offenses, according to the mandatory regulations of the Republic of Serbia, are actions that are in contradiction with the legislation and hinder the proper functioning of the economy and the market. These offenses encompass a wide range of unlawful or irregular activities, from violating tax and customs regulations to abusing competition or engaging in unfair business practices. The legislative framework of the Republic of Serbia recognizes various types of economic offenses that can have significant consequences for both business entities and the economy as a whole. Given the seriousness of such acts, appropriate sanctions have been prescribed to ensure legal certainty and fair market conditions.
The Law on Economic Offenses defines an economic offense as a socially harmful violation of regulations on economic or financial operations that has caused or could have caused serious consequences and is defined as an economic offense by the regulation of the competent authority. It is important to note that no one can be imposed a fine or other sanction for an offense that, before it was committed, was not defined as an economic offense by law or by a regulation based on the law, and for which it was not prescribed by that regulation how the perpetrator of the economic offense will be penalized.
Economic offenses are a special type of legal procedure that is conducted before the competent court in the jurisdiction where the accused company is located. The procedure is initiated by the public prosecutor’s proposal.
Individuals Responsible for Economic Offenses
A company and the responsible individual in the company may be held accountable for an economic offense. A foreign company and the responsible individual in a foreign company are liable for an economic offense if the foreign company has a representative office in the territory of the Republic of Serbia or if the economic offense was committed by its means of transportation, unless the regulation defining the economic offense provides otherwise.
The responsible person is defined as the individual entrusted with a specific scope of tasks in the field of economic or financial operations within a company, or in the organ of a socio-political community, another state organ, or a local community. These are typically the legal representatives (directors) of business entities who performed that function at the time the economic offense was committed. The responsibility of the responsible person for the economic offense does not cease because their employment relationship with the company has ended.
A company is responsible for an economic offense if the offense was committed through an action or failure to exercise due oversight by its management or responsible person, or through the actions of another person authorized to act on behalf of the company.
The responsible person is liable for the economic offense if it was committed by their actions or failure to exercise due oversight, and if the person acted with intent or negligence, unless the regulation defining the economic offense specifies that the offense can only be committed with intent.
Sanctions
After conducting the evidentiary procedure, the court may impose an appropriate sanction on the accused company and the responsible person in the company.
Among the penalties, the court can only impose a monetary fine. The amount of the monetary fine can vary depending on the economic offense itself and the consequences resulting from the harmful act. If it is determined during the procedure that a specific act constituted an economic offense, the court generally imposes one monetary fine for the company and one for the responsible person in the company. The law sets minimum and maximum limits for the fines imposed.
There is a possibility that the court may determine the amount of the fine based on the amount of damage caused, unmet obligations, or the value of goods or other items involved in the economic offense, in which case the maximum fine can be up to twenty times the amount of the damage, unmet obligations, or the value of goods or other items involved in the economic offense.
When determining the penalty, the court will particularly consider whether there are aggravating or mitigating circumstances, and will especially take into account the seriousness of the economic offense, the consequences that occurred or could have occurred, the circumstances under which the economic offense was committed, the economic strength of the company, whether the company or responsible person has been convicted of an economic offense or a crime related to an economic offense, whether a prior economic offense or crime is similar to the new economic offense, and how much time has passed since the prior conviction.
The court may increase the penalty for a company or responsible person for the economic offense up to twice the highest prescribed penalty if the perpetrator is a repeat offender.
The court may impose a penalty lower than the minimum prescribed for a particular economic offense (mitigation of the penalty) when this is prescribed by the law or regulation defining the economic offense, or if it finds that there are particularly mitigating circumstances.
A company and the responsible person within a company may also be subjected to a conditional conviction, as well as protective measures. The Law on Economic Offenses prescribes the following protective measures:
- public announcement of the judgment;
- confiscation of items;
- prohibition of the company from engaging in a certain business activity;
- prohibition of the responsible person from performing specific duties.
Statute of Limitations
The statute of limitations for prosecuting economic offenses arises when three years have passed from the date of committing the economic offense. Exceptionally, for economic offenses in the areas of foreign trade, foreign exchange, and customs operations, the statute of limitations for prosecution occurs after five years from the date of committing the economic offense.
The statute of limitations for the execution of a penalty for an economic offense occurs after three years from the date the decision imposing the penalty becomes final.
The statute of limitations for the execution of the protective measure of public announcement of the judgment occurs after six months, while the statute of limitations for the protective measure of confiscation of items is three years from the date the decision imposing that protective measure becomes final. The statute of limitations for the execution of the protective measures prohibiting the company from engaging in certain business activities and prohibiting the responsible person from performing specific duties arises when the period for which those measures were imposed has passed.
Hiring a lawyer in economic offense procedures is crucial due to the serious consequences these offenses can cause. The penalties for economic offenses in the Republic of Serbia are extremely high, and their enforcement can lead to serious financial problems, even bankruptcy for the company. Moreover, a lawyer specializing in this area can assist in preventing potential economic offenses by advising clients on aligning business operations with applicable legislation and providing protection from unexpected sanctions. Timely consultation with a lawyer enables the identification of risks and helps prevent the occurrence of economic offenses, thus protecting the interests and maintaining the stability of the business entity.