Criminal Liability of Companies. TAIWAN Tsar & Tsai Law Firm

Transcription

1 Criminal Liability of Companies TAIWAN Tsar & Tsai Law Firm CONTACT INFORMATION Edgar Chen and Judie Sun Tsar & Tsai Law Firm 8 th Floor 245, DunHua S. Road, Section 1 Taipei 106, Taiwan Republic of China Tel: / Fax: edgarchen@tsartsai.com.tw and judiesun@tsartsai.com.tw 1. General 1.1. Can a company be prosecuted in your jurisdiction in a similar way as an individual offender? Please explain the main differences, if any. As a general rule, a company is considered lacking the capacity to be held criminally liable. However, it is possible for a company to be prosecuted in a similar way as an individual offender under a number of so-called special criminal laws that delineate criminal sanctions on legal persons (companies) for breach of certain regulations.,.the principal distinction between prosecutions of companies and individuals relates to the issue of punishment. Unlike an individual offender, a company is not subject to death penalty or imprisonment. Generally, sanctions imposed on legal persons (companies) under the aforesaid special criminal laws are to pecuniary fines Can other types of sanctions under criminal law been imposed on companies? Describe the major types of sanctions and their legal prerequisites. Besides pecuniary fine, if a company is convicted of a special criminal law violation, the criminal law sanctions of confiscation and forfeiture may also be imposed. 1

2 Objects used for perpetrating a criminal offence or gains derived from a criminal offense could be confiscated or forfeited if, at the time of conviction, the perpetrator still owns or has a claim to the objects or gains Are there any other kinds of sanctions in other fields of law which can be imposed on companies following the commission of an offence by its directors, managers or employees (e.g. fines, dissolution of a company, etc.)? Please describe the relevant sanctions and summarize the legal prerequisites. In addition to criminal sanctions as aforesaid, if a company or any of its directors, managers or employees are convicted of a special criminal offense, the company would also possibly face such administrative sanctions as forced business suspension or dissolution. The aforesaid special criminal laws stipulate different criteria for different administrative sanctions. Normally, for a less serious offence, the competent authority would first order the company to take corrective action; and only when the company fails to take corrective action, would such drastic administrative sanctions as forced business suspension or dissolution be imposed.. 2. Criminal Liability of Companies 2.1. What types of sanctions can be imposed on a company? What is the minimum/maximum punishment for each sanction? If the sanctions distinguish between certain types of offences please describe the sanctions for the most relevant offences or groups of offences. The principal criminal sanctions on companies are fines. The minimum and maximum fine that can be imposed for a specific criminal offense is established by the different special criminal statutes. The court normally has the discretion to determine the appropriate fine, limited only by the statutory amount range. Under Criminal Act, the factors to be considered in deciding the amount of fine in a specific case include but are not limited to: the purpose of the offense, the method of the perpetration, the danger and damage caused by the crime, and especially in respect of discretion of fines - the economic situation and the financial advantage gained by the perpetrator. If the financial advantage gained by the perpetrator is more than the statutory maximum, the court may impose a fine beyond the statutory maximum but not to an amount exceeding the financial advantage gained by the perpetrator What are the legal requirements for each type of sanction? The premise of any criminal sanctions is that the underlying criminal offences be proven beyond a reasonable doubt. Each of the special criminal statutes as aforesaid defines its own prerequisites constituting a specific criminal offence, so there are numerous types of criminal offences that could be committed by companies in Taiwan. 2

3 2.3. Is the prosecution of a company confined to certain types of offences or to offences committed by certain hierarchy of company staff? If yes, please explain in more detail. Each of these special criminal statutes defines its own prerequisites constituting a specific criminal offence, so there are numerous types of criminal offences that could be committed by companies in Taiwan. Most of the special criminal laws defining criminal sanctions for legal persons require the offences being committed by the representative, the agent, the employee, or other servant of the legal person. If the activities of an employee are attributable to his employer under a special criminal law, then the hierarchy of the employee who perpetrates the offence would not be an important issue in deciding the criminal liability of a company in Taiwan How will acts (or omissions) of individuals (directors, managers, employees) be attributed to a company? Can acts or omissions been attributed if the individual violated only internal (but not statutory) rules or regulations? For most special criminal statutes that stipulate criminal sanctions for legal persons in Taiwan, a company is held criminally responsible for the illegal acts of its representatives, agents, employees, or other servants only when these illegal acts are done in the performance of their duties. Thus, if the illegal acts of individuals are within the scope of the employment or are intended, at least in part to benefit the company; those acts (or omission) would be consequently attributed to the company. On the other hand, the violation of internal company rules and regulations is not a prerequisite for any special criminal statutes defining criminal sanctions for legal persons. Therefore, in a criminal case concerning the criminal liability of a company, whether the individuals violate internal rules or regulations of the company would be irrelevant in Taiwan How will mens rea of the company be established? Under Taiwanese criminal system, legal persons such as companies are deemed short of the capacity to be held criminally liable; and it is only in the situation of offense of special criminal statutes, then legal persons become eligible objects of criminal sanctions. Consequently, the mens rea of any culpable employee or agent is legally imputed to the company. Once the individual perpetrators are found guilty, it is not necessary to show the mens rea of the company to find it criminally liable Is there a strict liability of a company for certain kinds of offences for which mens rea is not required? Please describe for which kind of offences mens rea is necessary and for which not. As described above, for most special criminal offenses, mens rea on the part of the company is not necessary to hold a company criminally liable. 3

4 Although Taiwan law does not imposes strict liability on a company for any criminal offence, we note that there are special criminal statutes which regard companies as the actual perpetrators of the offense and hence mens rea of any culpable employee or agent is imputed to the company Is it necessary to identify and/or convict the individual offender in order to prosecute a company? Because the criminal liability of a company is generally the result of the illegal conducts of individual offenders for special criminal violations, it is necessary to identify the individual offender in order to prosecute and convict a company. However, since there is no law requires consistent verdicts, accordingly, even if the individual offender is not prosecuted or convicted, the company may nonetheless be convicted What additional defenses (except of lack of offence) can a company raise? Because companies are considered legal persons under the law, any defenses available to an individual are generally available to a company. Accordingly, a company may rely on all constitutional and statutory defenses (such as jurisdictional defects or because the prosecution is barred by the statute of limitations), or assert any defense that negates mens rea of the culpable employee. In addition, as noted in answer to question 2.4, a company cannot be held responsible for the acts of people who are not its representatives, agents, employees, or servants. Nor shall a company be held criminally liable for any illegal acts committed not in the performance of the duties of its representatives, agents, employees, or servants Can a company avoid punishment if it is sufficiently organized, has duly instructed its directors, managers or employees and has taken reasonable care to exert control on its directors, managers or employees? What extent or organizational requirements and control are necessary to avoid conviction? Due organizational requirements and control would not work to avoid conviction, subject to rare exceptions (such as Money Laundering Control Law which spares a company from criminal fine for money laundering if the company has exercised due care and control to prevent illegal money laundering from occurring) Can certain kinds of sanctions been executed during the investigative phase of a criminal proceedings (e.g. preliminary seizure of bank accounts, attachment of claims)? Yes. During the investigation stage, upon application of the prosecutor, the court may issue a search warrant to allow the police and the prosecutor to conduct a search and seize anything that could be used as evidence or is subject to confiscation or forfeiture. On the other hand, the prosecutor could also order the owner, possessor, or custodian of the property subject to seizure to surrender or deliver it. 4

5 2.11. Can both the individual offender and the company been convicted for the same offence? In case of most special criminal offenses of legal persons, the criminal liability of a legal person is legally attributed from the illegal acts of its representatives, employees or servants. For that reason, the common practice of Taiwan is to prosecute and convict the individual offender and the company for the same offense in the same criminal proceeding Can a parent/group company been prosecuted for offences being committed within a subsidiary? The parent company and its subsidiary company are different legal entities. Except in an extreme case that an individual offender is found to be the representative, employee, or servant of both the subsidiary and the parent company, and commits the offense in the performance of his duty toward both the subsidiary and the parent company, normally the criminal offenses being committed within a subsidiary company is not imputable to its parent company. 3. Criminal Sanctions on a Company 3.1. What other types of sanctions but a criminal punishment can be imposed on a company? Please describe the types of sanctions and their legal requirements. As noted in the answer to 1.3., companies can also be subject to such administrative sanctions as forced business suspension or dissolution, aside from criminal fines Is the imposition of these sanctions confined to certain types of offences? Describe the most relevant sanctions and types of offences? There are more than fifty special criminal laws that delineate criminal sanctions on legal persons for breach of certain regulations, but only a limited number of them have rules authorizing the competent authority to impose administrative sanctions on the companies for committing those special criminal offenses What defenses can a company raise against these offences? The possible defenses for a company to avoid the above administrative sanctions: a) arguments to the effect that the offense is not so serious as to warrant administrative sanctions, or b) compliance with the cease and desist order of the competent authority and take prompt corrective actions, etc. 5

6 3.4. Can such sanctions been executed during the investigative phase of a criminal proceedings? Criminal conviction is the premise for the competent authority to impose administrative sanctions on company offenders. Therefore, during the investigative phase of a criminal proceeding concerning the criminal liability of a company, it is legally not permissible for the competent authority to impose an administrative sanction against the company for the same offense. 4. Procedural Issues in Cases of Corporate Liability 4.1. Does the prosecution have discretion to prosecute or not a company? Which aspects will the prosecution take into account? Yes. Pursuant to The Code of Criminal Procedure, for an offense with a maximum punishment of imprisonment for less than three years, the public prosecutor, after considering the matters specified in Criminal Code, has the discretion not to prosecute the defendant. The relevant factors to be taken into account for this prosecutorial discretion include but not limited to: the purpose of the offense, the method of the perpetration, the degree of the violation of duty, the danger and damage caused by the crime, and remedial actions taken by the defendant. Nonetheless, as mentioned in the answer to 2.11, the customary practice of Taiwan is to prosecute and convict the individual offender and the company for the same offense in the same criminal proceeding. Thus it is rare for a prosecutor to prosecute the individual offender but not to prosecute the company for the same criminal offense At what stage during an investigation/proceeding does a company have the status as a suspect or similar status? There is not a legal requirement that an accused be notified before she or he is investigated. However, under The Code of Criminal Procedure, before the police or the prosecutors take affidavits from a suspect or a defendant, they shall be informed of the information that they are suspected of committing an offense and all of the offenses they are suspected of. Hence in theory, if a company is suspected of committing a crime, after its representative, agent or employee is questioned by the police or the prosecutors, the company would be aware that it has become a suspect or a defendant in a criminal proceeding. 6

7 4.3. Does a company have the rights to remain silent (nemo tenetur se ipsum accusare), to refuse production of documents, to deny access to company site without search warrant, to refuse testimony, to answer questions or to any other suspects rights? Who exerts these rights if investigations are made against the company s directors? According to The Code of Criminal Procedure, the accused has the right to remain silent and does not have to make a statement against his own will. During the investigation stage or the criminal trial, the court may issue a search warrant to allow the police and the prosecutor to conduct a search and seize anything that could be used as evidence or is subject to confiscation or forfeiture. The court and the prosecutor could also order the owner, possessor, or custodian of the property subject to seizure to surrender or deliver it If a company site is not a place open to the general public for business purpose, the company has the right to deny access to this site without search warrant. Commonly, it would be the representative of the company or the employees of the highest hierarchy at site to exert this right. The responsible persons of a company, including its directors, has a right to refuse to testify if doing so would incriminate themselves personally or subject them individually to the threat of criminal prosecution When will a company be informed that it is or can become prosecuted? A company is formally notified that it is prosecuted by an indictment Can the directors, managers or employees be witness in proceedings against a company? Does this also apply if the directors, managers or employees are suspects themselves? If the court examines a co-defendant on a case that another defendant is being charged, the co-defendant shall be subject mutatis mutandis to the provision governing the examination of a witness. Hence even if the directors, managers or employees are codefendants with their company in the same legal proceeding, they still could testify against their company as a witness Will there be a joint proceeding against the company and the individual offender? As discussed in 2.11 above, the customary practice of Taiwan is to prosecute and convict the individual offender and the company for the same offense in the same criminal proceeding. However, there is no rule that requires a joint prosecution and the decision is legally left to the discretion of the prosecutor Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. No. 7

8 5. Procedural Issues on Other Criminal Sanctions 5.1. Does the prosecution have discretion to impose or not a sanction on a company? Which aspects will the prosecution or court take into consideration? Once a criminal offense is prosecuted, the court has the discretion to decide the exact criminal sanction within the statutory minimum/maximum limitation. In accordance with 133 II of The Code of Criminal Procedure and 61 of Criminal Code, for an offense with a maximum punishment of imprisonment for less than three years, if the court considers the offence to be trivial and the circumstance extenuating, it has the discretion to remit the sanction of the defendant. However, prior to a judgment remitting punishment pursuant to Article 61 of Criminal Code, the court may, in consideration of the circumstances and by consent of the complainant, also order the accused to do the following: to apologize to the victim, to make a written statement of repentance, or to pay to the victim an appropriate sum as consolation Does the company have the status of a suspect or a similar status and at what stage in proceedings? See answer to question When will the company been informed that the prosecution is considering to impose sanctions or have sanctions imposed? See answer to question Which procedural rights does a company have when it is at risk that sanctions might be imposed? As a legal person, a company is entitled to the same procedural rights as an accused individual. These rights include the right to counsel, a right to be present at all proceedings and examine the evidence, the right to present and cross-examine witnesses, and a right to a public trial by the court Will there be joint proceedings against the company and the individual offender? See answer to question Does the proceeding against a company differ from that against an individual suspect? If yes, describe the elemental differences. No. 8

9 6. Criminal Liability of Directors or Managers 6.1. Can directors or managers be criminally held liable for offences committed by other individual directors, managers or employees? Which legal concepts apply in your jurisdiction? Directors or managers cannot be criminally held liable for offences committed by other individual directors, managers or employees. Although the Tax Collection Law of Taiwan seems to provide a legal basis for the imprisonment of a company s statutory responsible person (e.g. director) for the company s tax law violations committed by other individuals, we are not aware of any precedent of a director or manager being imprisoned for illegal acts committed by others What are the legal requirements for a criminal liability of directors and managers for offences committed by others? See answer to question Does a criminal liability arise only from the fact that another director, manager or employee was not adequately selected, instructed, supervised or the company not adequately organized? See answer to question What recommendations do you have to exclude or minimize criminal liability risks of directors of a company? It is recommended that companies operating in Taiwan work closely with local legal counsel to work out and implement adequate internal control and corporate compliance programs to prevent or minimize criminal liability risks of directors of a company. 9