Corporate criminal liability through senior managers – what could this mean?

The law is changing to make it easier to prosecute companies for certain corporate offences in the UK. By the end of this year, the general rule that only the conduct of "directing minds and wills" could create criminal liability for a corporate will be expanded to include liability based on the actions of senior management. Currently, this change will only apply to the economic crime offences listed at Schedule 12 of Economic Crime and Corporate Transparency Act 2023 (ECCTA), but is likely to be expanded. We have recently written on this topic for the New Law Journal and you will find a PDF copy of that article available to download below. Here, we take the conversation further as we consider what parallels can be drawn with concepts of senior management from the areas of health and safety and financial services.

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Who could be considered a "senior manager" under the ECCTA?

In our article for the New Law Journal, we set out the statutory definition of "senior manager" as someone who plays a "significant role" in making decisions about how all or a substantial part of the organisation’s activities are to be managed or organised, or in actually managing or organising a whole or substantial part of those activities. But what does this really mean?

Drawing parallels with the Corporate Manslaughter and Corporate Homicide Act 2007

Can a comparison be drawn between the ECCTA and the FCA's Senior Managers and Certification (SMCR) regime?

Empty chair prosecutions

As noted in our article, it is currently unclear whether ECCTA requires a senior manager to be convicted of a crime in order to secure a conviction of the corporate; our view is that it does not. Ultimately, prosecutors could:

a) charge a senior manager with a relevant offence and then prosecute the corporate afterwards, following conviction of the individual;
b) prosecute the corporate on the basis of the senior manager's conduct without the senior manager being charged; or
c) prosecute the corporate and the senior manager at the same time.

If a prosecution of a corporate under these provisions proceeds to trial, ultimately whether the elements of the offence and the attribution liability have been proven will be a matter for a jury. In such a case, the issues that any jury will have to decide are:

Is the individual a senior manager?
Did the "senior manager" commit the underlying offence?
Was the "senior manager" acting within the actual or apparent scope of their authority?

The changes will need to be factored into compliance programmes, as well as the conduct of internal investigations.

Next steps

Reach out to our team for training on the new law or an assessment of how it applies to your business.

For our further insight into the Economic Crime & Corporate Transparency Act and the upcoming changes to corporate criminal liability in the UK, you can download a pdf version of our article "Senior manager attribution: a new liability?" in the New Law Journal here. This was first published on 20 October 2023 and is available without subscription here, where you can sign up for two weeks free access.

For those you with subscriptions to Lexis Nexis, you can also view the article at: Senior manager attribution: a new liability? – 173 NLJ 8045, p12