Companies incorporated under the laws of an EU Member State, if they meet any of the following criteria:

• They have an average of over 1,000 employees and a global net turnover exceeding EUR 450 million in the last financial year.
• They serve as the parent company of a group that has met these thresholds.
• They have entered into franchising or licensing agreements within the EU, with licensing rights exceeding EUR 22.5 million and a global turnover of over EUR 80 million.

Companies incorporated under the laws of a non-EU country:

• They generate a net turnover exceeding EUR 450 million within the EU.
• They are the parent company of a group that meets the turnover threshold within the EU.
• They have entered into franchising or licensing agreements within the EU, with licensing rights exceeding EUR 22.5 million and an EU turnover of over EUR 80 million.

This directive establishes a corporate due diligence obligation, focusing on identifying and managing potential and actual negative impacts on human rights and the environment across a company’s operations, its subsidiaries, and relevant partners in its value chain. Furthermore, the directive mandates large companies to adopt and implement a climate transition plan, using best efforts to align with the 2050 climate neutrality goal of the Paris Agreement, as well as intermediate targets set by the European Climate Law.

• Fines: Member States must impose economic sanctions that are effective, proportionate, and dissuasive. These fines must be based on the company's global net turnover, with a maximum limit of no less than 5% of the previous year's global net turnover.
• Publication of Violations: If a company fails to comply with a financial penalty within the set deadline, a public statement must be issued, identifying the company responsible for the violation and the nature of the breach.
• Calculation Based on Consolidated Turnover: For companies that are part of a group, fines are calculated based on the consolidated turnover of the parent company.
• Publication of Decisions: Any decision imposing sanctions must be made public for at least five years and communicated to the European network of supervisory authorities.