The decision-making process and criminal corporate liability in Portugal

The recent reform of Portugal's
criminal law has introduced
significant changes to the corporate
liability regime. As we know, by
the decisions that they take, companies can
be liable for their actions at a number of
levels, criminal liability is among them.

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law presents two types of responsibility:
criminal liabilty, and another form of
liability similar to the German
ordnungwidrigeiten. The latter normally
applies when the offence is committed by a
corporation's agent in the exercise of its
functions. Conversely, corporate criminal
liability depends on the express forbidding
of a specific action.

Leadership position

The recent legislative reform has however
widened the scope of the application of
criminal corporate liability, to encompass the
differing levels of corporate decision-making.

Thus, companies are criminally liable
when a crime is committed in its name or in
the collective interest by individuals who
occupy a leadership position. A company
may also be liable for crimes committed by
those who undertake an action under the
authority of those that occupy a leadership
position – notably when it results from a
lack of supervision or control expected by a
company's superiors.

For this to have effect, a position of
leadership in a company is considered to be
exercised by its agents, representatives, or
those who have the authority to exert
control over an activity.

Corporate liability only extends however
to decisions taken by those who exert
sufficient power in the organisation, thus
companies are only liable where an offence
is committed after a decision that can be
considered the direct manifestation of its
will. Thus, where an agent of a company
commits an offence against the specific
orders or express instructions of its
superiors, the company is excluded from
liability.

On the other hand, collective
responsibility does not exclude the
responsibility of a company's agents. But it
does also not expressly include it. As a
matter of fact, both situations co-exist.

Another important aspect of the new
regime is that corporate liability is no longer
excluded when a company splits, or merges
with another company. In the event of a
merger, corporate responsibility exists when
the merger is complete; in the event of a
split, responsibility is assumed by the
entities that result.

Individual responsibility

Those who occupy a position of leadership
in a company may also be liable for a fine
when a company is convicted of a criminal
activity. This may arise when:

• a crime is committed by the company
  while the individual exercises a position
  of leadership, and without their express
  opposition;
• a crime is committed previous to the
  period where the individual exercised a
  position of leadership, but where a lapse
  of the responsibility of the company has
  resulted in it having no monetary
  capacity for the respective payment; or
• a crime is committed previous to the
  period where the individual exercised a
  position of leadership, but the decision
  occurred in that same period, and the
  company's non-payment is imputable to
  them.

If the leadership responsibility falls to
several individuals there will be joint
liability, which means that each is liable for
the entire sum, or that one may demand
from the others their respective part.

These are the general themes of
Portugal's new corporate liability regime.
The amendments have improved many old
issues, but also created conditions that
prompt new questions and which will thus
require particular attention.

Independent of the problems that will
surely appear, the new regime creates
however an important framework around
which companies can define and execute
their corporate governance strategies.