Financial Crime World

Croatia Enacts Whistleblower Protection Act: Introducing New Obligations and Procedures for Companies

On April 23, 2022, Croatia introduced a new Whistleblowing Act, replacing the existing legal framework that has been in place since 2019. The Act aims to protect individuals who report breaches of Union law, aligning with the EU’s Whistleblowing Directive (EU) 2019/1937.

Key Changes and Obligations

While the main protection mechanisms for whistleblowers remain unchanged, the new Act introduces several novelties and expands on existing obligations and procedures for companies. Some of these changes include:

  • Direct Reporting: Whistleblowers can now report irregularities directly to the Ombudsman without previously using the internal reporting mechanism.
  • Internal Reporting Mechanism: Companies with more than 50 employees are required to establish an internal reporting mechanism, while those in certain sectors (e.g., financial services) must do so regardless of their employee count. Compliance with general standards of whistleblower protection is considered best practice for companies not subject to mandatory compliance obligations.

New Procedures and Requirements

The Act introduces new procedures for filing reports of irregularities, which can now be made verbally or in writing. Companies required to comply with the Act must:

  • Adopt an Internal Bylaw: Establish a new internal bylaw outlining the procedures for reporting and handling whistleblower reports.
  • Appoint a Confidential Person: Designate a confidential person (who may be an external individual, such as a lawyer) to receive reports of irregularities, communicate with whistleblowers, and conduct proceedings related to whistleblower protection.

Additional Protections

The Act expands retaliatory protection for whistleblowers to include not only the whistleblower themselves but also:

  • Related Persons: Family members or other individuals closely associated with the whistleblower.
  • Confidential Person or Their Deputy: The person designated to receive reports of irregularities and conduct proceedings related to whistleblower protection.

Consequences of Non-Compliance

Companies that fail to comply with the Act may face fines of up to:

  • HRK 50,000 (approximately EUR 6,600): For companies.
  • HRK 30,000 (approximately EUR 4,000): For responsible individuals.

Seeking Guidance and Support

For companies seeking guidance on how to draft internal bylaws or update them in compliance with the new Act, what their obligations are in case a report of irregularities is filed, or how to implement a secure whistleblowing system, experts are available to provide assistance.