Which legal entities face legal responsibilities in Spain?

  • Until the enactment of the Organic Law 5/2010, the reform of the Spanish Criminal Code (SCC) of 22nd June 2010, the principle of “societas delinquere non potest” ruled.
  • The update of said “Law” has established those circumstances, including extenuating and mitigating circumstances, under which legal persons subject to private law (mercantile companies) may be held criminally responsible.

The provisions on the criminal responsibility of legal persons will not apply to the State, Territorial Public Administrations, Regulatory Authorities, Public Business Agencies and Entities, to International Public Law Organizations, or any others that exercise public administrative powers or public powers of authority.

¿Under what premises may legal persons bear penal responsibility?

“Whoever acts as de facto or de jure administrator of a legal person, or on behalf or in legal or voluntary representation or another, shall be held personally accountable, even though he does not fulfil the conditions, qualities or relationship that the relevant definition of felony or misdemeanour requires to be an active subject thereof, if such circumstances concur in the entity or person in whose name or on behalf of who he so acts”. (art 31 SCC)

Legal persons will bear legal liability in the following cases:

  • For the felonies committed in their name or on their behalf, and to their benefit, by their legal representatives and de facto or de jure administrators. (art 31 bis 1.a SCC)
  • In the same cases, legal persons shall also be criminally accountable for the felonies committed when perpetrating the corporate activities and on account and to the advantage, thereof, who, these being committed by the natural persons mentioned in the preceding Section, were able to perpetrate the acts as due control was not exercised over them in view of the specific circumstances of the case. (art 31 bis 1.b SCC)

What are the penalties applicable to legal persons?

Penalties applicable, that are deemed serious (art 33.7 SCC), are as follows:

  • Fines
  • Dissolution of the legal person.
  • Suspension of its activities.
  • Closure of its premises and establishments.
  • Prohibition to carry out the activities through which it has committed, favoured or concealed the felony.
  • Barring from obtaining public subsidies and aid, to enter into contracts with the public sector, and to enjoy tax or Social Security benefits and incentives.
  • Judicial intervention.

How to avoid accusation and sentence?

If the crime was committed under the name of a company or by its legal representatives or those who, acting individually or as constituents of an organ of the legal person, are authorized to make decisions on its behalf, the legal person shall be exempted from the legal responsibility if the following conditions are met (art 31 bis.2 SCC):

The administrative organ has adopted and executed efficiently, before the commission of the crime, organisation and management models which include supervision measures and control suitable for preventing crimes of the same kind or to significantly reduce the risk of committing them.

A.- (Implementation of a crime prevention programme = Compliance Program)

The supervision, operation and compliance of the implemented prevention model has been entrusted to an organ of a legal person with autonomous power of initiative and control or which has been legally bestowed with the functions of supervising the efficiency of the internal controls of legal persons.

B.- (Institution of a Supervisory Organ = Compliance Officer)

The individual perpetrators have committed a crime fraudulently avoiding the organization and prevention models.

It will be considered to be exculpatory only if it is proven that the individual agent violated the controls previously set by the company.

No insufficient omission or exercise of its functions of supervision, monitoring and control by the organ bestowed with these functions has occurred.

C.- (Collecting evidence of Compliance)

If a crime was committed by people other than those representing the company (meaning employees or workers), the legal person will be exempted from liabilities if, before the commission of the crime, it has effectively adopted and executed an organization and management model that may be appropriate for preventing crimes with the characteristics of the committed crime or for significantly reducing the results of committing it.

In legal persons of small dimensions (those authorised to submit an Abridged Profit and Loss Account), the management body will be able to directly undertake supervising functions regarding the operation of and compliance with the prevention models (art 31 bis.3 SCC).

What are the requirements to be met by a Crime Prevention Program (Compliance Program)

The requirements to be met by a Compliance Program are as follows (art 31 bis.5 SCC):

  • It will identify activities in which crimes may be committed: “Risk maps”.
  • It will establish protocols and procedures that define the formation process of the will of legal persons’: “Politics” / “Protocol of action”.
  • It will dispose of management models of financial resources appropriate for implementing the Prevention Plan: “Financial Resources”.
  • It will enforce the obligation to inform the body in charge of possible risks and infringements: “Claims Channel”.
  • It will establish a disciplinary system that penalizes infringements (**): “Disciplinary System”.
  • It will conduct a regular verification of the model and its possible modification when relevant infringements become apparent or when changes occur in the organisation: “Periodic Review System”.

What stages are necessary for elaborating a Crime Prevention Program? (Compliance Program)

Understanding the current situation and drafting of an action programme

  • Understanding the current situation.
    • Identifying the business process, procedures and controls.
    • Risk analysis: Creating a Risk Map.
    • A programme for the establishment of a management model for crime prevention
  • Documentation on procedures and design of controls.
    • Documentation on procedures and controls.
    • Documentation on company policy.
    • Design of controls that mitigate the identified risks.
    • Design of monitoring systems fir the controls.
    • Drafting a Communication and Training Plan*.
  •  Implementation and assessment of the programme
    • Implementation and launching the control programme.
    • Assessment of the programme functioning.
  • Periodic monitoring and follow-up
    • Periodical controls.
    • Introducing improvements to the Crime Prevention System.

What activities carried out following the commission of a crime by its legal representatives can be considered in order to extenuate the criminal liabilities of legal persons? (art 31 quater)

  • Confessing the infringement to the authorities before knowing of the judicial proceeding against the legal person.
  • Having collaborated in investigating the crime, providing new and decisive evidence.
  • Proceeding to repair or reduce the damage caused by the crime at any point of the procedure, but before the oral trial.
  • Having established, before the oral trial, effective measures to prevent and discover crimes, which could be committed in the future.

What requirements should be met and what are the functions to be carried out by the “Compliance Officer”?

It consists of an organ forming a part of the legal person with powers of autonomy and own initiative or which has been legally entrusted the supervision of its internal monitoring.

The Compliance Officer undertakes a key responsibility from the criminal law perspective due to his role as “expert” and his independence (based on the autonomy of his activity). He acts as a projection of the duty of control of the managers of the company, and under their delegation. Thus, he must keep strict documentary support of the compliance of his duties, including:

  • The implementation of an ongoing analysis of the risks of non-compliance (existing situations and any others that could occur).
  • The risk analysis will include the verification of controls established in order to mitigate (prevent) risks of non-compliance from occurring and, to do this,
  • Documentation/evidence of control compliance must be gathered (if possible, with a “time stamp” and a guarantee of integrity). This ensures its integrity and it will provide proof of the moment when it was obtained.
  • Evidence obtained in such a way is to be conserved and safeguarded in a secure place.

The Compliance Officer must 1) be ready to engage in his activities under his own initiative; 2) be guaranteed access to all staff and registers of the company and 3) have the possibility to communicate directly with the administration organ for the purpose of informing not only the occurrence of any irregularities, but also the results of his activities.

What advantages does designing and implementing a Compliance Program bring to our company?

  • It is a further factor of prestige to improve the company’s reputation as an asset, projecting a transparent image of the internal organization and control.
  • Having a compliance program in place may be a precondition for accessing the tender access the contest of certain projects, public and private.
  • It reduces the risk of committing corporate crimes.
  • It provides a priori assessment of the criminal risks the company may assume.
  • Conducting verifications/monitoring controls that mitigate risks, as well as the presence of a reporting channel, means that the irregularities that may affect a company may be detected in advance, otherwise they may have gone unnoticed.
  • It means the exemption/mitigation of criminal liability.
  • The presence of an Intervention Protocol in the company, which has been communicated, informed and deployed at all levels, allows a faster and more organized reaction when resolving an incident.
  • Improve the organization efficiency and effectiveness in every aspect through the reinforcement of the system of Internal Control and Compliance.
  • The mere existence of a Criminal Compliance Plan and the formalization of the operational and administrative business processes imply a significant progress in the corporate culture of the company.
  • Projects more confidence to interested groups.

Adopting a Compliance Program will make us more effective and efficient in our business, gaining more transparency, projecting more trust in the marketplace and, furthermore, by all means, we will comply with the new Penal Code.

 

 

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

2nd October 2015