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Corporate liability for regulatory &
criminal sanctions under Dutch law
When it comes to regula...
©CMSDerksStarBusmannN.V.(June2014)
	
CMS Legal Services EEIG (CMS EEIG) is a European Economic Interest Grouping that coor...
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Corporate liability in criminal and regulatory matters under Dutch law

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Dutch law has extremely broad liability for corporates and their directors for regulatory and criminal sanctions. A brief overview.

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Corporate liability in criminal and regulatory matters under Dutch law

  1. 1. CMS_LawTax_CMYK_28-100.eps Corporate liability for regulatory & criminal sanctions under Dutch law When it comes to regulatory and criminal liability, Dutch law does not distinguish between natural persons and bodies corporate. In this respect, the Dutch system is fundamentally different from all other legal systems in Europe. Overview The Dutch Criminal Code holds a general provision on corporate criminal liability. In theory, corporates can commit and be prosecuted for all statutory criminal offences. In addition, the Dutch Criminal Code creates personal criminal liability for officers, directors and management that have “factually directed” the conduct of a guilty corporate. In recent years, this corporate and personal liability has been expanded to also encompass all regulatory and administrative fines. When has a corporation ‘committed’ an offence? Only natural persons can act in the physical sense. However, acts that fall “within the sphere” of a corporate can be attributed to that corporate. For example, employees’ acts within the course of the corporate’s everyday ‘normal business’ may lead to corporate liability, or if the corporate benefits (financially or other ways) from the employee’s wrongful acts. By way of illustration, if an employee of a chemical plant carelessly causes a chemical spill, that conduct will generally be attributed to the corporate, resulting in criminal liability for the corporate negligently causing the spill. Liability for management, officers and directors All persons that are aware of the risk that a criminal act may be committed by the corporate, that have the authority to take preventive or remedial action, but fail to do so adequately, can be held liable for having “factually directed” the corporate’s act. Formal authority is not a prerequisite. So, for example, a founder of a corporate may no longer have any formal link to the business, but in practice may still control the corporate’s policies. Such an informal leader may well be considered to have factually directed the corporate’s misconduct if that leader was aware that those policies created the risk of an offence being committed. In practical terms, this means that all officers, directors and management that were aware of the risk of an illegal act occurring but failed to take adequate remedial action, can be held directly and personally liable in both regulatory and criminal matters. This liability can extend “up the chain” to encompass individuals within a holding company – whether domestic or abroad –where the acts were committed by a Dutch operating company. If, for example, an Italian director of a Luxemburg holding company is aware of the risk of an illegal act occurring in a Dutch subsidiary, but fails to take adequate preventive measures, that director is liable in the Netherlands. Penalties A corporate can be sentenced to the administrative or criminal fines as set out in the statute for that specific offence. Individual officers, directors or management can be sentenced to all the statutory penalties for the relevant offence, including a prison sentence in criminal cases. More information For more information please contact: Dr. Mr. D.V.A. (Dian) Brouwer Investigations & Corporate Criminal Defence T +31 30 2121 740 M +31 6 52 643 924 E dian.brouwer@cms-dsb.com
  2. 2. ©CMSDerksStarBusmannN.V.(June2014) CMS Legal Services EEIG (CMS EEIG) is a European Economic Interest Grouping that coordinates an organisation of independent law firms. CMS EEIG provides no client services. Such services are solely provided by CMS EEIG’s member firms in their respective jurisdictions. CMS EEIG and each of its member firms are separate and legally distinct entities, and no such entity has any authority to bind any other. CMS EEIG and each member firm are liable only for their own acts or omissions and not those of each other. The brand name “CMS” and the term “firm” are used to refer to some or all of the member firms or their offices. CMS locations: Aberdeen, Algiers, Amsterdam, Antwerp, Barcelona, Beijing, Belgrade, Berlin, Bratislava, Bristol, Brussels, Bucharest, Budapest, Casablanca, Cologne, Dubai, Duesseldorf, Edinburgh, Frankfurt, Geneva, Glasgow, Hamburg, Istanbul, Kyiv, Leipzig, Lisbon, Ljubljana, London, Luxembourg, Lyon, Madrid, Mexico City, Milan, Moscow, Munich, Muscat, Paris, Prague, Rio de Janeiro, Rome, Sarajevo, Seville, Shanghai, Sofia, Strasbourg, Stuttgart, Tirana, Utrecht, Vienna, Warsaw, Zagreb and Zurich. www.cmslegal.com

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