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| Director's Duties and the Criminal Code |
From 15 December 2001 the Commonwealth Criminal Code applies. The main effects are:
- A body corporate may now be found guilty of an offence and if the penalty is imprisonment, this penalty can be substituted with a fine.
- The Code formally indicates that it is no longer appropriate to attribute liability for breach of director duties to the corporation only where a high level officer, considered to be "the directing mind and will" of the corporation, was involved in the offence.
- The physical element of an offence by an employee, agent or officer, acting within the scope of their employment, or authority must also be attributed to the body corporate.
- If a body corporate authorised or permitted the individual's commission of an offence, then the fault elements of intention, knowledge or recklessness must also be attributed to the body corporate.
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| The Code details the means by which authorisation or permission by the body corporate may be established, namely by proving: |
| (a) that the body corporate's board of directors intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or |
| (b) that a high managerial agent of the body corporate intentionally, knowingly or recklessly engaged in the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence; or |
| (c) that a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with the relevant provision; or |
| (d) that the body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision. |
This new Code will have a significant impact on corporations. |
Facilitating the notion that there can exist a "corporate culture" where non-compliance with the law is expected, it allocates criminal responsibility for such conduct to the corporation as a whole and not just prosecution of one or two officers. |
