Criminal liability of a member of a governing body and criminal liability of a legal person

Basic description and conditions of criminal liability of legal persons and members of the governing body.

Czech criminal law regulates criminal liability of natural persons and, in some cases, legal persons for criminal offences. If the basic constituent elements of a criminal offence are fulfilled by actions of a company’s governing body, individual natural persons who participated in such decision fulfilling the basic constituent elements of a criminal offence are liable for this offence, and the legal entity itself may be equally liable. First of all, it is necessary to establish the specific duties the business corporation’s governing body.

Obligations may be imposed only on the basis of the law and the basic legal framework determining the rights and obligations of members of governing bodies is set out in the Civil Code and the Business Corporations Act. Therefore, when determining the criminal liability of a company’s governing body, the first question is to establish the statutory obligations of the members of the governing body.

In practice, it is usual that the governing body does not exercise its powers alone, but through subordinates, who prepare documents for the members of the governing body and act according to their instructions. This results in a rather unclear situation, because the governing body of the business corporation acts externally on behalf of the business corporation, but the extent of its actual participation in such actions may vary.

A contract prepared from start to finish by a subordinate that is merely signed by a member of the governing body may be a good example. When a criminal offence is committed, it is necessary to examine in detail the subjective aspect of the offence, i.e. to sufficiently prove at least the possible intent to commit the offence, which must include all the elements of the offence (unless, of course, it is a negligent offence).

In connection with issues related to criminal liability of governing bodies of commercial corporations, it should be noted that the Czech legal system has recognised the notion of criminal liability for legal persons since 2012.

According to legal doctrine, a legal person does not possess the will and therefore also the ability to act directly in law, and therefore cannot be attributed culpability and the resulting subjective aspect of criminal liability. For this reason, the Act on Criminal Liability of Legal Persons introduces so-called imputability, on the basis of which the conduct of a natural person can be attributed to a certain legal person if the statutory prerequisites are met, and thus the existence of criminal liability of that legal person can be inferred. An imputable act is deemed to exist, inter alia, where the governing body or a member of the governing body or another person who is authorised to act on behalf of or for the legal person has acted. Such natural person must act on behalf of the legal person, in the interest of the legal person or in the course of the legal person’s business.

The attribution of a legal act of a natural person to a legal person does not extinguish the criminal liability of that natural person. The opposite is true. A consequence of the principle of simultaneous independent criminal liability of natural persons and legal entities is the fact that both the natural person and the legal entity to which the conduct is attributed may be convicted for a specific criminal act.

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