CORPORATE CRIMINAL LIABILITY

Corporations are as much part of our society as any other social institution. Corporations represent a distinct and powerful force at regional, national and global levels and they wield enormous economic/financial powers. Besides governments and governmental agencies, it is the corporations that are the more and more effective agents of action in our society. The multitude of roles the corporations play in the present day human life have been necessitated by the demands of the society, as it kept on ‘developing’. The development of the society, at various points of time, has had a direct influence on the structure and functions of the corporation. This had led to an ever increasing demand for the law to recognize the change and suit its applications, accordingly. Over the last few decades nature and form of a corporate sector has grown complex. In last two decades of 20th century, we saw globalization and privatization of every type of business entities all over the world and this globalization further paved the way for “Global Village”, which considerably made the changes in the form of business organization.

Corporate criminal liability has been an important issue on a legal agenda for a long time. Corporations play a significant role not only in creating and managing business but also in common lives of most people. That is why most modern criminal law systems foresee the possibility to hold the corporation criminally liable for the perpetration of a criminal offence. The doctrine of corporate criminal liability turned from its infancy to almost a prevailing rule. But, because a corporation is not a natural person and cannot be subject to one of the most important sentencing options, namely, imprisonment, it requires special consideration in an inquiry into sentencing law. Punishing a corporation undermines the theoretical foundations of criminal law, which presupposes that crimes involve an act and a culpable mental state. Corporate criminal liability or corporate crime is very difficult to define because this phrase in present day scenario covers wide range of offences. However for understanding purpose it can be defined as illegal act of omission or commission, punishable by criminal sanction committed by individual or group of individual in course of their occupation. It can be even defined as socially injurious acts committed in course of occupations by peoples who are managing the affairs of the company to further its business interest. Corporate criminality also represents a kind of instrumentalities through which the trust of the people continues to be betrayed by persons in positions of responsibility, authority and power in the business sector. Corporate crime has been defined as “the conduct of a corporation or of employees acting on behalf of a corporation, which is proscribed and punishable by law”. In this sense, “Corporate criminal Liability” refers to the imposition of criminal liability on either the corporation or its employees and agents. The latter is also referred to as white-collar crime.

In Nutshell, Corporate criminal liability is complementary to individual liability. The present liability regime that makes both corporate and individual prosecutions available to regulatory authorities has undeniable advantages over one that does not. Where crime arises from intra-organizational defects, the dismissal or discipline of a few individuals is clearly an inadequate response. Further, where individual liability is difficult to determine, prosecution of the corporation is an attractive alternative. There are many other situations where the prosecution of the corporation may be the only way to allocate responsibility for white-collar crime. Where both a corporation and its officers can be prosecuted, the prosecution of one over the other, or both, is a matter that is largely left to the discretion of the prosecuting authority. The prosecution’s choice should be aimed at achieving the effective regulation of corporate activities, as well as the general objectives of sentencing.

Arpit Sharma

Assistant Professor of Law

Law