The landscape of corporate criminal liability is evolving, with the further potential for companies to be held accountable for all crimes committed by their senior managers. But what does this expansion mean for the corporate world—and for the legal sector? Is it “lights, camera, action,” or is this simply more “red tape” for companies to be aware of?
Corporate Criminal Liability: A Summary of the Law
In 2023, the UK expanded the doctrine of corporate criminal liability, enabling businesses to be held criminally responsible for economic crimes committed by senior managers in the course of their employment.
Historically, at common law companies could be held criminally responsible for offences in one of two ways.
Companies could be criminally liable for the acts of their officers by the simple application of the principle of vicarious liability to the criminal law context. This approach applies where the legislation creating the offence envisages that the acts in question may be done by employees, typically in the case of regulatory offences and/or where the offence is one of ‘strict liability’.
For offences containing a ‘mental element’ corporate criminal liability was determined by what became known as the identification principle. This is where “the acts and state of mind” of those who represent the “directing mind and will” of the company are attributed to the company itself. This identification principle acknowledges the existence of corporate officers who are to be treated in law as the embodiment of the company when acting ‘on businesses. Their acts and states of mind are deemed to be those of the company, and they are deemed to be “controlling officers” of the company. Criminal acts by such officers will not only be offences for which they can be prosecuted as individuals, but also offences for which the company can be prosecuted because of their responsibilities and status within the company.
This framework raised significant challenges and meant it has been difficult to convict a company for a serious criminal offence. The stumbling blocks are the identification principle i.e. proving that an individual offender represented the “directing mind and will” and, connected to that, establishing a clear connection between a senior individual’s actions and the company’s interests. Prosecutors, including the former director of Serious Fraud Office, Sir David Green KC, have found themselves frustrated with the evidential hurdles of the identification doctrine, and have looked to other legislation such as the Bribery Act 2010, with its ‘failure to prevent’ offence to prosecute companies.
The need for reform had been apparent for some time and the pressure on the government to do more to tackle fraud and other forms of economic crime had been mounting.
Recent changes to corporate criminal liability have streamlined and expanded the scope of the doctrine in relation to economic crimes. Under section 196 of the Economic Crime and Corporate Transparency Act 2023, if a senior manager acting within the actual or apparent scope of their authority commits an economic crime, as defined by Schedule 12, their company may be criminally liable for those actions, regardless of whether the act aligns with the company’s broader interests.
A “senior manager” is any individual who plays a significant role in:
- the decision-making concerning the management or organisation of the whole or a substantial part of the company’s or partnership’s activities; or
- the managing or organising of the whole or a substantial part of such activities.
Take 2: The Proposed Expansion to Corporate Criminal Liability
In 2024, a new Bill was introduced to Parliament that aimed to extend corporate criminal liability further, making companies responsible for all crimes committed in the UK by senior managers, acting within their scope of authority. However, the dissolution of Parliament prevented the Bill from progressing.
In February 2025, the government introduced “Take 2” of this proposed expansion through Clause 130 of the Crime and Policing Bill. Clause 130 seeks to hold companies criminally liable for crimes committed by senior managers if those actions fall within the actual or apparent remit of their authority.
The Bill passed its second reading on 10 March 2025, and it will now go through the Committee review stage. If it receives Royal Assent, the potential impact on the corporate sector will be significant. Enforcement agencies will find it easier to prosecute companies or partnerships for a broader range of offences, including those under tax, environmental and data protection legislation.
What Could This Mean for Companies?
The proposed expansion of corporate criminal liability should be viewed alongside the existing “failure to prevent” offences, such as the failure to prevent bribery and fraud. Under these provisions, a company can be held criminally liable for failing to prevent an associated person (such as an employee or agent) from committing bribery, or fraud for large companies with a turnover over £36 million.
With the new Bill potentially broadening this scope, the spotlight is now squarely on companies. The question is: how will businesses respond?
Corporate Criminal Liability: Lights, Camera, Action?
The proposed changes to corporate criminal liability will likely bring increased spotlight on how companies manage their senior personnel. Hiring decisions will come under greater scrutiny; selecting the wrong person for a senior role could prove damaging not only to a company’s reputation but to its future growth.
Although the Bill is still in the early stages, businesses should be proactive in understanding its potential impact. Companies that fail to stay ahead of these changes could find themselves facing legal and reputational challenges down the road. Companies may need to implement more stringent vetting and supervision processes to ensure their executives adhere to the highest ethical and legal standards.
With corporate criminal liability potentially expanding, companies must act now to review their risk assessments by ensuring that senior managers – within the meaning of the legislation – are identified, conducting thorough due diligence on senior hires, and ensuring that robust internal controls are in place to mitigate the risks of falling short.
The EMM Investigations team will continue monitoring the advancement of the Bill through Parliament.
Natalie Tenorio-Bernal and Dylan Silvain
