Corporate criminal liability

Generally, when we think of criminal liability arising from the commission of crimes, we all think of it as being the property of natural persons. However, since the reform of the Criminal Code in 2010, legal persons are also liable.

However, the criminal liability of legal persons is a more complex concept than that of natural persons. Therefore, we would like to explain it in detail here.

What is meant by criminal liability of legal persons?

Criminal liability is the legal consequence of committing an offence under the Criminal Code. The difference in this case is that it does not fall on a private individual, but on a company or other legal entity.

This would be the case, for example, of associations, entities, foundations or organisations in general. The criminal liability of companies arises when the offence in question has been committed by one of their employees or legal representatives.

Those responsible for the offences of legal persons are usually the administrators, either as perpetrators or as participants in them, provided that they are committed in the exercise of their office. In this sense, it must be taken into account that these professionals have duties of compliance and control over the organisation. Moreover, they may be carried out by commission or omission.

Requirements for offences of the legal person

According to the provisions of Article 31 bis of the Criminal Code, a series of requirements must be met for legal persons to be criminally liable. These are as follows:

• The person committing the offence must be recognised as a legal person. In other words, it must be included in the register of private legal persons provided for in the Civil Code and Commercial Law. The only exception is the State itself and the rest of the territorial public administrations, as well as government agencies, regulatory bodies or any other entity with public sovereign or administrative powers.
• The offence committed is expressly subject to criminal liability of legal persons under the Criminal Code.
• The person who committed the offence is a legal representative or a person authorised to take decisions on behalf of the company. His or her immediate superiors may also be liable.

Mitigating circumstances for legal persons

However, the Criminal Code also provides for a number of specific mitigating circumstances related to the criminal liability of companies and other legal persons. In particular, they may benefit from reduced sentences when:

• They confess to the commission of the offence before judicial proceedings begin.
• They repair or reduce the damage caused by the commission of the offence before the start of the trial.
• Cooperate with the investigating authorities by providing hidden evidence that may be key to establishing the criminal responsibility of those who have committed the offences.
• Implement effective measures to prevent and uncover crimes within the company for the future.

The exemption of legal persons from criminal liability

The Criminal Code not only includes mitigating factors for the criminal liability of legal persons, but also provides for their complete exemption in certain cases. In the event that the criminal offence was committed by persons authorised to take decisions or by legal representatives of the entity, this will occur if:

• The organisation put in place effective monitoring and control measures to prevent offences of the same nature which significantly reduced the risk.
• The perpetrators fraudulently circumvented these prevention models.
• The organisation entrusted the prevention work to a third party or a body with autonomous powers.
• There has been no insufficient exercise of control and supervision.
• There has been no omission of the duties to implement such prevention models.

But what if the offence is committed by a person subject to the authority of someone who can take decisions on behalf of the legal person or its legal representatives? The same applies. Provided that the company has taken appropriate measures to prevent them, the Criminal Code provides for the possibility of exemption from criminal liability.

This is everything you need to know about the criminal liability of legal persons. A relatively new concept that was introduced into the Criminal Code just over a decade ago. In any case, if you still have any doubts about it or if you would like to enjoy personalised advice, you can make an online consultation with a specialist lawyer or visit us at any of our law firms in Madrid.