Company Law

Corporate Criminal Liability

Introduction video links
https://www.youtube.com/watch?v=sMHmy-95MrI
https://www.youtube.com/watch?v=FdyBy2s9I5c
https://www.youtube.com/watch?v=f5ptI6Pi3GA
https://www.youtube.com/watch?v=v490Z5lo7Xk
https://www.youtube.com/watch?v=eHDxy04QPq
M
https://www.youtube.com/watch?v=YRu6CaXTAxA
Definition of a company
An excellent definition of a company can be seen
from the statement made by Lord Lindley, By a
company is meant an association of many
persons who contribute money or moneys worth
to a common stock and employ it in some trade or
business, and who share the profit and loss as the
case may be) arising there from. The common
stock so contributed is denoted in money and is
the capital of the company and the persons who
contribute it, or to whom it belongs, are called as
members. The proportion of capital to which each
member is entitled is his share which is always
transferable although the right to transfer them is
more or less restricted.
What is corporate crime?
Corporate crimes was perhaps best explained by Sir John Salmond,
A society is not a person, but a number of persons. The so-called
will of a company is in reality nothing but the wills of a majority of
its directors or shareholders. Ten men do not in fact become one
person, because they associate themselves together for one end,
anymore that two horses become one animal when they draw the
same cart. The apparent absurdity of holding that a rich and
powerful joint-stock company is a mere fiction of the law, and
possesses no real existence, proceeds not from fiction-theory, but
from a misunderstanding of it. No one denies the reality of the
company (that is to say, the group of shareholders). What is in
truth denied is the reality of its personality. A group or society of
men is a very real thing, but it is only a fictitious person.
...Although corporations are fictitious persons, the acts and
interests, rights and liabilities, attributed to them by the law are
those of real or natural persons, for otherwise the law of
corporations would be destitute of any relation to actual fact and of
any serious purpose.
What is corporate crime?
Corporate crimes are thus, criminal breaches or
offences that have been either orchestrated or created
or committed by a company that could either lead to
financial losses or sometimes even the loss of live.
However, the problems that are associated with certain
areas of the laws such as criminal, contract and tort
law have been designed on the premise that of
individual autonomy. Thus, when dealing with a
company which has layers of individuals when
combined make a working company, when something
does go wrong do we than lay blame to the company
totally or try to find the actual perpetrator within the
organisation to be held accountable and liable. This is
made difficult with existing principles within company
law, namely, the separate legal personality principle.
What is corporate crime?
Perhaps when one looks at the what was said by Lord
Hoffman, things may seem clearer,
Judges are sometimes says that a company as such
cannot do anything; it must act by servants or agents.
This may seem an unexplained, even banal remark.
And of course the meaning is usually perfectly clear.
But a reference to a company as such might suggest
that there is something out there called the company
of which one can meaningfully says that it can or
cannot do something. There is in fact no such thing as
the company as such, no ding an sich, only the
applicable rules. To say that a company cannot do
something means only that there is no one whose
doing of that act would under applicable rules of
attribution, count as an act of the company.
The position in England
The approach has been first to deny corporate criminal
liability and then to base it on the identification of
certain persons as the alter ego of the company. As
stated by Viscount Haldane drawing his knowledge of
German law and philosophy.
As stated by Millett ;
Their minds are its mind; their intention its intention;
their knowledge its knowledge.
in Tesco Supermarkets Ltd v Natrass , however, their
Lordships have found a way around this by now only
drawing a clear line but the law as well has hitherto
avoided liability based on aggregation of individual faults
into a concept of organisational liability or responsibility.
Meridian Global Funds Management Asia Ltd v Securities
Commission .
The position in England
However, today the United Kingdom had moved to a new phase of
corporate criminal liability by the introduction of the Corporate
Manslaughter and Corporate Homicide Act 2007 that has come in
effect from 6th April 2008. For the first time, companies and
organisations can be found guilty of corporate manslaughter and
face criminal prosecution as a result of serious management failures
resulting in a gross breach of a duty of care.

A corporation today can and will be found guilty of the new offence if
the way in which its activities are managed or organised causes a
death and amounts to a gross breach of a duty of care to the
deceased. It will be called corporate manslaughter, or in Scotland,
corporate homicide.

Employees of companies, consumers and other individuals will be

offered greater protection against corporate negligence. The new
law will focus the attention of companies and organisations by
ensuring that they take their health and safety obligations seriously.
Position in Australia
In Australia, Courts initially relied on principles of
vicarious liability, but have largely followed the
identification approach since it was developed in
the UK in the 1940s. The most significant aspect
of Australia's corporate criminal liability regime is
the statutory provisions providing for
organisational liability in relation to federal
offences, including on the basis of 'corporate
culture'. These provisions are 'arguably the most
sophisticated model of corporate criminal liability
in the world'. There are also various provisions in
individual statutes setting out models of corporate
liability applying to particular offences. These
statutes include the Trade Practices Act 1974, the
Criminal Code Act 1995 and the Corporation Act
Malaysian Position
Identification doctrine
The court has to determine whether the employee
who committed the wrong action is a certain level
employee that is considered as an alter ego of the
company.
The doctrine attributes the actus reus and men
rea not just on any employee but of the
controlling mind to the company.
Yap Sing Hock & Anor v Public Prosecutor
[1992] 2 MLJ 714
The supreme court held that directly or indirectly,
a company can be held liable for offences
personally where the officer or director of the
company can be regarded from evidence as the
directing mind or the controlling will of the
Malaysian Position
Respondeat Superior
The doctrine is based on agency in a corporation.
It gives rise to vicarious liability where a
companys liability for crime indirect. Respondeat
superior doctrine is accepted in Malaysia to assign
vicarious liability to the employer for wrong
committed by a servant in the course of his
employment as emphasised in Mary Collette John
v South East Asia Insurance Bhd [2010] 2 MLJ 222.
this doctrine differs from the identification
doctrine as it seeks a master and servant or
agency relationship and statute imposed duty.
Malaysian Position
Strict Liability
In Melan bin Abdullah & Anor v Public
Prosecutor [1971] 2 MLJ 280; strict liability is
described as an offence where proof of the actus
reus alone suffices for a conviction, however
morally free from blame the defendant may be.
In Seah Eng Joo v Regina [1961] 1 MLJ 252
It was held that if a statute contains an absolute
prohibition against the doing of some act, mens
rea is not a constituent of the offence. If it is not
an act which is criminal in the real sense of the
term but one which in the public interest ought to
be penalised.
Malaysian Position
The Federal Court in Public Prosecutor v Datuk Tan
Cheng Swee & Ors emphasised that mens rea or
guilty mind is a essential ingredient in every crime
except in cases of strict liability or absolute liability.
Lim Chin Aik v R [1963] AC 160 (PC)
Lord Evershed, putting the defendant under strict
liability will assist in the enforcement of the regulations.
That means that there must be something he can do,
directly or indirectly, by supervision or inspection, by
improvement of his business methods or by exhorting
those whom he may be expected to influence or control,
which will promote the observance of the regulations.
Unless this is so, there is no reason in penalising him,
and it cannot be inferred that the legislature imposed
strict liability merely in order to find a luckless victim.
Malaysian Position
The concepts relating to corporate manslaughter or let alone corporate
criminal liability is really underdeveloped in Malaysia. The Companies
Act 1965 is silent on the matter. In fact leading textbooks on Company
Law in Malaysia have placed very little importance or no importance at
all on the matters pertaining to corporate manslaughter.

The limited case laws on the matter of corporate criminal liability in

Malaysia have been restricted to the decision of Tesco Supermarkets
Ltd v Natrass . However, even the English judges have long developed
the area of corporate manslaughter since the case of Tesco
Supermarkets Ltd v Natrass , today the United Kingdom have
legislation on the matter, Corporate Manslaughter and Corporate
Homicide Act 2007.

This goes to show the importance that have been placed on the area,
which has caused and moved British parliamentarians to legislate on
the matter. Of course this had not been easily done and would and did
come with resistance, however, it is a necessity that could have no
longer be avoided.
Position in Malaysia
Legislation on the matter of corporate manslaughter would
have to be devised carefully and has to be balanced between
the various conflicting rights of various parties that would
involve as well as the basic fundamentals that had led to the
creation of company law that had evolved from the feudal
system. The business world requires flexibility as it is ever
changing and is influenced by various fundamentals
surrounding such as political, economical and sociological
environmental considerations.

However, legislations are also necessary especially when

Malaysia has not gone globalised in the business sector, thus
allowing various multi and transnational companies to set up
business in various industries in Malaysia. In order to protect
the citizens of Malaysia from the potential threat of these
companies from exploiting the existing loop holes in legislations
in Malaysia, newer legislations have to be introduced.