Criminal Liability of Companies
Both within corporate organizations and in the practice of business activities, there is always the possibility that a director or employee may engage in an act or omission that constitutes conduct punishable as a crime.
When Can My Company Be Held Liable?
A commercial company can be held criminally liable in two scenarios:
- Crimes committed by legal representatives (de facto or de jure administrators, among others) or those who hold decision-making, organizational, and control powers, for the direct or indirect benefit of the company.
- Crimes committed by employees, for the benefit of the company, due to a lack of proper control over them—understood as a failure to fulfill the duties of supervision and oversight (compliance).
Thus, given who may commit crimes affecting the company, it is essential to remember that criminal liability requires a failure in corporate organization or a breach of the duty of control, which facilitated or encouraged the commission of the offense.
What Happens When a Company Is Convicted of a Crime?
If it is determined that the company must answer for the criminal actions of one of its administrators, managers, or employees, the penalties may include:
- Fines: This is the primary and mandatory penalty for legal entities, and it can be imposed: (i) in installments; (ii) in proportion to the damage caused.
- Prohibitive penalties: These are applied only in extreme cases. The most severe of these is dissolution.
How Can I Prevent This? – Criminal Compliance
A company may be exempt from criminal liability if, prior to the commission of the crime, it has effectively implemented organizational and management models that include appropriate monitoring and control measures to prevent crimes or significantly reduce the risk of their occurrence. This is achieved through the implementation of a criminal compliance plan (corporate compliance or compliance management system).
Minimum Content of a Compliance Program
To be exempt from criminal liability, the company must have implemented a model of organization and management capable of preventing and detecting potential future crimes committed using the company's resources or under its protection.
This compliance model must include, at a minimum:
- Identification of activities within which crimes that should be prevented may be committed.
- Establishment of protocols or procedures that define a “corporate will,” that is, guidelines for behavior in decision-making and execution.
- Creation of a disciplinary system to adequately sanction breaches of the model's measures.
- Deployment of financial resource management models designed to prevent the crimes to be avoided.
- Regular review of the model and its modification when new conduct arises that falls within the initial scope. Note: depending on the company's size, this requirement may vary.
Can My Company Be Liable for Any Crime?
The answer is no. Legal entities can only be held criminally liable for a limited number of crimes (numerus clausus). Below is a list (Spanish Penal Code, Article 31 bis 1):
- Illegal trafficking of human organs: Art. 156 bis
- Human trafficking: Art. 177 bis
- Crimes related to prostitution, sexual exploitation, and corruption of minors: Art. 189 bis
- Crimes against privacy, trespassing, and sexual exploitation of minors: Art. 197 quinquies
- Fraud and deception: Art. 251 bis
- Hindering enforcement of judgments: Art. 258 ter
- Insolvency crimes (asset disposition while insolvent, fraudulent creditor payments, accounting fraud): Art. 261 bis
- Cybercrimes and obstruction or disruption of computer systems: Art. 264 quáter
- Crimes related to intellectual and industrial property: Art. 288 in relation to Arts. 270–277
- Market and consumer crimes: Art. 288 in relation to Arts. 278 bis–286
- Business corruption: Art. 288 in relation to Arts. 286 bis–286 quáter
- Receiving and laundering of money: Art. 310 bis
- Illegal financing of political parties: Art. 318 bis.5
- Crimes against the Public Treasury and Social Security: Art. 310 bis
- Crimes against the rights of foreign citizens: Art. 318 bis.5
- Urban planning and land use offenses: Art. 319.4
- Crimes against natural resources and the environment: Art. 328
- Offenses related to nuclear energy and ionizing radiation: Art. 343
- Risk-related crimes involving explosives and other agents: Art. 348
- Public health offenses: Art. 366
- Drug trafficking: Art. 369 bis
- Counterfeiting currency: Art. 386.5
- Forgery of credit/debit cards and traveler’s checks: Art. 399 bis
- Bribery: Art. 427 bis
- Influence peddling: Art. 430
- Incitement to discrimination, hatred, or violence against groups: Art. 510 bis
- Terrorism-related crimes: Art. 576.5
In Conclusion, the possibility of a company facing criminal consequences is a serious and complex matter. If your company is currently undergoing criminal proceedings or you suspect illegal activities may be occurring, it is crucial to act proactively and seek legal advice. We invite you to schedule a consultation with us so we can provide accurate and strategic guidance tailored to your specific situation. Do not leave your company's integrity and future to chance—appropriate legal counsel is the first step toward safely navigating a compromised situation.
