Are legal entities criminally liable? If yes, legal entities incur criminal liability when satisfying which conditions? Almost businesses concern about these questions when conducting business activities. To answer these questions, in this article, we will analyze the basis and scope of criminal liability of legal entities.
1. Are all legal entities incur criminal liability?
According to Article 74 of the Criminal Code 2015, amended in 2017 (“Criminal Code”), not all legal entities incur criminal liability, only corporate legal entities incur criminal liability.
Legal entities include two types: corporate legal entities and non-corporate legal entities. A corporate legal entity is a legal entity whose primary purpose is seeking profits and its profits shall be distributed to its members. Corporate legal entities include enterprises and other economic organizations.
2. Conditions must be satisfied when a corporate legal entity incurs criminal liability
Corporate legal entities only incur criminal liability when the following conditions are satisfied:
First, the criminal offence is committed on behalf of the corporate legal entity. An offence committed on behalf of the legal entity is the act of a person or people who are the employees or employers of the legal entity or the owners of the legal entity, etc. These people can hold certain positions in the legal entity, be the legal representative, or be authorized by the legal entity to perform tasks on behalf of the legal entity.
Second, the criminal offence is committed in the interests of the corporate legal entity. For this basis, it is necessary to clearly define between the interests of the legal entity and the personal interests of the subject performing the acts assigned or authorized by the legal entity. In the course of committing a criminal act, if it is determined that the offender takes advantage of the legal entity to perform additional acts for personal gain, the legal entity is not criminally liable for this act, the excess will be the liability of the implementing subject.
Third, the criminal offence is under the instructions or approval of the legal entity. Subjects with authority to direct, administer and approve in the legal entity may be the legal representative, the owner, the Members’ Council, or the Administration Council.
Fourth, the time limit for criminal prosecution specified in Article 27 of the Criminal Code has not expired. The time limit for criminal prosecution is a time limit set out by the Criminal Code and upon the expiration of which the offender does not face any criminal prosecution. The law stipulates four categories of time limits for criminal prosecution corresponding to four categories of crimes as follows:
(i) 05 years for less serious crimes;
b) 10 years for serious crimes;
c) 15 years for very serious crimes;
d) 20 years for extremely serious crimes.
3. Scope of criminal liability of corporate legal entities
According to Clause 2 Article 2 of the Criminal Code: “No corporate legal entity that commits a criminal offence that is not regulated in Article 76 hereof has to incur criminal liability”. According to the provisions of Article 76 of the Criminal Code, a corporate legal entity shall only incur criminal liability for 33 crimes belonging to the following 3 groups:
+ Economic offences: Article 188 (Smuggling); Article 189 (Illegal transport of goods or money across the border); Article 190 (Manufacturing and trading of banned goods); Article 191 (Possession and transport of banned goods); Article 192 (Manufacturing and trading of counterfeit goods); Article 193 (Manufacturing and trading of counterfeit food or food additives); Article 194 (Manufacturing and trading of counterfeit medicines for treatment or prevention of diseases); Article 195 (Manufacturing and trading of counterfeit animal feeds, fertilizers, veterinary medicines, pesticides, plant varieties, animal breeds); Article 196 (Hoarding); Article 200 (Tax evasion); Article 203 (Illegal printing, issuance, trading of invoices or receipts for payment of state revenues); Article 209 (Provision of false information or concealment of information in securities activities); Article 210 (Use of internal information for trading securities); Article 211 (Manipulation of securities market); Article 213 (Insurance fraud); Article 216 (Evading payment of social insurance, health insurance, unemployment insurance for workers); Article 217 (Offences against regulations of law on competition; Offences against regulations of law on multi-level marketing); Article 225 (Infringement of copyrights and relevant rights); Article 226 (Infringement of industrial property rights); Article 227 (Offences against regulations on survey, exploration and extraction of resources); Article 232 (Offences against regulations on extraction and protection of forests and forest products); Article 234 (Offences against regulations on protection of wild animals).
+ Environmental offences: Article 235 (Causing environmental pollution); Article 237 (Offences against regulations on environmental emergency prevention, response, and relief); Article 238 (Offences against regulations on the protection of irrigation works, embankments and works for protection against natural disasters; Offences against regulations on the protection of river banks); Article 239 (Import of wastes into Vietnam’s territory); Article 242 (Destruction of aquatic resources); Article 243 (Forest destruction); Article 244 (Offences against regulations on the protection of endangered and rare animals); Article 245 (Offences against regulations on management of wildlife sanctuaries); Article 246 (Importing, spreading invasive species).
+ Infringement upon public safety, public order: Article 300 (Terrorism financing); Article 324 (Money laundering).
4. Sentences against corporate legal entities committing crimes
According to Article 33 of the Criminal Code, the corporate legal entity shall incur only one primary sentence for a criminal offence committed and possibly one or more additional sentences.
- Primary sentences include: a) Fine; b) Suspension of operation; c) Permanent shutdown.
- Additional sentences include: a) Ban from operating in certain fields; b) Prohibition from raising capital; c) Fine if no administrative penalties are imposed.
According to Article 46, Article 82 of the Criminal Code, the corporate legal entity may be subject to one or more of the following judicial measures: a) Confiscation of money and items directly related to the crime; b) Return, repair of property or provision of compensation; offering of public apology; c) Compulsory restoration of an original state that has been changed due to the criminal act of the corporate legal entity; d) Implementation of other measures for mitigation and prevention of consequences.
Above is the article “Do legal entities incur criminal liability?”. We hope that corporate legal entities and businesses will gain certain values when following the article.