FAQ´S about Criminal Liability of Companies in Spain (Corporate Compliance) 

  1. Which companies are subject to Spanish Corporate Liability law in Spain?

 The compliance laws in Spain affects all companies conducting business in Spain, whether as a resident entity, non-resident, branch or subsidiary.

  1. In which circumstances can a company be held criminally responsible for conduct?

 To establish corporate criminal liability, the offence must have been committed for or on behalf of a corporate entity and for its benefit by the following individuals:

  • Legal representatives and de facto and de jure administrators of the corporate entity;
  • Contracted workers and/or employees of the corporate entity, when the offence was committed while carrying out corporate activities and as a result of the corporate not having exercised due supervision in all the circumstances of the case.

 Corporate entities are only liable for crimes expressly applicable to them under corporate law, which include the discovery and disclosure of secrets, fraud and crimes related to intellectual property, tax fraud, money laundering and corruption offences. 

  1. How well is criminal liability enforced in Spain?

 The Spanish Criminal Law requires companies to put in place internal systems to allow for anonymous reporting of any criminal activity within the company (canal de denuncias). The requirement is therefore for companies to self-regulate reporting and enforceability of compliance. Failure to have regulatory measure in place will leave the company exposed for criminal responsibility in the event that a criminal act were to be carried out. 

  1. Is there any court judgements on the subject?

 There have been two judgements from the Supreme Court in Spain on the matter of Criminal liability of Corporations.

In the first judgement (Sentencia número 154/2016, de 29 de febrero de 2016), the court ruled that in order for criminal liability to be proved under article 31 bis of the Criminal Code, two requirements must be satisfied: 1) There should be a crime that is committed by a natural person that is integral to the company and 2) That the company failed in its obligations to establish measures to prevent the commission of a crime.

In the second judgement (Sentencia número 221/2016, de 16 de marzo de 2016), the courts ruled that the burden of proof for a legal personal (company) is the same as that of a natural person, and that the presumption of innocence applies equally to companies as with individuals. 

Compliance signal

  1. How can a company prevent itself from being help criminally responsible?

 In order to prevent criminal liability being found for a company, it must implement a compliance programme and enforce the measures set up in its programme. A company should also appoint a Compliance Officer that will see to it that the company enforces such measures. The Compliance Officer should ideally be an external person. The Compliance programme should ideally engage a legal professional with experience in Criminal Law that is able to identify potential criminal conduct that could occur within the organization.  

  1. What penalties can be imposed if a company is found to be criminally responsible?

 The penalties that can be imposed on a Company if found criminally responsible are laid out in article 31.7 of the Criminal Code, which lists the possible penalties as being:

  1. A fine.
  2. Dissolving of the company.
  3. Suspension from being able to carry out business for a period of up to 5 years.
  4. Closure of its business premises for a period of up to 5 years.
  5. Prohibition from carrying out activities that led to, aided or concealed the crime committed. The prohibition can be temporary or permanent. If permanent, it cannot be for a period exceeding 15 years.
  6. Ineligibility from obtaining subsidies, public sector funding or public sector controls, or benefiting from Tax or Social Security incentives, for a period not exceeding 15 years.
  7. Judicial intervention to safeguard the interests of employees or creditors for a period that is deemed necessary, which cannot exceed 5 years. 
  1. Is there any procedure for a company to receive a more lenient penalty if found criminally responsible?

 The Criminal, in Article 31 bis quater, sets out mitigating circumstances in which a company that receive a more lenient sentence if found criminally responsible. These are stipulated as:

  1. Confession of the crime committed prior to knowledge of the legal proceeding being initiated against the company.
  2. Collaborating with the investigation procedure, providing new evidence at any stage of the proceedings that facilitate the investigation.
  3. Repairing or reducing the damage done due to the crime prior to the oral hearing.
  4. Setting in place measures to prevent and detect criminal activity that can be committed through the company prior to the oral hearing. 
  1. What is the role of the Compliance Officer in Spain?

 The Compliance Officer in Spain is responsible for supervising the compliance programme and ensuring the company complies with its prevention guidelines, in accordance with article 31 bis of the Criminal Law and the intentions set out by the Director of Public Prosecutions (Circular 1/2011, Fiscalia General del Estado). 

  1. How is Spanish compliance any difference from compliance in Common law countries like the UK?

The compliance rules in Anglo-Saxon countries has at its core, trust that the subject will tell the truth. Therefore, as part of compliance, the subject is allowed to have the compliance documents in their possession and can be modified at any time.

The compliance rules in Spain have at its core a distrust of the subject. It believes the subject is dishonest, so sets a higher threshold of proof that compliance measures were indeed put in place. For compliance in Spain, being able to date stamp documents will help in proving compliance, as well as recording instances where compliance measures were enforced.  

  1. How expensive is Compliance in Spain?

 The cost of compliance in Spain will depend on the complexity of a company structure as well as the potential exposures to criminal liability. The fee is assessed on a case-by-case basis. Having said that, we can normally provide an estimate within 24 hours, based on some basic information about your company.

In order to obtain a quote, please complete our contact form on our contact page.

 

 

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