The new Economic Crime and Corporate Transparency Act ('ECCTA') is bringing about some profound changes to company law. In future, for example, the conduct of senior managers may lead to criminal liability for their employers. What is changing, and what should organisations do about it?
The ECCTA is introducing wide-ranging reforms aimed, among other things, at tackling economic crimes (which the Government says make up over 40% of crime in the UK). The reforms are being implemented in stages through secondary legislation, but one reform which is already in force is the expansion of the 'identification doctrine', the principle of English law under which criminal liability is attributed to an incorporated organisation. This is the first time in over 50 years that corporate criminal liability in the UK has been reformed, and it brings the UK into line with other jurisdictions, such as the US, which take a more aggressive stand on corporate crime.
The Government's intention is to enable prosecutors to hold corporations liable in their own right for economic crime. This will be particularly helpful in cases involving large or complex structures, and will help to prevent corporations distancing themselves from criminal conduct by senior managers (the term 'senior manager' will be widely defined). Conversely, senior managers will not be able to hide behind corporate structures or misleading job titles to avoid liability and prosecution.
In a nutshell, if a senior manager commits a crime, at work and acting within the actual or apparent scope of their authority, which is on the list of 'specified crimes', the employing organisation will be on the hook for that offence.
For a more detailed explanation of how this part of the new law will operate see here.
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