Business Gifts: Rules and Best Practices

The end of the year is an ideal time to make donations, give gifts, or extend invitations, whether to your clients, partners, or third parties. These gifts typically aim to express the company's gratitude, show a special relationship with a partner, celebrate special occasions or milestones, or serve as an opportunity to stand out from competitors.

However, it is crucial to carefully consider business gifts to ensure effective loyalty-building while adhering to strict legal frameworks. So, what framework exists? Are there limits on the value of gifts?

Our experts provide an analysis of the legal regulation of business gifts and the limits that should be set.

Business Gifts: Distinction Between Courteous Practices and Unethical Behavior

Gifts and invitations can be acts of courtesy or legitimate commercial actions in the business world. Client gifts — or business gifts — are tangible goods or services offered to clients, suppliers, or prospects without expecting anything in return. However, they must be distinguished from practices that could be considered attempts at corruption or influence peddling.

Corruption "refers to the behavior in which offers or promises, gifts, or presents are solicited, accepted, or received for the purpose of achieving or refraining from an act, gaining favors, or securing particular advantages."

Influence peddling, on the other hand, "consists of compensating the improper use of influence that the agent has or claims to have over a third party, in order to obtain a favorable decision."

Thus, a gift or invitation becomes problematic when its purpose is to influence the recipient's behavior, particularly to secure an undue benefit, such as the signing of a commercial contract, a job offer, or the award of a project.

It is therefore essential to clarify what constitutes an acceptable gift in a professional context.
Gifts can include cash or in-kind benefits, such as products or services offered at a price lower than their actual value.
Similarly, an invitation can take the form of a meal, accommodation, a show, a trip, or other forms of hospitality when the recipient does not pay the usual market price.

Business Gifts: What Regulations Apply?

The Current Legal Framework

2016 marked a major turning point in strengthening transparency and preventing corruption in France with the promulgation of Law No. 2016-1691 of December 9, 2016, also known as the "Sapin 2" law.

This law led to the creation of the French Anti-Corruption Agency (AFA), which has become the national authority responsible for helping competent authorities and individuals facing corruption-related issues to prevent and detect acts of corruption, influence peddling, embezzlement, illegal interest taking, misappropriation of funds, and favoritism.

Article 17 of the Sapin 2 law specifically requires companies to implement internal control systems to regulate the use of gifts and invitations. It ensures that practices in this area are transparent, proportionate, and do not create conflicts of interest.

The French Anti-Corruption Agency clarifies that "the offer or acceptance of a gift or invitation must not be made with the aim of influencing the performance or non-performance of an act by an individual." Therefore, any attempt to conceal a quid pro quo, such as obtaining a signature or commercial favor, constitutes an illegal act, punishable by sanctions and legal proceedings.

Corruption may also be established if the gift or invitation is disproportionate. This disproportion is assessed based on two criteria: the amount and frequency.
Moreover, there is no fixed amount, and it is up to the company to determine the threshold within its internal policy.

Gifts or invitations, whether received or offered, must therefore be occasional and reasonable. They must align with a professional approach and aim to promote the company's activities, possibly with reciprocity and full transparency with the hierarchy.

Sanctions

Failure to comply with rules related to business gifts can lead to severe consequences for the company. In addition to administrative and legal sanctions, the company risks damaging its reputation and losing the trust of its business partners. To protect itself, it is crucial to adopt a proactive approach and train employees on best practices related to business gifts. By implementing rigorous control mechanisms, the company minimizes the risk of corruption and ensures transparent and ethical business relationships.

Best Practices and Advice to Follow

Criteria for Business Gifts

To ensure that a gift or invitation is deemed acceptable, it must meet several essential criteria:

• It must fall within a strictly professional framework and should not involve any hidden counterparties;
• It must be reasonable and occasional, with no excessive repetition with the same individuals;
• Its value and frequency must be proportionate and should not compromise the recipient’s independence of judgment;
• It must serve a legitimate purpose, related to the company’s commercial interests, and should not create a conflict of interest.;
• It must be transparent and approved by the hierarchy to avoid any appearance of undue advantage.

It is also necessary that the gift or invitation is appropriate for the context and circumstances, ensuring that it does not appear intended to unduly influence the recipient’s decision or actions.

Internal Policy

To better manage corruption risks, it is strongly recommended by the AFA to implement an internal policy governing gifts and invitations. This policy should establish clear rules for the acceptance and offering of gifts, including effective control and monitoring mechanisms.

A company’s Code of Conduct defines and illustrates behaviors to avoid, which could be considered as corruption or influence peddling. The Code of Conduct and the policy on gifts and invitations are linked. The Code may include or reference elements of the "gifts and invitations" policy.

Another best practice is maintaining a register of gifts and invitations. This register, which must be kept rigorously, tracks all information related to gifts offered and received, such as: 

• Names, roles, and organizations of recipients;
• Amounts, dates, and contexts of exchanges;
• Information about the individuals offering the gift or invitation

This register provides three key advantages for the company

• It facilitates internal audits and compliance checks;
• It enhances transparency and the integrity of exchanges;
• It protects the company and its employees from any suspicion of dubious practices and legal risks

The company may decide that a gift or invitation, depending on its value, can only be accepted after authorization from a superior or another designated person. The volume of declarations or authorization requests may require the company to implement an IT tool to process them, or alternatively, to provide standardized forms.

Training on the policy regarding gifts and invitations may be provided to those most exposed to corruption risks, such as employees with delegated authority or signature power, as well as buyers.

To ensure the effectiveness of its internal policy on gifts and invitations, the organization implements a control system, which may include multiple levels:

• Hierarchical control: The superior, or another designated person (such as the compliance officer), oversees authorization requests, gift and invitation acceptance, and expense reports;
• Accounting control: The accounting record of gifts and invitations should be made in a way that makes them easily identifiable in accounting entries to facilitate the organization’s defined controls.

Additionally, an internal control system can be established to ensure proper implementation of the policy on gifts and invitations, its relevance, and to verify that authorization thresholds and applicable rules are being adhered to.

The management of gifts and invitations in a professional context goes beyond mere courtesy or commercial gestures. It is a major issue of compliance, transparency, and risk management, which must be carefully regulated to protect both the integrity of the company and the trust of stakeholders.

From risk mapping to training, from establishing procedures to formulating risk management policies at RSM France, we assist you in developing and updating your anti-corruption framework.