- This amendment to the Spanish Penal Code introduces an exemption from the criminal liability for those companies which implement an organisation and management model for the prevention of criminal misconduct (compliance program).
- The establishment of criminal compliance programs will henceforth be the only means of exculpation from criminal liability for companies.
- Any criminal compliance program which has been adopted in the past, must meet the new minimum requirements established by the statue in order to obtain the exemption from corporate criminal liability.
The Organic Law1 1/2015 entered into force on July 1st, 2015, marking substantial modifications to the Spanish Penal Code. Among the various amendments, the new criminal regulation of legal persons should be of immense interest to companies. For the first time it expressly provides a criminal liability exemption for companies which implement an organisation and management model for the prevention of crimes, i.e. a compliance program.
While Spain has recognised corporate criminal liability since the year 2010, significant debate has ensued on the “due control” provision found in Article 31 bis Spanish Penal Code. Thus, the present amendment to the Spanish Penal Code widens the scope of corporate criminal liability by defining the essential elements of a compliance program and regulating its impact for the first time. To this end, the reform is, to a considerable degree, based on the Italian Legislative Decree 231/2001 of June 8th, 2001.
Therefore, the most significant changes in the wake of the amendment in terms of criminal liability of companies can be summarised as follows:
1. The establishment of a control and supervision model will be the only way to obtain an exemption from criminal.
2. The criminal compliance programs must meet the minimum requirements established by statutory law so as to qualify for the exemption.
Conditions and legal requirements for the exemption from criminal liabilit
Under the amended Penal Code, when a crime is committed by directors (de facto or de jure) or legal representatives of a company, the amended Article 31 bis 2 demands that the following conditions are met by the company in order for it to be exempted from criminal liability:
- The existence of a compliance program prior to the criminal act, including proportionate monitoring and control measures to prevent the committed crime or to significantly reduce the risk of such crimes;
- The delegation of the supervision of the compliance program to an autonomous body within the company with its own powers of control (i.e. a “Compliance Officer”);
- The tainted individual / employees committed the crime fraudulently while acting in violation of the compliance programm
- There have not been any omissions in matters of supervision, monitoring and the control function by the Compliance Officer.
Therefore, the operative part of the amendment is the creation of a compliance program (organisational and management model) which is to be duly adopted and executed before the criminal offence itself is committed. Hence, the determination of what would constitute an effective compliance program becomes imperative.
An Organic Law (Spanish: Ley Orgánica), under the present Spanish Constitution of 1978, must be passed by an absolute majority (not merely a majority of those voting) of the Congress of Deputies.
The amended Article 31 bis 5 sets out the requirements for an effective compliance program, named “organisational and management model”, as follows:
Conducting comprehensive “due diligence” in order to identify areas of the company in which criminal offenses are most likely to be committed. Thus the implementation of the compliance program would have to be preceded by a “risk assessment”;
- The introduction and implementation of appropriate procedures for compliance related decision-making within the company;
- The introduction and implementation of financial resource management systems suitable to prevent crimes;
- The establishment of effective communication channels in terms of “ethical lines” or “whistleblowing” programs that would allow for a report of non-compliance or criminal misconduct within the company;
- The establishment of an internal disciplinary system that penalises failure to comply with the compliance program on an individual level;
- A Periodic review and audit of the compliance system whenever changes occur within the organisation of the company.
The amendment further introduces new criminal offences into the conclusive catalogue of crimes, which establishes criminal liability of a company, without prejudice to the liability of the perpetrator of the offence. In essence the new offences include the unlawful financing of political parties, frustration of enforcement actions and crimes against the public health.
However, it should be noted that the existing penalties applicable to a legal person under Article 33.7 remain unaltered by this amendment. Thus, companies may be subject to fines, dissolution, suspension of activities for up to five years, closure of premises, prohibition from contracting with the public sector or obtaining grants or subsidies, prohibition of certain business activities or even court regulated seizure assets.
Additionally it is to be noted, that the company is required to remain committed to undertaking mitigating steps in the aftermath of an offence. Examples of such mitigating activity would include voluntary disclosure of the criminal misconduct prior to discovery by law enforcement authorities, cooperation during the course of the investigation, restitution or minimisation of damages before the trial or the pre-trial implementation of measures that effectively prevent and detect any crimes that may be committed in the future.
Provenza, 290, 1º 2ª A y B
Phone: (+34) 93 487 24 77
Fax: (+34) 93 487 60 10
Paseo de la Castellana, 259C
Torre de Cristal, 28046 Madrid
Phone: (+34) 91 523 94 82
Fax: (+34) 91 523 94 87