Punishability of legal persons, de facto managers and principals (directors)
Traditionally, criminal law aims to punish evil human conduct. The founder of our penal code had in particular the 'willed muscle movement' in mind. Meanwhile, the importance of peer pressure and power relations has penetrated the law. Also, society has become a lot more complex.
This raises questions about other forms of criminal liability. Can a day laborer still be held responsible for a discharge he did at the behest of his manager? Is the intern at a bank responsible for money laundering if he or she accepts black money in accordance with internal policy? Or is it more appropriate to look at the manager or the company itself in such situations? And when then is the company or the managerial staff criminally liable?
Under Dutch law, not only natural persons, but also legal persons, principals and actual managers can commit criminal offenses.
What is a legal entity within criminal law?
Criminal law uses its own meaning of the term "legal person. Confusingly, this includes unincorporated forms of business, such as an unincorporated corporation or a partnership.
When is a legal entity criminally liable?
According to established case law of the Supreme Court, a legal person can be regarded as a perpetrator of a criminal offense if the conduct in question "can reasonably be attributed to him. The question when a (prohibited) conduct can reasonably be attributed depends on the concrete circumstances of the case, which includes the nature of the (prohibited) conduct. An important point of reference for the attribution is the question of whether the conduct took place or was performed "in the sphere of the legal person. This will be the case, among others, when it concerns:
to acts or omissions of any person employed either by virtue of employment or otherwise on behalf of the legal entity;
the conduct is in the ordinary course of business of the legal entity;
the conduct served the legal entity; and
the legal entity had control over whether or not the conduct would occur. This includes failure to exercise the care that could reasonably be expected of the legal entity to prevent the act.
If one or more of these landmarks are met, that is an indication that the conduct can be attributed to the legal entity. However, it remains difficult (and therefore uncertain) whether that is the case. The first landmark by itself will not (easily) suffice. By way of illustration, it is also sufficient if an employee prejudices his or her employer - for example, he or she takes a bite out of the till. Of course, the legal entity will not then also be considered a thief. It is somewhat different with the other handles, partly because they usually only apply if one or more other handles are met at the same time. In those situations, the legal entity is therefore more likely to be held liable for the conduct.
If the offense of which the legal person is suspected requires "intent," it will also be necessary to determine whether the legal person acted "willfully. Determining the intent of a legal entity can be done in several ways. Sometimes a natural person's intent can be imputed to a legal entity, but that is not a necessary condition. The intent of a legal person can also be inferred from the legal person's policies or the actual course of events within the legal person under circumstances.
You can read an example of criminal liability of a legal entity here (ECLI:NL:HR:2018:1675), in which a company was held criminally liable for forgery by widely billing dab as if it were school.
When is a director, principal or a de facto manager criminally liable?
If a legal entity has committed a criminal offense, then they are also liable for it:
the principals; and
the actual executives.
'Principals' means those who have ordered a particular conduct, within the ordinary meaning of the word.
The concept of actual leadership is somewhat broader. Actual leadership will often consist of active and effective behavior that falls within the ordinary meaning of that term. This may include (actively) implementing (wrong) policies or setting a (wrong) example to subordinates. Under circumstances, a de facto manager may also have a more passive role and still be criminally liable. This may be particularly the case if the person in question was authorized and reasonably required to take measures to prevent or end prohibited conduct and he or she fails to take such measures.
The de facto manager is only liable if he or she also intended the prohibited conduct. The lower limit for this is that the de facto manager accepts the substantial probability that the prohibited conduct will occur.
Factual principals and principals will often be directors of a company, but being a director alone is not sufficient. The reverse also applies: it is also conceivable that someone does not hold a formal management position but is nevertheless criminally liable as a de facto manager.
Assistance in a criminal case
Are you or company being prosecuted of a criminal offense? Or are you in need of advice? Then it is important to engage specialized legal assistance at an early stage.
Certainly there is much to be gained in the prosecution of corporations. Many companies prefer a transaction to (public) proceedings, and the Public Prosecution Service is generally more inclined to settle with companies than with directors. Whether the public prosecutor is willing to settle depends, of course, on all the circumstances of the case. Factors that may come into play - according to their own policies include:
the measures taken or to be taken for prevention or termination;
defendant's role in uncovering the crimes; and
compensation for any damages or willingness to do so.
'Principals' means those who have ordered a particular conduct, within the ordinary meaning of the word.
conducting (or having conducted) internal investigations into the prohibited conduct;
adjustment of policies;
dismissal of affected personnel;
Negotiate compensation from injured person(s); and/or
report themselves to the prosecutor's office.
Whether or not to take these actions (or have them taken) requires strategic consideration. At Van Meekren Advocatuur we have many years of experience. Like no other we can assist you or your company in this matter.
Should settlement negotiations fail to produce the desired result, Van Meekren Advocatuur can also represent your or your company's interests in court.
Learn more
Are you looking for a lawyer for a legal entity? Or are you looking for a lawyer for de facto managers and principals? Our contact information can be found here.
Van Meekren Advocatuur litigates throughout the Netherlands, including at the courts in Alkmaar, Almelo, Amsterdam, Arnhem, Assen, Breda , Dordrecht, The Hague, Groningen, Haarlem, 's-Hertogenbosch, Leeuwarden, Lelystad, Maastricht, Middelburg, Roermond, Rotterdam, Utrecht, Zutphen and Zwolle, the courts in Amsterdam, Arnhem, The Hague, 's-Hertogenbosch and Leeuwarden, the Supreme Court of the Netherlands in The Hague. Van Meekren Advocatuur also litigates at the European Court of Human Rights in Strasbourg.