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Criminal Liability of Legal Entities

Criminal Liability of Legal Entities

  • Ana Berta Mazuze & Vanessa Pires • MDR Advogados

The criminal liability of legal persons was one of the innovative principles introduced by the Criminal Code approved by Law No. 35/2014 of December 31.

Although the liability of legal persons was already enshrined in several regulations, the introduction in the Criminal Code represented a significant step in the normative development of this matter. On the other hand, this was necessary given the current reality that legal persons are vehicles for carrying out criminal activities such as money laundering, corruption
among others.

This also fits in with what is a global trend, bearing in mind that other countries, such as Portugal, also have a regime of criminal liability for legal persons. Although the provision for the criminal liability of legal persons represented a great advance, Law No. 35/2014 of December 31 had fallen short in regulating the institute under analysis, presenting many gaps that could hinder its applicability. By way of example, the legislator did not spell out which legal persons could be subject to the criminal offense, and there are legal persons of various natures.

The Penal Code approved through Law No. 35/2014 of December 31 “Old Penal Code” was repealed by Law No. 24/2019 of December 24 “New Penal Code”. The New Criminal Code also enshrines the regime, however, with some significant differences. Article 30(1) of the Old Penal Code provides that legal persons and mere de facto associations are liable for the offenses provided for in the Code, when committed by the holders of their organs or representatives in their name and interest, responsibility being excluded in cases where the agent has acted against express orders or instructions from those in authority.

The New Criminal Code, in its article 30 no. 1, also provides for the liability of legal persons but, unlike the Old Criminal Code, the article excludes from its scope of application the State, legal persons in the exercise of prerogatives of public power and public international law organizations. Under paragraph 2, the concept of legal persons in the exercise of prerogative of public power includes corporate public entities, public service concessionaires, regardless of their ownership, public institutes and others so defined by law.

Like the Old Penal Code, the New Penal Code does not determine which crimes can be charged to legal persons

Also in the scope of application, the New Criminal Code provides that legal persons are criminally liable for acts committed by those acting under the authority of those in a managerial position. Another change that stands out is the liability of legal persons in case of merger and demerger.

Article 31 provides that, in case of spin-off and merger, the following will be held liable for the crime

(i) the legal person or similar entity into which the merger has taken place; and

(ii) the legal persons or equivalent entities that resulted from the spin-off.

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On the other hand, the Code provides for the extension of liability to the members of the management body, who are subsidiarily liable for the payment of the fines and compensation in which the legal person is convicted, regarding crimes: (i) practiced during the period of their office, without their express opposition; (ii) practiced previously, when the final decision to apply them has been notified during the period of their office and the lack of payment is attributable to them.

In a comparative analysis, we can see that the New Criminal Code fills in the gaps in the Old Criminal Code, clearly listing the entities that cannot be held liable and regulating important aspects, such as joint and several liability in cases of conviction in fines and damages, as well as liability in the event of vicissitudes in the legal persons in question.

However, similar to the Old Penal Code, the New Penal Code does not determine which crimes can be attributed to legal persons, ruling out from the outset those crimes whose typification presupposes their exclusive occurrence by natural persons. However, it is possible to list several crimes for which legal persons can be held criminally responsible, such as bankruptcy, insolvency, pollution, aiding illegal immigration, corruption and document forgery, among others,
among others.

The changes introduced in the New Penal Code represent a signature development. However, there are still challenges that need to be faced at the legislative level in order to make the institute under analysis more effective, with a view to providing for important aspects such as accessory penalties, which may include disqualification from contracting with the state or public companies, or from receiving benefits or incentives, prohibition from exercising functions, suspension from exercising functions, confiscation of assets and dissolution.

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