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My business is subject to criminal prosecution – What happens now?

Any company, as defined under the Companies Act 2006 or any preceding law, can face a corporate prosecution where it has committed an offence.

Unincorporated businesses, such as partnerships and organisations, can also be prosecuted where criminal liability can be established.

In the eyes of the law, a business is effectively treated as a ‘legal person’ that can commit crimes. This includes where it is held criminally liable for illegal acts committed by its directors, employees or any other individuals acting on its behalf.

Corporate criminal liability

Making businesses criminally liable for the actions of the individuals within them, such as directors, officers, employees or shareholders, is not meant to be seen as a substitute for the prosecution of each individual.

Instead, criminal prosecution of a company, business or organisation is intended to have a deterrent effect on other corporate entities and thereby encourage ethical business practices and protect the public and workers.

When deciding on whom to prosecute – business vs individual – the courts need to consider this and also the actions of the company where the criminal conduct is for corporate gain.

In many cases, the prosecution will be brought against both an individual and the organisation – often at the same time.

How might your business be prosecuted?

There are three ways that a corporate entity can be prosecuted for a criminal offence in England and Wales, where an individual acting on its behalf has acted illegally.

These are:

Through vicarious liability, which is generally used for regulatory offences where laws impose liability upon employers to ensure compliance.
Through non-vicarious liability, as defined by the identification doctrine, which is when someone who can be said to be the “directing mind and will (DMW)” of the organisation commits the offence.
Where Parliament has created a specific criminal offence for corporates, such as the Criminal Finances Act 2017.

Usually, a company will not be held liable for offences that cannot be committed by the DMW of a company within the scope of their regular employment, for example, domestic abuse.

How will the company be punished?

To prosecute a company, the offence must be capable of being punishable with a fine, as it would not be possible to imprison a company or statutory corporation.

The level of the fine or penalty set by the courts will vary with each offence and could be affected by mitigating circumstances that might reduce the fine.

Are you concerned that your business may be subject to prosecution? Speak to our team today.

Gurjit Singh

Associate – Criminal Department

As a member of the Criminal Litigation Accreditation Scheme (CLAS), holder of the Higher Rights of Audience (HRA) qualification and duty solicitor for the Coventry area, I regularly represent clients in a wide range of criminal cases, including road traffic offences.