Part 5 – Miscellaneous Attributing criminal liability for economic crimes to certain bodies Section 196: Attributing criminal liability for economic crimes to certain bodies
Sections 196 to 198 enable a corporate body or partnership to be held criminally liable where a senior manager commits a relevant offence while acting within the actual or apparent authority granted by the organisation.
	At present, for most offences, whether a corporate body will be criminally liable relies on the application of the "identification doctrine", under which the offence must be carried out by a person representing the "directing mind and will" of the corporate body. This amendment does not replace or amend the common law identification doctrine but provides a new statutory route to corporate liability for offences listed in Schedule 12.
	Section 196(1) provides that the corporate body or partnership will be guilty of an offence if the offence is carried out by a "senior manager". A senior manager is an individual who plays a significant role in the making of decisions about how the whole or a substantial part of the activities of the body are to be managed or organised, or the actual managing or organising of the whole or a substantial part of those activities. This covers both those in the direct chain of management as well as those in, for example, strategic or regulatory compliance roles. "Substantial part of the business" relates to the importance of the activity over the operations of a business as a whole.
	"Senior management" would normally include a company’s directors and other senior officers such as a Chief Financial Officer or Chief Operating Officer, whether or not they are members of the Board. This would include organisations such as charities where, because of restrictions on trustees receiving benefits from the charity, the organisation’s salaried chief officers are not usually members of the Board. Other individuals who have significant roles in relation to a substantial part of the organisation’s activity, such as its human resources function, would also be included. However, "senior management" is not limited to individuals who perform an executive function or are board members, it covers any person who falls within the definition irrespective of their title, remuneration, qualifications or employment status.
	The senior manager must be acting within the actual or apparent scope of their authority. This does not mean that the senior manager must have been authorised to carry out a criminal offence. It would be enough that the act was of a type that the senior manager was authorised to undertake or which would ordinarily be undertaken by a person in that position. For instance, if a Chief Financial Officer commits fraud by deliberately making false statements about a company’s financial position, the company would be liable since the act of making statements about the company’s financial position is within the scope of that person’s authority.
	Subsection (2) and Schedule 12 define which offences the new rule will apply to. An offence in Schedule 12 is a "listed offence". The rule will also apply to attempts and conspiracies to commit a listed offence; to aiding, abetting, counselling or procuring the commission of a listed offence; in England, Wales and Northern Ireland, to offences of encouraging or assisting a listed offence; and in Scotland to inciting the commission of a listed offence.
	Subsection (3) ensures criminal liability will not attach to an organisation based and operating overseas for conduct carried out wholly overseas, simply because the senior manager concerned was subject to the UK’s extraterritorial jurisdiction: for instance, because that manager is a British citizen. Domestic law does not generally apply to conduct carried out wholly overseas unless the offence has some connection with the UK. This is an important matter of international legal comity. However, certain offences, regardless of where they are committed, can be prosecuted against individuals or organisations who have certain close connections to the UK. Subsection (3) makes sure that any such test will still apply to organisations when the new rule applies.