An overview of how a director can be held criminally liable, even when they have not personally committed the criminal act in question.
- Personal Liability When the Company Commits a Crime: A director is not automatically criminally liable for a crime committed by the company . However, there are exceptions, with liability often stemming from the director’s role in the company’s offence:
- Counselling or Procuring the Offence: If a director authorises or procures the commission of the offence by the company, they can be held liable as an accessory . This common law liability applies even for statutory offences, unless specifically excluded by the statute.
- Consenting to or Conniving in the Offence: Many statutes hold directors criminally liable if they “consent to or connive in” the company’s offence . This means a director could face charges even if their awareness or approval didn’t directly encourage or assist the company in committing the crime.
- Neglect Contributing to the Offence: Some statutes impose liability on directors whose neglect contributes to the company’s offence . This requires proving a causal link between the director’s neglect and the crime, even if the director wasn’t aware of the wrongdoing. However, the Law Commission has raised fairness concerns about this approach, especially for offences requiring proof of fault or carrying significant stigma .
- Corporate Manslaughter Act: The sources specifically highlight the Corporate Manslaughter Act, noting the debate about extending criminal liability (or disqualification) to senior management responsible for organisational failings leading to corporate manslaughter. However, the Act focuses solely on corporate offences and doesn’t impose individual criminal liability, even for counselling or procuring the offence .
- Other Criminal Offences:
- Failing to Take Reasonable Steps for Compliance: Directors are required to take reasonable steps to ensure compliance with legal provisions, especially regarding financial matters . Failing to do so can result in imprisonment or a fine. Directors can argue a defence if they can prove they had reason to believe a competent person was responsible for compliance.
- Contravening a Disqualification Order: Directors are prohibited from acting in contravention of a court-issued disqualification order. Doing so can lead to imprisonment, a fine, or both.
- Making Payments Without Shareholder Approval: Directors can face criminal liability, including imprisonment or a fine, for making unauthorised payments (e.g. compensation for loss of office) without proper disclosure and shareholder approval.
- Liability of the Company Secretary: The company secretary, as a company officer, can also face criminal liability alongside directors for defaults such as failing to file required notifications or documents. They can also be held liable for breaches of trust or duty, especially related to company assets .
- General Principles:
- Directors’ Duties: The sources emphasise that directors owe various duties to their company, including fiduciary duties (avoiding conflicts of interest, making secret profits) and duties of care and skill .
- Environmental Legislation: The sources highlight that environmental legislation increasingly imposes personal liability on directors, alongside the company, demonstrating a trend towards greater personal accountability for corporate actions.
- Gross Negligence Resulting in Death: Directors can face charges of corporate manslaughter if their gross negligence leads to a fatality.
- Fraudulent and Wrongful Trading: Directors can be held personally liable for fraudulent trading (carrying on business to defraud creditors) or wrongful trading (trading while insolvent without a reasonable prospect of avoiding liquidation) .