Criminal liability of company officers

About

Managers, as persons responsible for decisions made in a company, may be subject to extensive liability, including criminal liability, in connection with abuse of their powers or failure to fulfill their duties.

Practice indicates that unlawful actions are increasingly being met with a swift response from law enforcement agencies, notified by regulators, shareholders, contractors and employees. These notifications concern the criminal liability of company officers and the liability of managers. Over the past 20 years, the number of established economic crimes has doubled, with an average of 80% of investigations involving the detection and prosecution of the perpetrator.

Liability of managers carries the risk of being convicted of fines, community sentence or even years of imprisonment. Conviction for certain offenses (including causing damage to trade, bribery in a managerial position, extortion of compensation, money laundering, harming a creditor) automatically triggers a ban on serving as a member of the company’s management board, supervisory board, audit committee or liquidator. In addition, for any act related to the criminal liability of company officers, the court may impose a ban on holding a certain position, practicing a certain profession or conducting a certain business activity.

Criminal liability of company officers is a huge risk associated with destabilization of the company’s work as a result of actions carried out by the authorities. Liability of managers also leads to image and financial losses, in particular, related to:

the risk of seizure of company assets and blocking of bank accounts;
the risk of conducting activities that destabilize the company’s operation (searches, detentions);
vacancy in an important position for the company due to loss of confidence in the employee or his detention on remand;
negative impact on employee morale;
loss of confidence of the public, shareholders or contractors;
consumer boycotts;
exclusion from prestigious organizations;
economic costs of crisis management.

The assistance we provide includes:

training and legal advice to minimize the risk of liability for managers, and legal assistance in any crisis situation involving suspected wrongdoing by a manager;
comprehensive training of managers;
creation of a system of compliance procedures and internal codes, internal audits;
representation in contacts with Polish and international supervisory authorities;
representation and assistance in crisis situations (searches, interrogations, arrests, presentation of charges, detention on remand);
representation before law enforcement agencies and courts;
acting as defense counsel for suspects and defendants;
acting as attorney for the victimized entity;
development of a litigation and communication strategy and full support in protecting the company’s image (we cooperate with reputable PR agencies);
assistance in obtaining support from relevant experts, organizations and institutions.

Our offer is addressed to:

board members of commercial companies;
shareholders and partners of commercial companies;
managerial staff;
persons subject to criminal liability of company officers;
entities harmed by the crimes of managers.

Criminal liability

Criminal law is the body of law that relates to crime.

Criminal liability is considered to determine whether a person will be charged and sentenced. There are two elements to criminal liability – the physical element and the mental element. These are generally referred to as committed the actus reus and the ‘mens rea’ (guilty mind).

Meaning of criminal liability: criminal liability typically falls on the person who committed the criminal act directly – however, this isn’t always the case. In some instances, the liability falls on those who were directly involved in the act too.

In most criminal cases, the prosecutor needs to prove that the defendant harboured mens rea (criminal intent). This essentially means that the court needs to prove that the defendant had the intent to commit a crime.

In civil cases, however, criminal intent is not required – this is because most civil actions involve allegations that the defendant harmed the plaintiff by means of negligence rather than unlawful actions.

Burden of proof is placed on the person who brings a claim into a dispute. It’s an obligation to show that they are correct, while the other party has no such burden and is presumed to be correct. The burden of proof requires a party to produce evidence to establish the truth of facts needed to satisfy all the required legal elements of the dispute.

How to Prevent Criminal Liability?

Effectively minimizing the risk of criminal liability for company officers requires implementing comprehensive preventive measures that focus on ensuring compliance with applicable legal regulations.

A fundamental step is the establishment and maintenance of effective internal control procedures and compliance programs that enable the identification and elimination of potential legal violations within the company’s operations. These measures should include developing internal policies and procedures that set clear standards of conduct and implementing monitoring systems to ensure adherence to regulations by employees and management alike.

Equally important is organizing regular training sessions for managerial staff to enhance their understanding of current legal requirements and practical operational standards. Such training should be tailored to the specific industry and take into account the risks associated with the company’s activities, enabling management to make informed decisions that comply with the law.
Moreover, effective oversight of subordinates is a critical component in preventing potential breaches—this involves not only monitoring employees’ actions but also ensuring they are adequately informed about their responsibilities and the consequences of potential missteps.

Collectively, these measures create a cohesive system of prevention that helps avoid situations leading to criminal liability for company officers while fostering a culture of compliance and accountability within the organization.

Any questions?