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Law Commission proposals: holding corporations to account

The Law Commission sets out proposals on how it can improve the law to ensure that corporations are effectively held to account.

On 10 June 2022, the Law Commission published a paper for the UK Government setting out proposals on how it can improve the law to ensure that corporations are effectively held to account for committing serious crimes.

The recommendations signal an intention to attribute liability to corporate bodies for conduct of its senior management. This trend can be said to have started in 2007 with the introduction of the corporate manslaughter offence and continued with the introduction of fail to prevent offences of bribery and tax evasion.

What are the proposals?

Failing to prevent fraud: The recommendations include the introduction of an offence of failing to prevent fraud, which would bring it in line with existing “Fail to Provide” offences of bribery and tax evasion. However there has been some criticism that the changes do not go far enough. Some politicians have lobbied for the introduction of an offence of failing to prevent money laundering. Other corporate offences under consideration are failing to prevent human rights abuses, ill treatment or neglect, and computer misuse.

Publicity orders: There is also the proposal to make publicity orders available, requiring a corporate body to publish details of a conviction for an offence. Other proposals include the introduction of reporting requirements modelled on similar requirements contained in the Companies Act 2006 and the Modern Slavery Act 2015.

Monetary penalties: Another proposal considered is the introduction of a regime of administrative monetary penalties where fraud is committed by an associated person on behalf of a corporate body. It remains to be seen whether this proposal will be seen as fettering the criminal jurisdiction of the Serious Fraud Office or Crown Prosecution Service.

It remains to be seen how many, if any, proposals will be adopted by the Government and whether the Government will add to an already burdensome and costly financial regulatory regime.

To discuss any of the issues raised in this insight, contact our expert business and financial crime solicitors

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