Criminal Liability of A Company / Corporations: Lakshminarayanan Alaguraja Advocate Altacit Global

CHENNAI
3rd Floor, Creative Enclave,

148-150, Luz Church Road,
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Bangalore - 560 001.
Tel: +91 - 80 - 6546 2400
COIMBATORE
CRIMINAL LIABILITY OF A
COMPANY / CORPORATIONS
BB1, Park Avenue,

# 48, Race Course Road,
Coimbatore - 641018.
Tel: +91 - 422 6552921
Lakshminarayanan Alaguraja
Advocate
Altacit Global
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Corporate Liability
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
In criminal law, corporate liability determines

the extent to which a corporation as a legal
person can be liable for the acts and
omissions of the natural persons it employs.
It is sometimes regarded as an aspect of
criminal vicarious liability, as distinct from
the situation in which the wording of a
statutory offence specifically attaches
liability to the company / corporation.
Formation of a Company
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Company = organization of persons and

funds for common purpose.
Only an Incorporation makes it a legal
entity registration under Companies
Act, 1956 conclusive proof of valid
formation.
Memorandum and Articles of Association
also shareholders agreement.
Promoter of a Company
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Promoter = one who promotes the

formation of the company
entrepreneur.
Personally liable for contracts before
completion of the incorporation
process.
Fiduciary
relationship
and
legitimate expenses are payable
sweat equity, etc.
Objects Clause
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
MoA Main, Ancillary and Other

Objects.
Investor protection and as caution
to outsiders Doctrine of Ultra
Vires exceeding the legal power.
Ultra vires actions are not binding
on the Company.
Articles of Association
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
For internal management rules for dayto-day activities.

Rule of Constructive notice = presumed
knowledge of the AoA by anybody dealing
with the Company.
Rule of indoor management an
exception of procedural compliance to
protect external interests with reasonable
efforts.
Criminal Liability
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
1. Nature and seriousness of crime.

2. Complicity and pervasiveness within the
Company
3. History of similar conduct.
4. Corporations timely, voluntary disclosure
and cooperative efforts.
5. Presence of a compliance and ethics code.
6. Prosecution = combined efforts of the
Corporation
and
the
Investigating
Authorities Concern of confidential
information.
Criminal Liability
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
1. Rationale for Criminal liability = enormous

influence on economy.
2. Strict degree of Vicarious criminal liability
attribution of collective mens rea of
Executives.
3. Gross negligence or breach of duty.
4. Test of Organizational approach.
5. Applies to Partnerships/Trusts/Unions too.
6. Statutory compliances also covered for
liability.
Criminal Liability
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Fundamental Rights of a Company

Fair trial = Procedural safeguards
Issue of Political funding
Punishments for Company:

Restitution; Fines; Probation under
Court supervision; Forfeiture clauses;
and Public apologies
Culpability of Company
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Crime committed by an employee

despite strong Corporate policy
against it?
Crimes committed by contractors/
consultants?
Crimes committed in ignorance or
wrong understanding of law?
Serious frauds committed by senior
management?
Offences under Companies Act

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
Section
(Companies Act 1965)
Offences
Section 169
Failure to table accounts.
Section 364(2)
Making false and misleading statement.
Section 131
Disclosure of interest in contracts, property,

officers etc
Section 132
Breach of duty and liability of officers.
Section 132E
Substantial property transactions involving

directors.
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Offences under Companies Act

CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
Section
(Companies Act 1965)
Offences
Section 167
Failure to keep accounts for 7 years.
Section 125
Undischarged bankrupt acting as

director.
Section 133A
Prohibition of loan to persons

connected with directors
Section 135
General duty to make disclosure
Section 174
Powers and duty of auditors as to

reports on accounts
Section 367
Use of a company name in business

prior to incorporation.
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
CASE STUDY
Iridium India Telecom Ltd. vs. Motorola

Inc. 2011(1) SCC 74
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
The Honble Supreme Court allowed the prosecution against

the Motorola setting aside the defence plea that it could not
have the necessary mens rea. A Company/Corporation is
virtually in the same position as any individual and may be
convicted of offences including those requiring mens rea. It
cannot escape liability for a criminal offence merely because
the punishment prescribed is that of imprisonment. The
criminal intent of the alter ego of the company i.e. the persons
or group of persons that guide the business of the Company,
would be imputed to the corporation, depending upon degree
of control exercised by persons in charge of affairs of company.
Held if degree of control is so intense that a corporation may be
said to think and act through a person or body of persons, mens
rea of person or persons in control is attributable to the
corporation.
CHENNAI
Mylapore,
Chennai - 600 004.
Tel: +91 - 44 - 2498 4821
BANGALORE
Suite 920, Level 9,
Raheja Towers,
26-27, M G Road,
Tel: +91 - 80 - 6546 2400
COIMBATORE
BB1, Park Avenue,
Tel: +91 - 422 6552921
EMAIL
info@altacit.com
WEBSITE
www.altacit.com
Thank You

Criminal Liability of A Company / Corporations: Lakshminarayanan Alaguraja Advocate Altacit Global

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Criminal Liability of A Company / Corporations: Lakshminarayanan Alaguraja Advocate Altacit Global

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CHENNAI

3rd Floor, Creative Enclave,

BB1, Park Avenue,

In criminal law, corporate liability determines

Company = organization of persons and

Promoter = one who promotes the

MoA Main, Ancillary and Other

For internal management rules for dayto-day activities.

1. Nature and seriousness of crime.

1. Rationale for Criminal liability = enormous

Fundamental Rights of a Company

Punishments for Company:

Crime committed by an employee

Offences under Companies Act

Failure to table accounts.

Making false and misleading statement.

Disclosure of interest in contracts, property,

Breach of duty and liability of officers.

Substantial property transactions involving

Offences under Companies Act

Failure to keep accounts for 7 years.

Undischarged bankrupt acting as

Prohibition of loan to persons

General duty to make disclosure

Powers and duty of auditors as to

Use of a company name in business

Iridium India Telecom Ltd. vs. Motorola

The Honble Supreme Court allowed the prosecution against

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