A new law recently introduced in Spain on December 23, 2010 has gone a long way in creating greater transparency and accountability on the part of companies and other legal entities. This law has established that a legal person (for example, a limited liability company) can now be considered criminally liable and duly accountable for it. This new figure renews a tradition of many centuries in which it was considered that only people could be criminally responsible. The new law establishes that legal persons can now be held criminally liable in the following cases:
1) By themselves or in their place by the administrators who represent them
2) Any other person who, on behalf of or depending on the administrators of the company, has carried out a criminal act in relation to the activities of the company.
However, the criminal liability of a company does not in any way exclude the criminal liability of the people who are behind these activities and who ordered them. The concept of criminal liability of directors or any other legal representative of the company has existed for a long time and covers areas such as fraud, bribery, private bribery (new figure introduced in the same law), money laundering, responsibility before the tax administration or social security, against the environment, urban planning or against the rights of workers.
The sanctions provided for in the new law can be serious and range from the total dissolution of the company or legal person, the temporary suspension of its activities, the temporary closure of some or all of the premises in the name of the company, the prohibition of entering into contracts with the public administration or even judicial intervention, as well as financial sanctions.
However, it should be remembered that companies can avoid being held criminally liable if they are deemed to have exercised a sufficient degree of control (due diligence or corporate compliance). For this reason, since the entry into force of the new law, many companies have implemented corporate control and compliance systems with the aim of avoiding future claims for criminal negligence. Previously only introduced by larger companies or multinationals, these systems are now finding wider acceptance by small and medium-sized businesses. These new measures are expected to improve consumer confidence in an environment of distrust towards the practices of many corporate entities.