Running a business is not just about defining a strategy, signing contracts or making day-to-day decisions. Behind these responsibilities there is also a legal dimension that the manager cannot neglect. Because depending on the situation, personal liability may be incurred, both civilly and criminally.
The subject is sometimes difficult to understand. A manager may in fact find himself prosecuted for acts in which he did not directly participate, particularly when the organization of the company or compliance with certain regulatory obligations are in question.
So, in what situations can liability be incurred? What are the main risks and, above all, how to prevent them? Here are the essential points to know.
Restructuring: watch out for the “ghosts” of the past
A merger or acquisition is not just a financial transaction. Before buying a company, you must also take an interest in its history and the possible legal risks that accompany it.
The Court of Cassation marked an important step with its judgment of November 25, 2020 (no. 18-86.955). It admitted, in certain merger-absorption operations, that the absorbing company could be sentenced to a fine or confiscation for an offense committed before the merger by the absorbed company.
Since then, the question of the company’s criminal past has occupied an important place in acquisition audits. Before signing, it is therefore essential to look beyond accounts and contracts. Social practices and possible regulatory shortcomings must also be examined.
In particular, it is important to check:
- Situations of harassment and discriminationwhether moral or sexual;
- Hidden work and possible obstruction offenses ;
- Compliance with health and safety rules at workparticularly when breaches have been noted on several occasions.
These checks make it possible to better measure the risks before finalizing the operation. They also avoid discovering, once the merger has been completed, difficulties inherited from the absorbed company.
When the leader finds himself on the front line
A question often arises: can a manager be prosecuted even though he did not personally commit the offense? The answer depends on the circumstances.
In principle, everyone is criminally liable for their own actions. However, in the life of the company, certain obligations rest directly on the business manager. This is particularly the case when it is his responsibility to ensure compliance with rules relating to safety, work or certain professional regulations.
Thus, when an offense is committed in the company, the investigators and the judge will notably seek to determine who was responsible for the activity concerned, what measures had been taken and whether the manager had actually fulfilled his obligations.
The manager’s responsibility is therefore not automatic. It must be assessed in the light of the facts and circumstances of each case.
The isolated fault of an employee
Let’s take the example of an employee who commits an offense outside of his duties and unrelated to the activity entrusted to him. The simple fact of being his employer is not enough, in itself, to make the manager criminally responsible.
On the other hand, if the facts are linked to the organization of work, to a breach of safety rules or to an obligation that fell to management, the situation may be different.
It is therefore the role played by each person, as well as the measures put in place in the company, which must be examined.
Delegation of powers: a tool to be seriously monitored
A leader obviously cannot manage everything alone. In a sufficiently structured company, he can therefore delegate part of his powers to an employee.
But a delegation of powers is not just a signed document. To be recognized, it must be real and allow the delegatee to effectively assume the mission entrusted to him.
Three elements are particularly essential:
- The skill: the employee must have the knowledge or experience necessary to carry out this mission;
- Authority: he must have real decision-making power and be able to give the necessary instructions;
- The means : he must have sufficient time, resources and means to take concrete action.
In other words, we cannot delegate a responsibility without giving the person concerned the means to assume it.
In a small business, the exercise is sometimes more complicated. A small business or craft structure rarely has several hierarchical levels. The manager then often remains directly involved in most decisions.
Very diverse offenses
The criminal risks that a company may face are not limited to labor law. They can concern many aspects of its activity.
The public prosecutor can initiate proceedings when an offense is brought to his attention. For their part, victims can, when they meet the conditions provided for by law, become civil parties in order to request compensation for the damage suffered.
In practice, the offenses encountered may notably concern:
| Type of offense | Examples |
|---|---|
| Offenses that may concern many companies | Tax fraud, forgery and use of forgery, embezzlement, certain health and safety offenses, deceptive commercial practices or environmental harm |
| Offenses linked to certain sectors | Road transport, driving and rest rules, safety in construction, traceability and hygiene in the food industry, regulations applicable to certain establishments or activities |
This diversity shows one thing: criminal risks largely depend on the activity carried out. A transport company will obviously not be faced with the same obligations as a restaurant, a construction company or an industrial company.
The company can also be sued
The criminal liability of the manager does not eliminate that of the company. A legal entity, such as a company or association, may also be held criminally liable when an offense has been committed on its behalf by one of its bodies or representatives.
The system of local authorities, however, meets specific rules.
For a society, the consequences can be significant. First, financial sanctions can have a direct impact on accounts. But they don’t necessarily stop there.
A fine that can be five times higher: in principle, the maximum amount of the fine incurred by a legal entity can reach five times that provided for a natural person, unless otherwise specified.
Sanctions that can directly affect the activity: depending on the offense and its seriousness, a company may in particular be prohibited from participating in certain public contracts, be subject to temporary closure or suffer other penalties provided for by law. In the most serious situations, dissolution may also be pronounced.
A conviction that leaves a mark: a legal entity may be subject to registration in the criminal record. A conviction can thus have consequences that go beyond the simple sanction handed down by the court and complicate certain relationships with partners or principals.
Anticipate rather than endure
For a manager, prevention therefore remains essential. It is not only a question of knowing the sanctions incurred, but above all of identifying the risks before a problem arises.
This requires adapted procedures, a good distribution of responsibilities, the training of teams and, when necessary, the establishment of truly operational delegations of powers.
Finally, during an acquisition or merger, the legal and social audit should not be treated as a simple formality. The company’s past, its practices and its possible disputes can have consequences long after the signature.
For the manager as for the company, it is therefore better to know your obligations, organize them and follow them over time. Criminal liability is not only a question of sanction: it also begins with the way in which the company is managed on a daily basis.
