Definition and concept of corporate criminal law
Das Corporate criminal law refers to the branch of criminal law that deals with the attribution, sanctioning, and prevention of crimes within and by legal entities, namely associations, organizations, and companies. While traditional criminal law targets the personal culpability of natural persons, corporate criminal law focuses on collective entities and their responsibility for crimes committed within their corporate or organizational context.
Historical development of corporate criminal law
Origins and international development
The attribution of criminal responsibility to associations was historically rejected for a long time, as criminal law traditionally focused on individual guilt. Initial approaches to also sanction legal entities emerged in Anglo-American law as early as the 19th century. Over the course of the 20th century, the view became increasingly established that organizations must be effectively involved in the fight against economic crime, corruption, and other offenses.
Development in German law
In Germany, the introduction of a classic corporate criminal law was long disputed. Currently, a genuine criminal liability of legal entities is not provided for under the law; however, there are sanctions against associations under the Administrative Offenses Act (§ 30, § 130 OWiG) and other special laws. Since the 2000s, a reform towards an independent law on association sanctions has been discussed; however, a relevant law, the Association Sanctions Act (VerSanG), has not yet been adopted.
Scope and fundamentals of corporate criminal law
Target group
Corporate criminal law is addressed to legal entities under private and public law, legal partnerships, and in some cases companies without their own legal personality. Private individuals remain subject to classic individual criminal law.
Offense reference
Corporate criminal law applies when a criminal offense is committed for the benefit of or from the sphere of responsibility of an association by management personnel or employees. What is decisive is a functional connection between the criminal act and the association’s activity.
Principles of attribution
A central question of corporate criminal law is under what conditions an association can be held criminally liable for its own wrongdoing. According to prevailing opinion, the criminal acts of management personnel (managing directors, board members, etc.) as well as employees are attributed to the company, provided they enrich the association or violate duties incumbent upon the association (organizational fault).
Sanctions and legal consequences in corporate criminal law
Fines and monetary penalties
In the absence of actual criminal penalties, current legal provisions allow authorities to impose substantial fines on associations, such as under § 30 OWiG. The amount is calculated based on the severity of the violation and the size of the company.
Measures relating to associations
Alongside fines, further sanctions may be imposed under planned legal reforms, for example:
- Skimming of profits
- Requirements to improve compliance structures
- Public announcement of the sanction
- Exclusion from public contracts
Planned development: Association Sanctions Act
The latest draft law for the Association Sanctions Act (VerSanG) provides for a tiered system of sanctions and sets out independent rules for investigation proceedings, sanctions, mitigating factors such as self-disclosure and internal investigations. The planned reform thus aims to close the gap in the existing sanctions system and ensure international compatibility.
Investigation procedures and special features
Proceedings against associations
Current administrative offense law gives authorities the opportunity to conduct proceedings directly against associations. In contrast to classic criminal proceedings against individuals, the economic interests and organizational deficiencies are in the foreground here.
Rights and duties of cooperation
Associations have rights of participation in the proceedings, but they can also be obliged to conduct internal investigations (e.g., internal inquiries). The planned Association Sanctions Act takes willingness to cooperate and preventive measures into account as mitigating factors in the assessment of fines.
Principles and objectives of corporate criminal law
Preventive effect and compliance incentives
Corporate criminal law primarily pursues preventive goals: By sanctioning collective organizational and supervisory deficiencies, companies are to be incentivized to implement effective compliance management systems in order to efficiently prevent criminal acts.
Efficiency of law enforcement
Traditional individual criminal liability reaches its limits in view of complex corporate structures and acts of concealment. Corporate criminal law is also meant to enable sanctions when individual responsibility cannot be fully clarified.
Relationship to individual criminal law
Corporate criminal law complements individual criminal law. In addition to sanctioning the natural perpetrators, the ‘beneficiaries’—that is, the companies themselves—should also be held accountable.
International comparatives and European law requirements
Legal situation in other countries
Many countries already have comprehensive corporate criminal law regulations. In the USA, corporate liability has long been recognized. Numerous European countries (e.g., France, United Kingdom, Netherlands) have introduced comprehensive systems of corporate criminal liability in recent decades.
Influence of European law
European legal requirements, such as in combating corruption and money laundering, promote the harmonization and expansion of corporate criminal law. Harmonization is particularly important in the case of cross-border offenses and antitrust law.
Critical review and outlook
Corporate criminal law constitutes a dynamic and hotly debated area of the legal system. While proponents emphasize its effectiveness and preventive impact, critics warn against overregulation and excessive burdens on the economy. Further development will largely depend on legislative progress and European harmonization.
See also:
- Corporate liability law
- Administrative offenses law
- Compliance systems
Literature:
- Beulke, Criminal Law, Special Part II
- Joecks/Miebach, Munich Commentary on the Criminal Code
- Gercke/Kinzig, Handbook of Commercial Criminal Law
Web links:
- Draft law for the Association Sanctions Act (Juris)
- Federal Ministry of Justice: ‘Corporate criminal law: Questions and Answers’
Frequently asked questions
How does corporate criminal law differ from classic criminal law for natural persons?
Corporate criminal law is primarily aimed at legal entities, such as corporations or registered associations, and differs significantly from traditional criminal law, which applies to natural persons. While for natural persons, criminal conduct is mainly characterized by elements such as intent or negligence and personal fault, corporate criminal law is oriented towards so-called organizational fault. This means that misconduct by board members, management personnel, or violations of organizational, supervisory, and control duties are attributed to the association itself. The focus is therefore less on individual guilt and more on collective responsibility and compliance with organizational duties to prevent unlawful acts. Corporate criminal law also recognizes specific legal consequences, which, in addition to or instead of monetary penalties, can include structural measures such as directives, requirements, or even the dissolution of the association—sanctions that are not applicable to natural persons.
When can an association be held criminally liable at all?
The criminal liability of an association requires that a crime was committed ‘in the execution of association tasks’ by a person in a leadership position or with their approval. The decisive factor is whether the offense is objectively attributable to the association, i.e., is related to the association’s activity, and whether the association thereby gains reputational advantages, financial benefits, or other positive effects—or seeks to gain such advantages. It is generally required that the association, through inadequate compliance structures or deficient monitoring mechanisms, enabled or at least facilitated the crime. The specific requirements always depend on the legal framework, such as the provisions of German law on association sanctions or corresponding special laws in other jurisdictions.
What sanctions can be imposed under corporate criminal law?
Unlike individual punishment, corporate criminal law focuses on specific sanctions aimed at restoring lawful conditions, prevention, and deterrence. The most common sanctions include substantial fines, which are calculated based on the association’s economic gain from the offense and can be potentially existentially threatening. In addition, so-called ‘association orders’ can be issued, such as the obligation to implement or improve compliance programs, the appointment of external monitors, or the obligation to publish the sanction. In particularly serious cases, dissolution of the association is also possible. Furthermore, the association can be excluded from public contracts or subject to professional disciplinary measures.
Is an effective compliance management system a means of liability prevention?
A coherent and actively practiced compliance management system (CMS) is a key instrument for risk prevention and can significantly reduce an association’s liability risk. Corporate criminal law regularly recognizes efforts by an association to prevent criminal acts through preventive measures, training, effective control mechanisms, and whistleblower systems as mitigating when assessing sanctions. The more effective and demonstrably up-to-date the CMS is designed and implemented in association practice, the more likely it will be considered a mitigating or sanction-reducing factor—potentially even leading to full exclusion of liability if it can be proven that, despite reasonable structures, a crime occurred solely in exceptional cases and not due to organizational deficiencies.
What procedural rights does the affected association have?
Within the framework of corporate criminal proceedings, the affected association enjoys numerous procedural legal safeguards, which are largely aligned with those available to natural persons. This includes, in particular, the right to be heard, access to files, the right to remain silent, and the option to be represented by lawyers. Furthermore, the association may submit motions for evidence and has the right to a fair trial before independent courts, including the opportunity to appeal judicial decisions. There are also special features regarding internal company investigations and the disclosure of sensitive business documents, where data protection and professional law aspects must be observed.
How does the interaction between corporate criminal law and civil corporate liability work?
Corporate criminal law and the civil liability of associations often interact, but differ in purpose and type of sanctions. While the former aims to sanction criminal misconduct, civil liability consequences particularly concern damage claims from third parties who have suffered harm as a result of the association’s misconduct. A criminal conviction may serve as strong evidence of an unlawful and culpable breach of duty by the association in a civil lawsuit. Moreover, in addition to sanctions under corporate criminal law, civil compensation claims—such as from victims or contractual partners—can be asserted simultaneously, significantly increasing the economic consequences for the association.
