Can criminal liability be transferred to a company for the purchase of another legal entity that has committed a criminal offence?

ComplianceKeys#7

As has been analysed in other Compliance Keys, legal entities may be criminally liable for offences committed in the course of their activities.

However, Article 130.2 of the Spanish Criminal Code establishes an exception to this issue that deserves special development. This is the transfer of criminal liability to a company through the acquisition in the broad sense (takeover, merger, among other structural modifications) of another legal entity that has previously committed a criminal offence. 

It should be noted that this transfer of liability is not automatic. In accordance with the provisions of the Spanish Criminal Code and the relevant court decisions on the matter, the acquiring companies will not be criminally liable for criminal acts committed by the companies they acquire when:

• The acquiring company did not control the acquired company at the time of the commission of the offences. According to this statement:
  • A company A could be liable for offences committed by a company B when it had some kind of control over the latter at the time of the commission of the offences (e.g. by imposing strategic decisions, sharing directors or shareholders, etc.).
• The legal personality of the acquired company is not extinguished during the acquisition process. According to this statement:
  • A company A could be liable for offences previously committed in company B when the transaction by which it acquired company B extinguished its legal personality (e.g. by a takeover).

However, it should be noted that, even if the legal personality of the acquired company has been extinguished, the transfer of criminal liability can be avoided in court. 

In this sense, there are some judicial precedents in which such a transfer has been avoided (for example, Decision 246/2019 of the Audiencia Nacional, of 30 April, in the case of the takeover of Banco Popular by Banco Santander), the discussion on this issue is still alive and kicking.

Departament of Compliance of Molins Defensa Penal. 

compliance@molins.eu