According to the penal code, in the case of a criminal offence, who is liable in the company?

There is often a tendency to believe that companies have no criminal liability for their actions. However, this is not the case. In fact, the Criminal Law contemplates a wide variety of offences that can be committed by this type of companies and which can lead to their managers being sent to prison. All of this falls under what is known as Economic Criminal Law or Corporate Criminal Law.

In this article we will try to explain to you, as simply and clearly as possible, which subjects are subject to the criminal liability of a company in the event of a crime.

Bases of the criminal liability of companies

The first thing to say is that everything related to this matter is covered by the regulation of the Criminal Liability of Legal Entities in Spain, the purpose of which is to determine and punish criminal offences committed by an employee or manager of the company in question.

According to the Criminal Code, commercial companies, business organisations, associations and foundations are subject to the regulation on Criminal Liability of Legal Entities. Only state-owned companies that provide services of general public or economic interest or that solely and exclusively carry out public policy are excluded.

What behaviours are susceptible to criminal liability?

Generally speaking, there are only two cases in which a legal person can be criminally convicted. Specifically, these are

1. Criminal conduct of employees, managers or employees that benefits the legal person on the basis of the legal person's failure to take the required and necessary control measures. A good example of this would be a company in whose factories toxic waste is generated and in which its workers, on their own initiative, do not take it to a suitable place for treatment.

2. Criminal behaviour of the administrators with the purpose of directly benefiting the legal person. To illustrate this, we can use as an example a company which, in order to pay less inheritance tax, conceals income of more than 120,000 euros.

Of course, we have only given a few examples above. However, the reality is that the law considers as criminal offences all actions that lead to competitive advantage, economic enrichment, improvement of market position or undermining of competition that are not legally provided for.

Penalties provided for in the criminal code

The penalties that society may face in the event of a criminal offence are very serious and varied. First of all, there are the fines, which can be in full or daily instalments and can be up to EUR 9 000 000. This will of course depend on the profit made or the damage caused as a result of the criminal offence.

The judge may also order the closure of the establishments, premises and activities linked to the company for a maximum period of 5 years, although in the most serious cases he may order the definitive closure. It can also disqualify the entity from obtaining public subsidies and aid or even automatically dissolve the legal entity.

To prevent this from happening, especially in the most serious cases, criminal lawyers usually recommend that the administrators make use of any of the four mitigating circumstances contemplated by the law. If they are the ones who report the offences before the police intervene, if they collaborate by providing evidence in the investigation, if they reduce or repair the damage caused by the offence or if they implement prevention programmes (complication) so that it does not happen again, the judge may not be so severe in the sentence.

Specific offences for which the legal person will be held liable

Spanish legislation has opted to specify specifically all those criminal offences that can be committed by legal persons. These are, in general terms, fraud and swindling, computer crimes and offences against industrial and intellectual property, as well as tax and social security offences. It also covers urban planning, bribery, money laundering and influence peddling.

Any other criminal offence committed by a legal person will entail civil liability for the latter and criminal liability for the specific perpetrators, as specified in the system used until 2010. In fact, these actions will appear in the Criminal Certificate of the subject in question from the moment in which there is a final judicial sentence.

What are Compliance or criminal risk prevention processes?

Previously, when talking about the mitigating factors by which legal persons could reduce the penalties they may have to face for committing a crime, we spoke of 'Compliance'. This concept refers to a series of processes that are responsible for detecting criminal risks within a given company. Based on this information, it is possible to establish new behavioural guidelines that reduce the risk of managers, employees, administrators or dependents carrying out actions that are considered criminal according to the Criminal Code and that have repercussions for the company.

In general, 'Compliance' is designed by criminal law firms. In this sense, they are fully customised as they are perfectly adapted to the structure and needs of each specific company. Undoubtedly, they have become indispensable tools for all those companies that have a workforce and an organisational structure, however small these may be.

In short, the latest legislative changes contemplate that it is the legal entities that must face, in most cases, the criminal actions typified by the Criminal Code carried out within the company whenever these result in an economic benefit for them or when they occur due to a lack of preventive measures. In all other cases, it will be the person in question who will have to face the corresponding sanctions derived from the offence, while the company will only be obliged to comply with its civil liability.

If you have any further questions, please contact us.