Term and Classification: Company (criminal law)
The term company has an independent and specific meaning in German criminal law, which differs from the business administration and corporate law definition. The criminal law perspective of a company includes all aspects in which a company is either affected as the object of an offense or appears as a potential perpetrator or facilitator. With the increasing regulation of white-collar crime and the rise of corporate-related offenses, the criminal law definition of company is gaining ever-increasing importance.
General definition of a company in criminal law
In the context of criminal law, a company is any organizationally independent economic entity that pursues a sustained activity in the market. This definition is tied to specific legal consequences, such as in the area of corporate criminal liability, confiscation, or fines.
Criminal law requirements
In contrast to corporate law, the legal form of an organization is irrelevant for its classification under criminal law. What matters is the existence of an independent economic structure that enables unlawful acts. These include:
- Corporations (e.g. stock corporation, GmbH)
- Partnerships (e.g. OHG, KG)
- Sole proprietorships
- registered associations, provided they engage in economic activities
- in some cases, unincorporated organizations, provided they pursue economic purposes
As a result, the criminal legal concept of company also includes public enterprises as well as special forms such as foundations, provided there is economic activity.
Companies as Participants in Criminal Offenses
Corporate criminal liability in Germany
According to traditional understanding, German criminal law does not recognize the direct criminal liability of companies but adheres to the “principle of culpability.” Criminal law sanctions are imposed on natural persons. Nevertheless, there are several criminal and regulatory special provisions for companies:
Legal basis
- § 30 Act on Administrative Offenses (OWiG): Fine against legal entities and associations of persons if directors or representatives violate legal duties.
- § 130 OWiG: Liability for breaches of supervisory duties within a company.
- Confiscation and asset recovery: Pursuant to §§ 73 et seq. Criminal Code (StGB), assets obtained from criminal offenses can be confiscated, even if they benefit a company.
- Law on Sanctions for Corporate Crime (Verbandssanktionengesetz – planned for the future): A legislative proposal to introduce corporate sanctions is being prepared.
Corporate criminal liability in Germany is therefore (as of May 2024) still only implemented through these substitute mechanisms and not as original criminal liability.
Representation and attribution of criminal offenses
For a company to be held liable under §§ 30, 130 OWiG, the criminal conduct of a natural person (e.g. management, senior executives) must be attributable to it. Specifically:
- Principle of Representation: Offenses committed by directors, representatives, or senior managers are considered offenses of the company.
- Organizational and supervisory duty: If a company fails to implement effective control and supervisory measures, this breach of duty can itself form the basis for sanctions.
Criminal liability of corporate officers
Corporate leaders can be held personally criminally liable, especially if they fail to implement required control measures or act as offenders, co-offenders, or participants in corporate crimes.
Criminal offenses in the corporate context
In connection with companies, there are numerous criminal offenses that are typically committed in business life. These include, among others:
White-collar crimes and corporate offenses
- Fraud (§ 263 StGB)
- Embezzlement (§ 266 StGB)
- Bribery and acceptance of bribes in business transactions (§§ 299 et seq. StGB)
- Insolvency offenses (§§ 283 et seq. StGB)
- Cartel violations (under the Act against Restraints of Competition, GWB, in combination with criminal law)
- Environmental crimes (§§ 324 et seq. StGB)
- Employment offenses, such as withholding social security contributions (§ 266a StGB)
Corporate-related ancillary consequences
If it is established that a company was involved in criminal offenses, the following ancillary consequences may occur:
- Fines of up to several million euros, depending on company turnover
- Warning with reservation of penalty
- Confiscation of illegally obtained benefits
- Exclusion from public contracts (debarment)
- Reputational damage and reporting obligations to supervisory authorities
Prevention, compliance, and criminal law risks
The importance of compliance
In the criminal law sense, the establishment of compliance structures within companies is a central tool in preventing criminal acts. Effective organizational measures and prevention systems can significantly reduce the risk of corporate criminal liability.
Consequences of inadequate prevention
If a lack of or inadequate compliance system is found, this can have an aggravating effect. In particular, under § 130 OWiG, the company is liable if it has “neglected necessary supervisory measures.”
International aspects: Companies in criminal law
While German criminal law only covers companies through administrative offense and ancillary provisions, many other countries have specific regulations on original corporate criminal liability, such as the USA, United Kingdom (Corporate Criminal Liability), and France.
EU law and international developments
At the European level, liability rules for companies are also being increasingly tightened, for example in cartel law or data protection (GDPR, fines regulations for companies). International law enforcement is of increasing importance, especially in cases of money laundering (§ 261 StGB) and cross-border corruption.
Literature and sources
For a more in-depth examination of corporate criminal responsibility, the basic sources include:
- § 30, 130 OWiG, § 73 et seq. StGB
- Draft laws on the Verbandssanktionengesetz (as of 2024)
- BAG, BGH, and Higher Regional Court decisions on corporate criminal liability
- EU law, in particular GDPR and cartel law
Conclusion
In criminal law, the company is an independent, dynamic category, whose importance continues to grow with international interconnection and increasing regulation of the business world. The criminal law handling of companies includes sanctions through fines, asset confiscation, and measures to protect reputation. Consistent implementation of compliance structures and internal controls is essential to reduce criminal law risks. Companies – regardless of legal form and size – remain the focus of sanctioning efforts in modern legal systems.
Frequently Asked Questions
When can a company be held liable under criminal law?
Under German law, companies as such cannot generally be held directly criminally liable, since criminal law usually ties liability to the personal culpability of natural persons. Therefore, direct criminal liability of legal entities does not exist in German criminal law. However, § 30 of the Act on Administrative Offenses (OWiG) provides that fines may be imposed on legal entities and associations of persons if management personnel commit a criminal or administrative offense through which obligations incumbent upon the company are violated or the company has been or was intended to be enriched. Additionally, the Verbandssanktionengesetz is under discussion, which would provide for its own form of association sanctioning. In practice, this means that companies can be held liable for the offenses committed by their officers or managers, especially in cases involving violations of protected legal interests such as tax evasion, corruption, or environmental offenses.
What liability risks do managing directors and board members face under criminal law?
Managing directors and board members are personally criminally liable for breaches of duty under the principles of organizational and supervisory responsibility if they grossly violate monitoring and control duties, thereby enabling or potentially enabling company-related offenses. This includes violations of labor, environmental, data, or product safety regulations. Personal liability may arise, for example, if internal control systems are absent or inadequate, thereby failing to prevent criminal acts. The responsibility of the management extends to the entire organization and can also cover acts committed by subordinate managers or employees, provided a breach of supervisory duty can be proven.
What criminal consequences does a company face for violations of compliance obligations?
If a company fails to meet its compliance obligations, it may be subject to severe fines under § 30 OWiG of up to ten million euros or – in cases of financial gain from the offense – even significantly higher amounts. In addition, ancillary measures such as confiscation of profits obtained through the crime according to §§ 73 et seq. StGB as well as criminal procedural measures like searches, seizures, or professional bans can be imposed. Serious or repeated violations may, under certain circumstances, also lead to the public announcement of sanctions, resulting in considerable reputational damage. Countries with specific corporate responsibility laws (such as Austria or the USA) also recognize main criminal penalties against companies, including sanctions such as corporate dissolution.
How are investigations initiated against companies?
The law enforcement authorities are required to initiate investigations against companies if there are sufficient grounds for suspicion – usually triggered by reports, audits, or voluntary disclosures. The investigation is directed against natural persons as perpetrators or participants, as well as parallel against the company itself with regard to a possible fine under § 30 OWiG. Typical investigative measures include searches of business premises, seizure of documents and data carriers, questioning of witnesses, and, if applicable, ordering asset freezes. The company’s defense is typically conducted by appointed criminal defense attorneys or internal legal/compliance departments.
What is the significance of internal investigations in the criminal law corporate context?
Internal investigations, i.e. internal company inquiries, are not expressly regulated by law in German criminal law, but have gained considerable practical importance in recent years. Companies use internal investigations both to clarify the specific circumstances and to minimize their own sanctions. By voluntarily disclosing the investigation results to the investigatory authorities, collaboration may be credited in mitigation of punishment. However, handling evidence and witnesses in the context of internal investigations is legally demanding and requires compliance with data protection and labor law requirements as well as a clear separation between internal fact-finding and internal representation of company interests.
How can a company defend itself against criminal allegations?
Defense against criminal allegations occurs on multiple levels: During investigative proceedings, companies may respond with statements, provide exculpatory documents, or engage external experts. Companies can demonstrate that they have implemented adequate compliance measures, established internal controls, and conducted regular training. Providing evidence of effective prevention can refute an accusation of inadequate supervision. In addition, cooperation with the authorities – for example, through disclosure of relevant information or initiation of restitution measures (e.g. repayments, restructuring compliance) – may help obtain a lenient verdict or discontinuation of proceedings. The involvement of experienced criminal defense attorneys is essential.
