Authors: Mgr. Michal Nulíček, LL.M., Mgr. Bohuslav Lichnovský, LL.M., CIPP/E and Mgr. Anna Cervanová, LL.M.

Are you preparing to invest in a new company? Are you a shareholder and want to protect the value of your investment? Be careful, an enticing opportunity may turn sour in a matter of days. This happened in Nikola, an electronic lorries company briefly valued at $30bn whose shares fell by 36 % in the last days. Reason? An activist investor published its findings on alleged fraud. A drop in share prices, resignation of the company’s boss and further investigations by the authorities duly followed.

How to avoid this?

The answer is prevention and early discovery of misconduct. A robust compliance system is a good start. Such system will set clear rules and ensure that employees can safely report misconduct and that the reports are properly investigated.

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