Definition and Legal Classification of Corporate Offenses
In legal science, corporate offenses refer to all criminal acts in which companies act as the means of the crime, the object of the crime, or represent the immediate economic context in which the offense takes place. These are offenses that typically occur in connection with corporate activity or are made possible only by a company’s structures. Corporate offenses may be perpetrated by individuals (e.g., board members, executives, employees) within the scope of their activities or by the company itself. They predominantly fall within the domain of commercial and corporate criminal law.
There is no clear legal definition under German criminal law. The distinction is usually made on a functional basis, dependent on the connection of an offense with corporate processes, structures, or objectives.
Typical Forms of Corporate Offenses
Economic Offenses
Economic offenses represent the most significant group of corporate offenses. These include, among others, fraud (§ 263 StGB), breach of trust (§ 266 StGB), insolvency offenses (§§ 283 et seq. StGB), corruption offenses (e.g., §§ 299 et seq. StGB), and tax offenses (e.g., § 370 AO). Such crimes are often committed or facilitated in the course of ordinary business activities and are frequently directed against the assets of third parties, the state, or competing companies.
Violations of Supervisory and Regulatory Provisions
Many corporate offenses result from the breach of statutory monitoring and due diligence obligations. Typical examples include violations of accounting obligations under commercial and corporate law, breaches of environmental regulations, or violations of labor law commitments. Regulatory offenses under the OWiG (e.g., § 30, § 130 OWiG) can also constitute corporate offenses.
Offenses in the Corporate Environment
Corporate offenses also encompass acts that impair externally organized markets or social sectors, such as antitrust violations, insider trading (§ 119 WpHG), market manipulation, or violations of antitrust law (§§ 1 et seq. GWB). Here, the focus is on influencing markets or market mechanisms.
Perpetrators of Corporate Offenses
Responsible Persons
Corporate offenses may be committed by various groups of individuals:
- Bodies of Corporations (e.g., board members, managing directors)
- Executives
- Employees
- Third Parties Acting on instruction of or in cooperation with the company
Misconduct can occur individually or collectively, frequently also within organized company structures.
Companies as Perpetrators
With the introduction of § 30 OWiG, companies themselves can be sanctioned as independent perpetrators of regulatory offenses. However, German criminal law does not recognize a separate corporate penalty as an original sanction for legal entities. Instead, under the so-called association principle, companies are held liable when management personnel commit criminal or regulatory offenses from which the company benefits.
Legal Foundations and Sanctioning
Criminal Law Provisions
Both general and specific criminal offenses are applicable to corporate crime. Relevant legal provisions are found in particular in the Criminal Code (StGB), the Act on Regulatory Offenses (OWiG), the Stock Corporation Act (AktG), the Limited Liability Companies Act (GmbHG), as well as in special statutes (e.g., Securities Trading Act, Federal Data Protection Act, environmental law).
Law on Regulatory Offenses and Corporate Fines
German law on regulatory offenses allows the imposition of fines on companies via § 30 OWiG. This applies when a management person commits a criminal or regulatory offense from which the company benefits or by which obligations owed by the company are breached.
According to § 130 OWiG, companies may also be sanctioned when they intentionally or negligently fail to implement supervisory measures, leading to unlawful acts.
Administrative and Ancillary Consequences
In addition to fines and criminal sanctions, corporate offenses can result in administrative measures (e.g., prohibition of commercial activity, revocation of licenses) and ancillary consequences (e.g., forfeiture, confiscation of assets gained under §§ 73 et seq. StGB).
Compliance and Prevention Obligations
Companies are required to prevent criminal and regulatory offenses within the company through appropriate organizational and supervisory measures. The implementation of an effective compliance management system is increasingly used by authorities as a benchmark. Insufficient control and monitoring may be deemed organizational fault.
If companies fail to take preventive measures and as a result corporate offenses occur, the risk of severe sanctions and civil law claims for damages increases.
Relationship to International Developments
A number of countries have specific laws for sanctioning companies for criminal misconduct (“corporate criminal liability”). In contrast to legal systems such as those of the United States or Great Britain, German law has so far responded more cautiously to the direct criminal liability of legal entities, instead focusing on fines and supervisory actions.
The EU and international organizations are increasingly calling for effective company liability, placing greater emphasis on transparency, accountability, and preventive corporate governance. This is increasingly reflected in national laws, for instance in the Supply Chain Due Diligence Act or the Whistleblower Protection Act.
Literature and Further Reading
A comprehensive account of corporate offenses can be found in works on commercial criminal law, commentaries on the StGB, OWiG and special statutes, as well as in monographs on corporate liability and compliance. Current developments are regularly discussed in legal journals and specialist publications in the fields of business and corporate law.
Summary
Corporate offenses encompass all criminal and regulatory offenses committed through entrepreneurial actions or within corporate structures. They affect key sectors of the business world and are subject to a complex interplay of criminal, regulatory, and administrative law. Proper prevention and organization within a company serve in practice as crucial protection against sanctions. In light of increasing regulation and international developments, compliant handling of corporate offenses is growing in significance.
Frequently Asked Questions
How does an investigation proceed in the case of corporate offenses?
An investigation into corporate offenses typically begins with a criminal complaint or an initial suspicion, which can be triggered, for example, by regulatory authorities, whistleblowers, or competitors. The public prosecutor’s office then initiates investigations and examines whether there is sufficient suspicion of a criminal act. Various investigative measures are undertaken in this process, such as searches, seizures, questioning witnesses, or evaluating company documents. Especially in corporate offenses, a unit specialized in economic or tax criminal law is often involved. Frequently, complex facts and a multitude of involved persons and companies are in focus. The aim of the investigation is to gather sufficient incriminating or exculpatory evidence to reach a well-founded decision on whether to bring charges or discontinue the proceedings. In this context, the so-called company fine under § 30 OWiG may also be imposed on the company if the requirements are met.
What penalties may be imposed for committing a corporate offense?
Criminal sanctions for corporate offenses are diverse and depend on the nature and severity of the offense. Penalties range from fines to imprisonment for individuals (managing directors, board members, employees). For companies themselves, German law does not provide for ‘criminal liability’ in the classical sense, but a substantial fine may be imposed on legal entities or associations under § 30 OWiG, which can reach millions of euros. In particularly serious cases (such as organized economic crime), additional penalties such as professional bans, exclusion from public contracts, or confiscation of the proceeds of crime are possible. The range of penalties reflects the complexity of the offenses concerned, such as fraud, breach of trust, corruption, antitrust violations, or tax evasion.
What rights do accused persons and companies have in investigation proceedings?
Accused individuals have extensive rights during investigation proceedings. These notably include the right to remain silent, the right to legal counsel, and the right for the defense to inspect files. Companies targeted by proceedings (e.g., on suspicion of liability under § 30 OWiG) typically exercise their rights through lawyers or internal legal departments. Importantly, both accused individuals and companies are not obliged to incriminate themselves and may remain silent. In many cases, it is advisable to engage specialized defense counsel for commercial criminal law at an early stage to avoid unwanted self-incrimination or disadvantages in further proceedings.
To what extent are managing directors or board members liable for corporate offenses?
Managing directors and board members are liable on multiple levels: On the one hand, they may be held personally criminally liable, for example, through direct involvement (as principal or joint perpetrators) or by failing to supervise (keyword: organizational fault under § 130 OWiG). On the other hand, they may also face civil liability to the company (internal liability) and to injured third parties (external liability). Personal liability requires that the decision-maker intentionally or negligently breached their duties — e.g., through inadequate monitoring of business operations, failure to prevent illegal acts, or insufficient compliance measures.
What is the role of compliance in preventing corporate offenses?
Compliance, that is, adherence to statutory, regulatory, and internal requirements, is a key element of preventing corporate offenses. An effective compliance management system identifies risks, creates effective controls, and promotes a corporate culture of legal compliance. Courts and investigative authorities take existing and continuously updated compliance structures into account in determining sanctions and assessing any breaches of supervisory duties. The absence of an adequate compliance system can be seen as an indication of a breach of duty and lead to increased liability or higher fines.
What notification obligations exist toward authorities in cases of internal suspicion of corporate offenses?
If, in the course of internal investigations or as a result of tips from whistleblowers, a company discovers suspicion of a corporate offense, there are generally no statutory obligations requiring self-reporting to the authorities — except, for example, in cases regulated by anti-money laundering laws or specific industry-specific reporting obligations. Nonetheless, early self-disclosure or cooperation with investigative authorities may be considered as mitigating when sanctions are later determined. In tax matters, however, the prerequisites and effects of a voluntary self-disclosure that exempts from punishment are governed by § 371 AO, the requirements of which must be strictly observed.
How do corporate offenses affect contractual relationships and tenders?
The conviction or even mere suspicion of a corporate offense can have serious impacts on existing and future business relationships. Many national and international contracting parties, especially public sector clients, require explicit declarations of integrity and sanction violations with contract terminations, claims for damages, or exclusion from tenders. In many sectors, corresponding sanction clauses are established in standard contracts. Proved corporate offenses may also result in entry into procurement registers, as a consequence of which affected companies may be excluded from public contracts for a certain period. Thus, there are significant economic and reputational risks extending beyond the mere criminal and regulatory proceedings.
