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PENAL LIABILITY OF ORGANIZATIONS

The entry into force of Organic Law 5/2010, of 22 June, modifying Organic Law 10/1995, of 23 November, of the Penal Code, introduced an unprecedented novelty in our criminal law system: The possible indictment of legal persons for certain behaviour that would from now on be considered a crime.

The entry into force of Organic Law 5/2010, of 22 June, modifying Organic Law 10/1995, of 23 November, of the Penal Code, introduced an unprecedented novelty in our criminal law system: The possible indictment of legal persons for certain behaviour that would from now on be considered a crime.
Taking this situation into account, these posts on our blog will explain the organisational and technological mechanisms for organisations to be exonerated from criminal liability.

As this is a novelty from the point of view of imputability, the development of undesirable behaviour in benefit of the organisation (not only its administrators but, in general, any natural person linked to the entity) has never been alien to the history of organizations, especially trading companies. These behaviours have not only generated anti-competitive advantages with regard to law-abiding operators, but have also, with the passing of time, eroded the grounds of good corporate governance, endangering especially protected legal assets.

To address this, new regulations in our Penal Code propose zero tolerance with punishable behaviour in organizations, determining that this behaviour, when criminal, constitutes a serious crime that doubtlessly affects national economic activity and thus society as a whole.

This extension of Penal Law to direct responsibility of organizations has been the result of a continual process of international harmonisation of this branch of law as well as – in the words of the Attorney General- “a real need to offer a more effective response to increased business criminality, especially in the framework of economic crime.”

This new regulation was specifically established in the new art. 31 bis of the Penal Code, completed with articles 33.7 (regarding sentencing for legal persons), 50.3 and 4 (regarding extension and daily sum of the fine), 53.5 (on the possibility of fractioned payment), 52.4 (on fines substituting a proportional fine, when it is not possible to calculate the latter), 66 bis (on the determination of the applicable punishment), 116.3 (regarding civil liability) and 130 (on cases of transformation and merger of companies).

At the same time as classifying these behaviours, the Penal Code established, as counterbalance, the possibility of setting up measures for surveillance and control to prevent and detect criminal activities, understanding that the existence of these measures, when correctly adopted, could serve as a basis for exoneration of possible penal responsibility.

Nevertheless, as this new responsibility attribution framework suffered from significant defects that needed to be corrected (as an example, the small number of criminal proceedings instigated against legal persons during the first five years the aforementioned legislative modification came into force), Organic Law 1/2015 was published and came into force, significantly updating the still recent legal system, modifying the Penal Code yet again and specifying more precisely the penal regime of responsibility of legal persons in Spain (extending it to state owned companies ) and detailing the requirements for the management and control systems of organizations, which, if applicable, could allow these entities to accredit unequivocal diligence in the prevention and detection of criminal behaviour, which could lead to a significant attenuation of derived penal responsibility or even complete exoneration.

In the next edition, we will analyse these management systems, as tools to support penal compliance.

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