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Free «Corporate & Organizational Criminal Liability» Essay Sample


Corporations are subject to criminal code law. The criminal code law was amended to modernize the law with the view of sentencing corporations and initiating criminal liability of corporations. A corporation can be found guilty of a crime if it commits a prohibited act while in a necessary state of mind. The directors and officials of a corporation can be convicted for the acts of crime. This essay seeks to discuss corporate criminal liability matters in relation to business concerns.

Criminal liability of corporations

Section 2 of the criminal code provides that societies, companies and corporate bodies are subject to criminal law. However, the determination on whether a prohibited act has been committed by a corporate body and whether the corporate had the necessary state of mind has proved to be more complicated that in simply criminal law. This is simply because corporate act on behalf of other stake holders such as directors, agents and employees. It is important to note that a corporate can be found to be guilty of a crime if the ‘’directing mind in the company commits the prohibited act. The greatest challenge lies on determining who the ‘’directing person’’ is. The directing person is the person who commits the prohibited act on behalf of the company. The directing person must therefore be a person in authority or a person who simply has the mandate or authority to manage particular affairs of the corporate business. Under the current law, the directors and officers of a corporation can be convicted of prohibited acts committed by the corporate business. This simply means that they will be held responsible of the crimes committed under the criminal code.



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The amendments on the criminal code make corporations and organizations liable for criminal actions committed by senior officers. This is because they are the over seers of the daily activities of the organization or corporation. In cases where the senior officers are aware of the crimes being committed in the organization but do not take action against such offences, they are liable under the criminal code. The criminal code also applies when the actions of the senior officers. It is also important to note that currently there is no specific limit set in terms of fines charged to organizations.

There exists tension between the corporate and criminal law in relation to corporate & organizational criminal liability. This is because criminal law tries to exact retribution from different corporate entities, express acts of moral condemnation which takes place within the organizations and impose reforms which are structural in nature in order to prevent a repeat of the prohibited acts in the future. On the other hand, corporations find it very difficult to impose criminal liability in an entity level without invoking or affecting responses from the employees and the stake holders. It is important to note that innocent employees and stake holders are not responsible and thus argue that they should not be blamed. This critique has been responded to by the criminal liability law which states that criminal liability is only valuable if the shareholders played a greater role in the management of the corporation and organization. However, the big question is ‘’ what role should the share holders play in the management of a corporation that is held publicly?’’

The basis of liability

Corporate and organizational criminal liability is established under the legal system concept. This means that every country has to address all the fundamental issues which are related to the legal design. The best realistic approach that would be effective in making the organizations and corporations accountable is the exploration of the structure and decision making process of the company and adopting a degree of innovation in defining individual elements and human culpability.  This simply means that there is a link between the management decisions and the criminal act in every corporate entity.

Law theories

Identification theories (Respondent superior)

The corporate and organization criminal liability is currently in operation but is subject to change under consideration in many countries. It focuses on the ‘’directing mind’’ actions of corporate persons in order to determine who is liable for the same. The identification theory narrows the liability on the corporation liability which is responsible fro authority over corporate matters and the decision making process. However, this theory is not sufficient to establish which particular agent of employee acted criminally. This theory has received much criticism on the limitation of the applications on the same. Thos is because it is limited to key managers who are responsible for corporate policy making and committed the offence. This theory is also limited because it can only address limited parts of large corporate organizations.

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Vicarious liability

This liability has been followed by some states but has been rejected by most states and countries. The vicarious liability is one of the modifications which are used in the identification theory in order to improve the usefulness as applied to Modern Corporation. However, most states reject the vicarious liability because it distorts the concept of fault. Nevertheless, this liability represents an attempt to link individual actions of employees to the corporate personality of the same.

New legislative approach

The new legislative approach is an approach that focuses on the ‘’ corporate killing’’ approach. This approach is bases on a special offence that broadly corresponds with the corporate killing from gross carelessness, corporate conduct which can be reasonably expected, an offence that is not obvious and an offence that causes the death of a person. In this case, management failure is used to means corporate failure. It applies to direct relationship between the environmental, organization and corporate policy in order to assign the liability.

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Corporate culture

The corporate liability Act attributes corporate bodies to fault and authorizes the commission of the offence. This authorization is set out in section 12.3 (2) of the criminal code Act. It helps to prove that the board of directors from the corporate bodies have intentionally, recklessly and knowingly expressed the authorized conduct, that the senior agents have recklessly, knowingly and intentionally in relevant conduct of the same, that the corporate culture exists, is tolerated and accepted within the corporate body and that the corporate body has failed to maintain and create required compliance by the corporate culture within the relevant provisions. This simply means that criminal liability can be attributed to the corporation if they prove that all senior officials preformed relevant conduct at a requisite degree of intent and that the requisite degree is carried out through the analysis of the corporate culture. Corporate attitude is defined as an act, course of conduct, policy or an attitude. The criminal code Act expects the courts to explore and probe which agent, officer or employee might have committed the offence. It is important to note that this approach does not require a condition precedent of individual responsibility related to imposing liability of an offence involves intention.  Corporate culture is a very unique model which represents and emphasizes a collective form of embodied responsibility in the corporation. This means that liability could shift back to a particular employee in the corporation unless reasonable grounds show that the actions of the particular employee were permitted.

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Section 12.4(1) of the criminal liability Act states that the test carried out on a natural person and corporate body are similar. The justice human rights standing committee, refers to the subject matter that refers to corporate culture alternative formulation. Section 467.3 (2) proposes that where reasonable grounds show that the omission or the prohibited act was committed on behalf of the corporation , indirectly or directly by an independent contractor or employees. It also proposes that there should be encouragement of act or omission tolerance by established practices or policies in order to manage a corporation that is aware of the acts or omissions. The last proposal on the same is that corporation management should be allowed to develop a common culture attitude amongst all their employees. The employees should also be encouraged to tolerate, ignore or condone the corporation’s acts or omission. The provision in this Act requires a non compliance belief on the corporate culture approach which is ignored, condoned and tolerated by the corporation.

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Other approaches

Reactive corporate fault

Reactive corporate fault is an argument that undermines corporate delinquency which can be viewed as gross negligence or negligent behavior in the context of a criminal law. This model or approach questions the existence of a combination of remedy measures which are taken by the corporation. It also represents a traditional approach departure to the prospects of a criminal law. In this way, the corporation or organization is required to address and comply with the issues related to criminal law objectives.

Specific corporate law offences

 Specific corporate law offences proposes a creation of a ‘’corporate killing offence. In this case, criminal liability of the corporation is customized or addressed to certain types of offences such as man slaughter. The specialized offences provide certainty and clarity in the law applications in order to target serious behavior. The new proposed section 467.5 of the criminal liability Act states that all the corporations which permit or which fails to provide safe working conditions by taking reasonable steps are liable to the offences . The offenders can be convicted to a fine of not less than $100,000 for every working day that was unsafe. However, this approach focuses on dangerous situations and thus regulatory conditions must exist on the same. The breach of the statutory obligation is an offence that is punishable.

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Punishment, remedial orders and corporate compliance

It is important to note that criminal law penalties can be envisaged on the structure and offences committed by organizations and corporations. The efforts on law reform must therefore address the objectives which are related to public policy. Section 735.1 of the criminal code Act specifies that every corporation found liable or convicted of an offence must be fined except if it is otherwise provided by a certain section of the law. In May 2000 proposals, corporate killing fines were initiated and a remedy scheme of action reinforced. In section 735 .5 (1) of the criminal liability Act states that if a corporation is convicted of an offence or corporate killings, which is subject to subsection (2) it should take steps in such a time that the specified order in question appears before the court and has caused death or resulted to failure. It also proposes that every order should be made on the prosecution application and specifies the proposal order terms which is made and considered by the court as appropriate adduced evidence in relation to prosecution matters on the corporation’s behalf.

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The proposals on the enforcement orders are used in many different enforcement bodies in relation to health and safety of the work place. Where the court issues a separate order on the corporate killing prosecution, corporate bodies are instructed to ensure that there is compliance of referred matters where necessary. This is a very effective approach that entails corporate structure investigations, probations orders, fines and restitution orders. A complaint [program will not only detect misconduct but also provide early warnings of criminal violations.

Liability of directors, managers and employees

The corporation’s directors, agents and officials are liable to the criminal code offences that they commit personally. Section 21 – 23 of the criminal code Act states that director’s officials and agents may be found criminally liable of an offence. The director of agent who authorized the offence or omission is party of guilty of the offence. It is important o note that the corporation directors, officers and agents are liable of the offences under section 467.3 if the director authorized the offence, if the director ‘’ought to have known’’ about the offence committed in the corporation. In respect to this, the presumption of innocence under the charter of rights is of importance in relation to the attribution of liability of the same. The greatest challenge comes from determining the extent by which the liability from the criminal code should be specified on the directors,, managers and agents of the corporation in relation to the corporate criminal liability.

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A corporation is a creature of statutes which include corporate bodies and business organizations. Criminal liability is a common law by reason which generally identifies managing directors, board of directors, or any other employee with executive authority of the corporation. Corporate bodies are required to be incorporated under the law commission and are termed as a corporate body. Legal entities apply to the scope of entities on the corporate criminal liability.


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