There have always been exceptions to the protection offered by the corporate veil. The modern regulatory system, however, has created a wide variety of corporate offences for which senior company officials can find themselves liable. Anybody with senior decision making power within a company should know how and when they could be personally facing potential criminal charges.
Usually, personal liability for corporate offences stems from three key words - Consent, Connivance or Neglect. They are best explained with reference to an example. Imagine a company fails to maintain a key piece of machinery, which fails dramatically and breaks the arm of an employee. The Company is likely to have breached Section 2 of the Health and Safety at Work Act, and committed a criminal offence. Personal liability for directors could arise in the following circumstances:
Neglect can be a difficult trap to avoid for a senior manager with a wide range of duties and obligations. Whilst health and safety has been used as an example, personal liability can arise from a wide array of regulatory offences, including:
Likewise, liability is not limited solely to directors. Again using health and safety as an example, any "senior manager" is potentially exposed to liability under the relevant statute.
In summary senior officials can face a significant risk of personal liability, potentially in areas outside their personal expertise. Senior managers should ensure they are up to date with their regulatory responsibilities, and put in place practical action to safeguard both their Company and themselves.
We produce a range of insights and publications to help keep our clients up-to-date with legal and sector developments.
Sign up