Corporate Liability in Australia

By Georgie Farrant (Baker McKenzie Australia)

I.              Corporate liability deriving from criminal activity

1.             Nature of the liability (criminal, administrative) and basis (crimes committed by directors or representatives, in the interest of or for the advantage of the company)

Criminal

The nature of corporate liability in criminal cases will vary depending on the type of offense. In cases where the relevant offense is contained within or subject to the Criminal Code 1995 (Cth), then Part 2.5 of the Criminal Code sets out the nature of corporate criminal liability.

The code provides for the following:

  • The Code applies to bodies corporate in the same way that it applies to individuals, but with modifications as are set out in the code and made necessary by the fact that the criminal liability is being imposed on a company rather than an individual.
  • If the physical element of an offense is committed by an employee, agent or officer of a body corporate acting within the actual or apparent scope of its employment or within its actual or apparent authority, the physical element must also be attributed to the body corporate.
  • If intention, knowledge or recklessness is a fault element in relation to a physical element of an offense, that fault element must be attributed to a body corporate that expressly, tacitly or impliedly authorized or permitted the commission of the offense. Such an authorization or permission may be established by proving the following:
  • The body corporate’s board of directors intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorized or permitted the commission of the offense.
  • A high managerial agent of the body corporate intentionally, knowingly or recklessly engaged in the relevant conduct, or expressly, tacitly or impliedly authorized or permitted the commission of the offense. However, this is excusable if the body corporate proves that it exercised due diligence to prevent the conduct, or the authorization or permission.
  • A corporate culture existed within the body corporate that directed, encouraged, tolerated or led to noncompliance with the relevant provision.
  • The body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision.
  • If negligence is a fault element in relation to a physical element of an offense and no individual employee, agent or officer of that body corporate has that fault element, then fault may exist on the body corporate’s part if the body corporate’s conduct is negligent when viewed as a whole – that is, by aggregating the conduct of any number of its employees, agents or officers. Negligence could be established by the fact that the prohibited conduct was substantially attributable to either: (i) the inadequate corporate management, control or supervision of the conduct of one or more of its employees, agents or officers; or (ii) the failure to provide adequate systems for conveying relevant information to relevant persons in the body corporate.

Based on the nature of criminal offenses in Australia, some offenses are identified as strict liability offenses. These offenses do not require a fault element to be proven, whereas some offenses require a fault element to be proven.

2.             Type of crimes/administrative offenses from which, according to the legislature, corporate liability may arise

The Parliament of Australia has the power to pass Commonwealth legislation, and each State and Territory parliament also has the power to pass State or Territory legislation. Due to extensive varying provisions among the States and Territories, this chapter sets out the relevant provisions under Commonwealth Laws.

We note that under Australian legislation, a reference to a “person” may mean an individual person or a body corporate. The particular provision will need to be read in light of the broader part of the particular act, the act as a whole and the Acts Interpretation Act 1901 (Cth) to ascertain whether the reference to a “person” means an individual, a body corporate or both simultaneously.

TypeNature of offense
Bribery and corruption offenses·         Bribery of foreign public officials (Criminal Code, Section 70.2)

·         Bribery of a Commonwealth public official (Criminal Code, Section 141.1)

·         Corrupting benefits given to or received by a Commonwealth public official (Criminal Code, Section 142.1)

·         Intentional false dealing with accounting documents (Criminal Code, Section 490.1)

·         Reckless false dealing with accounting documents (Criminal Code, Section 490.2)

Money laundering related offenses·         Dealing in proceeds of crime (Criminal Code, Sections 400.3 to 400.8)

·         Dealing with property reasonably suspected of being proceeds of crime (Criminal Code, Section 400.9)

Corporations Act offensesSection 1311 of the act sets out the general penalty provisions and notes that criminal responsibility is based on the Criminal Code. Schedule 3 of the act sets out the penalties for the offenses under the legislation.

A licensed trustee company may be required to provide an account in relation to:

·         estate (Section 601SBB)

·         licensed trustee companies and their duties (Chapter 5D)

·         continuous disclosure provisions (Chapter 6CA)

·         market misconduct provisions (Part 7.10, Division 2) including market manipulation, false trading and marketing rigging, and false or misleading statements, but excluding misleading and deceptive conduct

·         insider trading provisions (Part 7.10, Division 3)

·         mutual recognition of securities offers (Chapter 8) particularly complying with offering conditions

·         advertising or publishing false or misleading statements (Section 1308)

Environmental protectionEnvironment Protection and Biodiversity Conservation Act 1999

·         Providing false or misleading information to obtain approval or permit (EPBC Act, Section 489)

·         Providing false or misleading information in response to a condition on an approval or permit (EPBC Act, Section 490)

·         Providing false or misleading information to authorized officer, etc. (EPBC Act, Section 491)

·         Offenses relating to declared World Heritage properties (EPBC Act, Section 15A)

·         Offenses relating to National Heritage places (EPBC Act, Section 15C)

·         Offenses relating to declared Ramsar wetlands (EPBC Act, Section 17B)

·         Offenses relating to threatened species etc. (EPBC Act, Section 18A)

·         Offenses relating to listed migratory species (EPBC Act, Section 20A)

·         Offenses relating to nuclear actions (EPBC Act, Section 22A)

·         Offenses relating to marine areas (EPBC Act, Section 24A)

·         Offenses relating to water resources (EPBC Act, Section 24E)

·         Offenses relating to Commonwealth land (EPBC Act, Section 27A)

·         Offenses relating to Commonwealth heritage places overseas (EPBC Act, Section 27C)

·         Offense of breaching conditions on approval (EPBC Act, Section 142A)

·         Offense relating to declared commercial fishing activity (EPBC Act, Section 390SB)

EmploymentWork Health and Safety Act 2011 (Cth)

·         Reckless conduct in relation to health and safety duty owed to employees (WHS Act, Section 31)

·         Failure to comply with health and safety duty – Category 2 (WHS Act, Section 32)

·         Failure to comply with health and safety duty – Category 3 (WHS Act, Section 33)

·         Prohibition of discriminatory conduct (WHS Act, Section 104)

·         Prohibition of requesting, instructing, inducing, encouraging, authorizing or assisting discriminatory conduct (WHS Act, Section 107)

·         Prohibition of coercion or inducement (WHS Act, Section 108)

·         Misrepresentation regarding rights and obligations under the WHS Act (WHS Act, Section 109)

Competition and Consumer Act offenses·         Cartel offenses under Part IV Division 1 – the making of a contract containing a cartel provision or giving effect to a cartel provision (Sections 44ZZRF and 44ZZRG)

·         False or misleading representation that goods are of a particular standard or quality (Section 151)

·         Misleading conduct as to the nature of goods, including their suitability for their intended purpose (Section 155)

·         Non-compliance of a supply of goods with a mandatory standard (There is a wide range of standards in force, including mandatory product safety standards for various kinds of toys, exercise and sporting equipment and tobacco products.) (Section 195)

TaxationTax Administration Act 1953

·         Incorrectly keeping records (Section 8L)

·         Making false or misleading statements (Section 8K)

·         Recklessly keeping incorrect records (Section 8Q)

·         Recklessly making false or misleading statements (Section 8N)

·         Incorrectly keeping records with intent to mislead or deceive (Section 8T)

·         Falsifying or concealing identity (Section 8U)

·         Accessing tax records without authorization (Section 8XA)

Crimes (Taxation Offenses) Act 1980

·         Offenses relating to income tax, fringe benefits tax, petroleum resource rent tax, superannuation guarantee charge, Goods and Services Tax, Wine Equalisation Tax and Luxury Car Tax, which relates to the avoidance of payment of that tax and aiding and abetting provisions

SuperannuationSuperannuation Industry (Supervision) Act 1993

(Parts 1 to 3B)

·         Electronic lodgment of approved forms (Section 11B)

·         Declaration required if approved form lodged electronically (Section 11C)

·         Public offer superannuation fund (Section 18)

·         Being trustee of a registrable superannuation entity while unlicensed etc. (Section 29J)

·         Failing to notify breach of license condition (Section 29JA)

·         Not complying with the direction to comply with license conditions (Section 29JB)

·         False representation about the status as an RSE licensee (Section 29JCA)

·         Certain information required to be made publically available (Section 29QB)

·         Obligation to give consistent information (Section 29QC)

·         Offering a product as a MySuper product when not authorized to do so (Section 29W)

·         Contributions in relation to which no election is made are to be paid into MySuper product. (Section 29WA)

·         Contributions by large employer in relation to which no election is made to be paid into large employer MySuper product (Section 29WB)

·         Prescribed operating standards must be complied with (Section 34)

·         Compliance requirements-trustees of eligible superannuation entities (Section 34M)

·         Compliance requirements-employers (Section 34N)

·         Regulator’s power to give directions in certain circumstances-trustees of eligible superannuation entities (Section 34P)

·         Regulator’s power to give directions in certain circumstances-employers (Section 34Q)

·         Trustees to provide information for inclusion in register (Section 34Z)

(Part 4, Div 2-Obligations for registrable superannuation entities)

·         Accounting records (Section 35A)

·         Auditor requests for documents (Section 35AB)

(Part 4, Div 3-Obligations for self-managed superannuation funds)

·         Accounting records (Section 35AE)

·         Accounts and statements (Section 35B)

·         Audit of accounts and statements (Section 35C)

·         Trustee to lodge annual returns (Section 35D)

(Parts 5 to 11)

·         Certain regulated superannuation funds not to accept employer contributions in certain circumstances (Section 63)

·         Superannuation contributions-deductions from salary or wages to be remitted promptly (Section 64)

·         Victimization of trustee, etc. (Section 68)

·         Relationship breakdowns (Section 71EA)

(Part 12-Duties of trustees and investment managers of superannuation entities)

·         Duty to establish arrangements for dealing with inquiries or complaints (Section 101)

·         Duty to seek information from investment manager (Section 102)

·         Duty to keep minutes and records (Section 103)

·         Duty to keep records of changes or trustees (Section 104)

·         Trustees etc. of self-managed superannuation fund-recognition of obligations and responsibilities (Section 104A)

·         Duty to keep reports (Section 105)

·         Duty to notify Commissioner of Taxation of change in status or entity (Section 106A)

·         Duty of trustee of employer-sponsored fund to establish procedure for appointing member representatives (Section 107)

·         Duty of trustee of employer-sponsored fund to establish procedure for appointing independent trustee or independent member of board of directors of corporate trustee (Section 108)

(Part 15, Div 2-Requirements for custodian and investment managers)

·         Investment manager must not appoint or engage custodian without the trustee’s consent (Section 122)

·         Persons who may be appointed to be custodians of superannuation entities (Section 123)

·         Investment managers must be appointed in writing (Section 124)

·         Individuals not to be investment managers of superannuation entities (Section 125)

·         Disqualified persons not to be trustees, investment managers or custodians of superannuation entities (Section 126K)

(Part 16, Div 2 Obligations of actuaries and auditors)

·         Obligations of actuaries and auditors – compliance (Section 129)

·         Obligations of actuaries and auditors – solvency (Section 130)

·         Auditor must notify the Regulator of attempts to unduly influence etc. the auditor etc. (Section 130BA)

·         Giving false or misleading information to auditor (Section 130BB)

·         Actuaries and auditors – failure to implement actuarial recommendations (Section 130C)

(Part 16, Div 3 Actuaries and auditors of superannuation entities)

·         APRA may direct removal of auditor or actuary (Section 131AA)

(Part 16, Div 4 Offenses and failure to carry out duties etc.)

·         Offense of holding oneself out as an actuary or auditor (Section 131B)

·         Disqualified persons not to be auditor or actuary of superannuation entities (Section 131C)

(Part 17, Suspension of removal of trustee of superannuation entity)

·         Terms and conditions of appointment of acting trustee (Section 135)

·         Acting trustee to notify appointment to beneficiaries (Section 140)

·         The Regulator may give directions to acting trustee (Section 141)

·         Property vested in acting trustee – former trustee’s obligations relating to books, identification of property and transfer of property (Section 141A)

·         The Regulator may formulate a scheme for the winding-up or dissolution, or both, of a superannuation entity (Section 142)

(Part 19, Div 2 Issuing, offering etc. superannuation interests in public offer entities)

·         Limitation on issuing, offering etc. superannuation interests in public offer entities (Section 152)

·         Commission and brokerage (Section 154)

(Part 20, Div 2 Administrative directions and penalties for contravention relating to self-managed superannuation funds)

·         Rectification direction (Section 159)

·         Education direction (Section 160)

(Part 21, Div 3 Civil and criminal consequences of contravening civil penalty provisions)

·         The Regulator may require a person to give assistance in connection with application for civil penalty order (Section 201)

·         When contravention of civil penalty provisions is an offense (Section 202)

(Part 24, Div 2 Authority to operate an eligible rollover fund)

·         Operating a fund as an eligible rollover fund when not authorized to do so (Section 242P)

(Part 24B, Div 1 Monitoring of superannuation funds with fewer than 5 members)

·         APRA or Commissioner of Taxation may request certain information (Section 252A)

(Part 25, Div 2 Monitoring)

·         Information to be given to Regulator (Section 254)

(Part 25, Div 3 Monitoring and Investigation)

·         Deadline for receipt of report (Section 260)

·         Trustee must comply with requirements (Section 262)

(Part 25, Div 4 Investigations by Regulator)

·         Inspectors (Section 265)

(Part 25, Div 5 Examinations)

·         Examination to be in private (Section 278)

·         Giving copies of record to other persons (Section 281)

(Part 25, Div 7 offenses)

·         Compliance with requirements made under this Act (Section 285)

·         Concealing books relevant to investigation (Section 286)

·         Legal professional privilege (Section 288)

(Part 25, Div 8 Evidential use of certain material)

·         Statements made at an examination: proceedings again examinee (Section 290)

(Part 25A, Div 1 Quotation of employee’s tax file number)

·         Employer must inform trustee of tax file number (Section 299C).

(Part 25A, Div 2 Quotation, use and transfer of beneficiary’s tax file number)

·         Trustee must request person who is beneficiary at commencement to quote tax file number (Section 299F).

·         Use of tax file number for certain purposes – beneficiaries of eligible superannuation entities (Section 299H)

·         Use of tax file number for certain purposes – beneficiaries of regulated exempt public sector superannuation scheme (Section 299J)

·         Use of tax file number for certain purposes – applications to become beneficiaries of eligible superannuation entities (Section 299K)

·         Use of tax file number for certain purposes – applications to become beneficiaries of regulated exempt public sector superannuation schemes (Section 299L)

·         Trustee of eligible superannuation entity must inform RSA provider or other trustee of tax file number for certain purposes (Section 299M)

(Part 25A, Div 5 General)

·         Trustee of former regulated exempt public sector superannuation scheme to destroy records of tax file numbers (Section 299Y)

(Part 29 Exemptions and modification)

·         Enforcement of conditions to which exemption is subject (Section 331)

(Part 29A, Div 1 Protection for whistleblowers)

·         Victimisation of whistleblowers prohibited (Section 336C)

·         Confidentiality requirement for company, company officers and employees and auditors (Section 366E)

(Part 30 Miscellaneous)

·         The Regulator may collect statistical information (Section 347A)

·         Regulations (Section 353)

Superannuation Industry (Supervision) Regulations 1994

(Part 13, Div 13.3 Various prescribed matters)

·         Self-managed superannuation funds – investment in collectables and personal use assets (Section 13.18AA)

Superannuation Guarantee (Administration) Act 1992

(Part 7 Additional superannuation guarantee charge)

·         Failure to provide statements or information (Section 59)

(Part 9 Miscellaneous)

·         Records to be kept and retained by employers (Section 79)

·         Regulations (Section 80)

Superannuation Guarantee (Administration) Regulations 1993

·         Obligation of responsible officers who receive a request from employee (Section 10B)

Criminal CodeOffenses against a Commonwealth entity

·         Obtaining a financial advantage by deception (Section 134.2)

·         Dishonestly obtaining a gain or causing a loss (Section 135.1)

·         Obtaining a financial advantage (Section 135.2)

·         The making of false or misleading statements in applications (Section 136.1)

·         The giving of false or misleading information (Section 137.1)

·         The production of false or misleading documents (Section 137.2)

·         Manslaughter of an Australian citizen or Australian resident (Section 115.2)

·         Intentionally causing serious harm to an Australian citizen or a resident of Australia (Section 115.3)

·         Recklessly causing serious harm to an Australian citizen or a resident of Australia (Section 115.4)

·         Murder of a UN or associated person (Section 71.2)

·         Manslaughter of a UN or associated person (Section 71.3)

·         Intentionally causing serious harm to a UN or associated person (Section 71.4)

·         Recklessly causing serious harm to a UN or associated person (Section 71.5)

·         Recklessly causing serious harm to a UN or associated person (Section 71.6)

Information technology offensesCriminal Code

·         Dishonesty with respect to a carriage service provider (Criminal Code, Section 474.2)

·         Interception devices (Criminal Code, Section 474.4)

·         Wrongful delivery of communications (Criminal Code, Section 474.5)

·         Interference with facilities (Criminal Code, Section 474.6)

·         Modification etc. of a telecommunications device identifier (Criminal Code, Section 474.7)

·         Possession or control of data or a device with intent to modify a telecommunications device identifier (Criminal Code, Section 474.8)

·         Producing, supplying or obtaining data or a device with intent to modify a telecommunications device identifier (Criminal Code, Section 474.9)

·         Copying subscription-specific secure data (Criminal Code, Section 474.10)

·         Possession or control of data or a device with intent to copy an account identifier (Criminal Code, Section 474.11)

·         Producing, supplying or obtaining data or a device with intent to copy an account identifier (Criminal Code, Section 474.12)

·         Using a telecommunications network with intention to commit a serious offense (Criminal Code, Section 474.14)

·         Using a carriage service to make a threat (Criminal Code, Section 474.15)

·         Using a carriage service for a hoax threat (Criminal Code, Section 474.16)

·         Using a carriage service to menace, harass or cause offense (Criminal Code, Section 474.17)

·         Improper use of emergency call service (Criminal Code, Section 474.18)

·         Using a carriage service for child pornography material (Criminal Code, Section 474.19)

·         Possessing, controlling, producing, supplying or obtaining child pornography material for use through a carriage service (Criminal Code, Section 474.20)

·         Using a carriage service for child abuse material (Criminal Code, Section 474.22)

·         Possessing, controlling, producing, supplying or obtaining child abuse material for use through a carriage service (Criminal Code, Section 474.23)

·         Obligations of internet service providers and internet content hosts (child pornography or child abuse material) (Criminal Code, Section 474.25)

·         Using a carriage service for sexual activity with person under 16 years of age (Criminal Code, Section 474.25A)

·         Using a carriage service to procure persons under 16 years of age (Criminal Code, Section 474.26)

·         Using a carriage service to “groom” persons under 16 years of age (Criminal Code, Section 474.27)

·         Using a carriage service to transmit indecent communication to person under 16 years of age (Criminal Code, Section 474.27A)

·         Using a carriage service for suicide related material (Criminal Code, Section 474.29A)

·         Possessing, controlling, producing, supplying or obtaining suicide related material for use through a carriage service (Criminal Code, Section 474.29B)

·         Unauthorized access, modification or impairment with intent to commit a serious offense (Criminal Code, Section 477.1)

·         Unauthorized modification of data to cause impairment (Criminal Code, Section 477.2)

·         Unauthorized impairment of electronic communication (Criminal Code, Section 477.3)

·         Unauthorized access to, or modification of, restricted data (Criminal Code, Section 478.1)

·         Unauthorized impairment of data held on a computer disk etc. (Criminal Code, Section 478.2)

·         Possession or control of data with intent to commit a computer offense (Criminal Code, Section 478.3)

·         Producing, supplying or obtaining data with intent to commit a computer offense (Criminal Code, Section 478.4)

Telecommunications Act 1997 (Cth)

·         Network unit not to be used without carrier license or nominated carrier declaration (Telecommunications Act, Section 42)

·         Primary disclosure/use offense (Telecommunications Act, Section 276)

·         Primary disclosure/use offense – database persons (Telecommunications Act, Section 277)

·         Primary disclosure/use offense – emergency call persons (Telecommunications Act, Section 278)

·         Offense of contravening condition of permit to connect and maintain customer equipment to a telecommunications network or facility (Telecommunications Act, Section 399)

·         Use or application of protected symbols (Telecommunications Act, Section 417)

·         Confidential material not to be published (Telecommunications Act, Section 493)

Radiocommunications Act 1992 (Cth)

·         Unlicensed operation of radiocommunications devices (Radiocommunications Act, Section 46)

·         Unlawful possession of radiocommunications devices (Radiocommunications Act, Section 47)

·         Licensees must keep records of authorizations (Radiocommunications Act, Section 117)

·         Licensees must notify authorized persons of certain matters (Radiocommunications Act, Section 118)

·         Contraventions of permit conditions (Radiocommunications Act, Section 170)

·         Failure to retain records (Radiocommunications Act, Section 187A)

·         Use or application of protected symbol (Radiocommunications Act, Section 188A)

·         Interference likely to prejudice safe operation of vessels, aircraft or space objects (Radiocommunications Act, Section 192)

·         Interference in relation to certain radiocommunications (Radiocommunications Act, Section 193)

·         Interference likely to endanger safety or cause loss or damage (Radiocommunications Act, Section 194)

·         Transmission from foreign vessel, aircraft or space object (Radiocommunications Act, Section 195)

·         Causing interference etc. (Radiocommunications Act, Section 197)

·         Transmission of false information (Radiocommunications Act, Section 198)

·         Transmission likely to cause explosion (Radiocommunications Act, Section 199)

·         Contravention of a direction from ACMA (Radiocommunications Act, Section 214)

·         Offenses relating to settlement of interference disputes (Radiocommunications Act, Section 216)

·         Confidential material not to be published (Radiocommunications Act, Section 261B)

·         Supply of radiocommunications devices to unlicensed persons (Radiocommunications Act, Section 301)

Privacy Act 1988 (Cth)

·         Failure to attend conference where directed in connection with investigation by Commissioner (Privacy Act, Section 46)

·         Failure to attend before Commissioner where required by Act (Privacy Act, Section 65)

·         Failure to give information where required by Act (Privacy Act, Section 66)

·         Disclosure of personal information in emergencies and disasters (Privacy Act, Section 80Q)

Intellectual property offensesPatents Act 1990 (Cth)

·         Carry on a business as, or to describe itself as, a patent attorney (Patents Act, Section 201)

·         An incorporated patent attorney does not have a patent attorney director, and fails to notify IP Australia within 7 days, and/or continues to carry on the business as a patent attorney (Patents Act, Section 201B)

·         An employee or member of the incorporated patent attorney/legal practice, who is not a registered patent attorney themselves, prepares a specification for a patent registration without the instructions or supervision of an individual who is a registered patent attorney (Patents Act, Section 202B)

·         A person to use, in connection with his or her business, words that would reasonably lead to the belief that his or her office is, or is officially connected with, the Patent Office (Patents Act, Section 177)

·         A person to falsely represent that they are the patentee of an invention or an innovation patent that has been certified, or that an article sold by them is patented in Australia, or is the subject of an application for a patent in Australia (Patents Act, Section 178)

Trade Marks Act 1995 (Cth)

·         To falsify or remove a registered trademark without the permission of the registered owner or an authorized user of the mark (Trade Marks Act, Section 145)

·         To falsely apply a registered trademark without permission (Trade Marks Act, Section 146)

·         To make or possess a die, block, machine or instrument, or to draw or program a computer or other device to draw a registered trademark, for the purpose of falsifying or removing a registered trademark, or to falsely apply a registered trademark (Trade Marks Act, Sections 147-147B)

·         To sell, expose for sale, possess for purpose of trade or manufacture, or import goods with false trademarks (Trade Marks Act, Section 148)

·         To make false representations regarding the registration status of trademarks (Trade Marks Act, Section 151)

·         To make a false entry in the Trade Marks Register (Trade Marks Act, Section 152)

·         To describe itself as a trademarks attorney or agent without being registered (Trade Marks Act, Section 156)

·         To make false representations suggesting an association with the Trade Marks Offices (Trade Marks Act, Section 157)

·         If an incorporated trademarks attorney does not have a trademarks attorney director, and fails to notify IP Australia within 7 days, and/or continues to describe itself as a trademarks attorney (Trade Marks Act, Section 157A)

Designs Act 2003 (Cth)

·         Make a false entry in the Designs Register (Designs Act, Section 131)

·         Make a false representation that a design is registered (Designs Act, Section 132)

·         Make false representations suggesting an association to the Designs Office (Designs Act, Section 133)

·         Not comply with requirements of the Designs Register (Designs Act, Section 134)

Copyright Act 1968 (Cth)

·         Engage in commercial-scale infringement prejudicing a copyright owner (Copyright Act, Section 132AC)

·         Make or deal in infringing copies of a work (Copyright Act, Sections 132AD-132AM)

·         Cause a work to be performed or aired in public without approval by the copyright owner (Copyright Act, Sections 132AN-132AO)

·         Circumvent or enable the circumventing of access control technological protection measures (Copyright Act, Section 132APA-132APE)

·         Remove or alter electronic rights management information relating to a work, and/or distributing the work or the information (Copyright Act, Sections 132AQ-132AT)

·         Make or deal in unauthorized decoders to decrypt an encoded broadcast and make, play, and making copies of unauthorized recordings of performances (Copyright Act, Sections 248P-248PM)

SanctionsAutonomous Sanctions Act 2011 (Cth)

·         Offense — contravening a sanction law or condition of an authorization under a sanction law (Section 16)

·         Offense — false or misleading information given in connection with a sanction law (Section 17)

·         Offense for failure to comply with requirement (in relation to notice to give information or documents, Section 21)

Autonomous Sanctions Regulations 2011 (Cth)

·         Prohibitions relating to a sanctioned supply (reg 12)

·         Prohibitions relating to sanctioned import (reg 12A)

·         Prohibitions relating to the provision of sanctioned services (reg 13)

·         Prohibitions relating to engaging in sanctioned commercial activity (reg 13A)

·         Prohibitions of dealing with designated persons or entities (reg 14)

·         Prohibition of dealing with controlled assets (reg 15)

·         Prohibitions relating to sanctioned vessels (reg 16)

Charter of the United Nations Act 1945 (Cth)

·         Offense — dealing with freezable assets (Section 20)

·         Offense — giving an asset to a proscribed person or entity (Section 21)

·         Offense — contravening a UN sanction enforcement law (Section 27)

·         Offense — false or misleading information given in connection with a UN sanction enforcement law (Section 28)

PharmaceuticalsTherapeutic Goods Act 1989 (Cth)

·         Criminal offenses for false statements in requests for variation of entries in Register (Section 9G)

·         Criminal offenses for importing, supplying or exporting goods that do not comply with standards (Section 14)

·         Criminal offenses relating to breaching a condition of a consent (Section 15)

·         Breach of conditions relating to exceptional release of biologicals (Section 15AB)

·         Criminal offenses relating to registration or listing etc. of imported, exported, manufactured and supplied therapeutic goods (Part 3-2 Registration and listing of therapeutic goods, Section 19B)

·         Criminal offenses relating to notifying the Secretary and to importing goods exempt under Section 18A (Section 20)

·         Offense relating to wholesale supply (Section 21)

·         General criminal offenses relating to this Part (Section 21A)

·         General offenses relating to this Part (Section 22)

·         Criminal offenses for false statements in applications for registration (Section 22A)

·         Criminal offense for failing to notify adverse effects etc. of goods (Div 2 – Registration and listing, Section 29A)

·         Criminal offenses for non-compliance with requirements (Div 2A – Public notification and recovery of therapeutic goods, Section 30EC)

·         Criminal offenses for goods exempt under Section 18A not conforming to standards etc. (Section 30F)

·         Secretary may require information or documents (Part 3-2 Registration and listing of therapeutic goods, Section 31)

·         Criminal offense for failing to give information or documents sought under Section 31A, 31AA or 31B (Part 3-2 Registration and listing of therapeutic goods, Section 31C)

·         False or misleading information (Part 3-2 Registration and listing of therapeutic goods, Section 31D)

·         False or misleading documents (Part 3-2 Registration and listing of therapeutic goods, Section 31E)

·         Criminal offenses for importing a biological (Part 3-2A Biologicals, Section 32BA)

·         Criminal offenses for exporting a biological (Part 3-2A Biologicals, Section 32BB)

·         Criminal offenses for manufacturing a biological (Part 3-2A Biologicals, Section 32BC)

·         Criminal offenses for supplying a biological (Part 3-2A Biologicals, Section 32BD)

·         Criminal offense and civil penalty relating to a failure to notify the Secretary about manufacturing (Part 3-2A Biologicals, Section 32BG)

·         Criminal offense relating to wholesale supply (Part 3-2A Biologicals, Section 32BH)

·         Criminal offense for using a biological not included in the Register (Part 3-2A Biologicals, Section 32BI)

·         General criminal offenses relating to this Part (Part 3-2A Biologicals, Section 32 BJ)

·         Criminal offenses for breaching a condition of an exemption (Subdiv C Exempting biologicals to deal with emergencies, Section 32CH)

·         Criminal offenses and civil penalty for biologicals not conforming to standards etc. (Subdiv C Exempting biologicals to deal with emergencies, Section 32CJ)

·         Criminal offenses relating to the giving of an authority to a medical practitioner (Subdiv D Exempting biologicals for special and experimental use, Section 32CN)

·         Criminal offenses for false statements in applications for including biologicals in the Register (Div 4 Including biologicals in the Register, Section 32DO)

·         Criminal offense and civil penalty for failing to notify adverse effects etc. of biological while it is included in the Register (Div 4 including biologicals in the Register, Section 32DQ)

·         Criminal offenses and civil penalties for failing to notify adverse effects etc. of biological where application is withdrawn or lapses (Div 4 including biologicals in the Register, Section 32DR)

·         Criminal offenses for breach of condition (Div 5 Conditions, Section 32EF)

·         Criminal offenses for non-compliance with requirements (Div 8 Public notification and recovery of biologicals, Section 32HC)

·         Criminal offenses for failing to comply with a notice etc. (Subdiv B Obtaining information or documents for biologicals included or proposed to be included in the Register, Section 32JB)

·         Criminal offenses for failing to comply with a notice etc. (Subdiv C Obtaining information or documents for biologicals covered by exemptions, Section 32JI)

·         Criminal offenses relating to manufacturing therapeutic goods (Part 3-3 Manufacturing of therapeutic goods, Section 35)

·         Criminal offenses relating to breaching a condition of a license (Part 3-3 Manufacturing of therapeutic goods, Section 35B)

·         Criminal offenses for making a false statement (Part 4-4 Conformity assessment certificates, Section 41EI)

·         Criminal offenses for making a false statement (Part 4-5 Including medical devices in the Register, Section 41FE)

·         Complying with the Secretary’s requirements (Part 4-8 Obtaining information, Section 41JB)

·         Criminal offenses for failing to give information or documents sought under this Division (Part 4-8 Obtaining information, Section 41JG)

·         False or misleading information (Div 2 Information relating to medical devices covered by exemptions, Section 41JH)

·         False or misleading documents (Div 2 Information relating to medical devices covered by exemptions, Section 41JI)

·         Criminal offenses for failing to comply with requirements relating to a kind of medical device (Part 4-9 Public notification and recovery of medical devices, Section 41KC)

·         Criminal offenses for importing, supplying or exporting a medical device that does not comply with essential principles (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MA)

·         Criminal offenses relating to breaching a condition of a consent (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MC)

·         Criminal offenses for failing to apply conformity assessment procedures — manufacturers (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41ME)

·         Criminal offenses for failing to apply conformity assessment procedures — sponsors (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MF)

·         Criminal offense for making false statements in declarations (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MH)

·         Criminal offenses for importing, exporting, supplying or manufacturing a medical device not included in the Register (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MI)

·         Wholesale supply of medical devices not included in the Register (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MK)

·         False advertising about medical devices (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41ML)

·         Claims about arranging supplies of medical devices not included in the Register (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MM)

·         Criminal offenses relating to breaches of conditions (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MN)

·         Criminal offenses for breaching a condition of an exemption (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MNB)

·         Criminal offenses for misusing medical devices exempted for special or experimental uses (Section 41MO)

·         Criminal offense for failing to notify adverse events etc. (Part 4-11 Offenses and civil penalty provisions relating to medical devices, Section 41MP)

·         Offenses relating to publication of advertisements (Part 5-1 Advertising and generic information, Section 42C)

·         Advertising offenses (Chapter 5 Advertising, counterfeit therapeutic goods and product tampering, Section 42DL)

·         Offenses — publication of generic information (Chapter 5 Advertising, counterfeit therapeutic goods and product tampering, Section 42DP)

·         Offense of dealing with counterfeit therapeutic goods (Section 42E)

·         Notifying of actual or potential product tampering (Part 5-3 Product tampering, Section 42T)

·         Recovery of therapeutic goods because of actual or potential tampering (Part 5-3 Product tampering, Section 42V)

·         Supply etc. of therapeutic goods that are subject to recovery requirements (Part 5-3 Product tampering, Section 42W)

·         Offenses for contravening conditions or requirements imposed under the regulations (Chapter 7 Miscellaneous, Section 54AA)

·         Criminal offense for damaging etc. documents (Chapter 7 Miscellaneous, Section 54AB)

Therapeutic Goods Regulations 1990 (Cth)

·         Information about certain therapeutic goods to be supplied (Part 2A Patient information, reg 9A)

·         Information about therapeutic goods manufactured using human embryos (reg 9B)

·         Transfers within the Register (Div 2C.1 Registered and listed therapeutic goods, reg 10B)

·         Unapproved medicines and biological — exemption in life-threatening cases (reg 12A)

Therapeutic Goods (Medical Devices) Regulations 2002 (Cth)

·         Notification of change of name or suspension or revocation of conformity assessment certificate (reg 4.11)

·         Information about sponsor (reg 10.2)

·         Custom-made medical devices — information about manufacturer (reg 10.3)

 

3.             Identification of companies and entities to which liability may apply

Corporate criminal liability ultimately depends on the terms of the offense committed. However, entities that may be found liable of a criminal offense include:

  • Australian corporations conducting business: (a) in Australia; (b) between Australia and a place outside Australia; (c) among States; (d) between a State and a Territory; or (e) between two Territories
  • Public institutions, government bodies or state-owned entities

A corporation includes: (i) a company; (ii) a body corporate, whether incorporated in Australia or elsewhere; and (iii) an unincorporated body, which under the law of its place of origin, may sue or be sued, or may hold property in the name of its secretary or of an office holder of the body duly appointed for that purpose. As Section 57A of the Corporations Act 2001 (Cth) dictates, the definition of corporation does not include an exempt public authority or a corporation sole.

As defined in Section 9 of the Corporations Act 2001 (Cth), “body” means a body corporate or an unincorporated body and includes, for example, a society or an association.

4.             Corporate liability for crimes committed abroad by its representatives or subsidiaries

For offenses to which the Criminal Code applies, it would ultimately depend on the legislation and the specific offense.

Unless a contrary intention appears, the standard geographical jurisdiction under Division 14 of the Criminal Code provides that criminal liability will be found if: (i) offenses are conducted wholly or partly in Australia; or (ii) the result of the offense occurs wholly or partly in Australia.

The Criminal Code, in Division 15, also provides four categories of extended geographical jurisdiction that apply to certain offenses. These categories are as follows:

  • Category A — This category of jurisdiction applies in cases where at the time of the offense, the person charged with the offense is an Australian citizen or is a body corporate incorporated by or under a law of the Commonwealth or of a State or a Territory.
  • Category B — This category of jurisdiction is the same as category A, except for the addition of a further possible basis for jurisdiction where at the time of the alleged offense, the person charged with the offense is a resident of Australia.
  • Category C — This category of jurisdiction is unrestricted. It applies whether or not the conduct or the result of the conduct constituting the alleged offense occurs in Australia. However, in cases where the conduct occurs overseas and the accused is not an Australian citizen or a company incorporated in Australia, then the accused cannot be guilty if the conduct in question would not be illegal in that foreign company.
  • Category D — This category of jurisdiction is also unrestricted but unlike category C, there is no foreign law defense under category D.

5.             Corporate liability in the case of transactions taking place after the commission of a crime (acquisitions, mergers, demergers, etc.)

Under Australian law, there is no legal concept of “successor liability.” In some limited instances, the courts can “pierce the corporate veil” to seek to attribute liability to a parent company, but that would usually apply to a parent company that had control of the subsidiary at the time of the offense rather than a new parent company.

II.            Applicable sanctions

1.             Type of sanctions applicable to the company

Depending on the nature of an offense, there is a variety of sanctions that could apply in the event that the company is found guilty of an offense. These sanctions include the following:

  • Injunctions to restrain the party in contravention from engaging in conduct
  • Infringement notices
  • Fines as penalty including for offenses that only specify imprisonment as penalty (Section 4B Crimes Act 1914 (Cth))
  • Confiscation of proceeds (under the anti-money laundering legislation) or disgorgement of profits
  • Community service orders
  • Bans from operating (ie, licenses regarding environment breaches or orders disqualifying persons from managing corporations
  • Enforceable undertakings to implement a program for compliance
  • Winding up of companies, such as the cases of insolvent trading (Section 461, Corporations Act)

2.             Interim measures, cease and desist orders, bans and confiscatory measure

The most common interim measure is an injunction. Whether other interim measures could be taken would depend on the nature of the offense and the required action to either cease or stop that action.

3.             Liability of directors or managers for not having adopted (intentionally or negligently) measures for the prevention of the crime

In Australia, directors and officers of a company have a duty of care and diligence, and they are obliged to act in good faith in the best interests of the company and for a proper purpose (Sections 180 and 181 Corporations Act 2001 (Cth)). These are civil penalty offenses. In addition, if directors or officers have been reckless or intentionally dishonest when they fail to exercise their powers in good faith and for a proper purpose, this can result in a criminal penalty. These provisions have been used recently to take actions against directors who have failed to ask sufficient questions about, and properly monitor, the activities of the company, including an alleged giving of bribe that resulted in loss for the company when allegations in relation to that conduct were made.

III.           Measures and “models” of prevention and effects of the same on corporate liability and applicable sanctions

1.             Consequences of the adoption of a compliance “model” and effects on corporate liability for crimes committed by the company’s managers, directors or representatives (cases in which it is possible to obtain an exemption from liability or a mitigation of the sanction)

For offenses where the Criminal Code applies, the compliance mode adopted by the company will be relevant to determine: (i) whether the prosecution can establish that the corporation authorized or permitted the commission of an offense; and therefore (ii) whether the company can be criminally liable for the offense (see Section I1 above).

In addition, the compliance procedures adopted by the company can also be relevant to determine the penalties for some offenses.

2.             Modality according to which a compliance “model” must be adopted in order to benefit from exemption from responsibility or mitigated punishment (codes of ethics, procedures, etc.)

There is no specific guidance either from the regulators or from case law in Australia in relation to the type of compliance models that need to be adopted to fulfil the requirements of the Criminal Code.

3.             Monitoring: independent person or body to control/supervise, with the purpose of verifying the correct application of the “model”; mode of operation of such person or body

Many of the regulators, including the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and the Australian Transaction Reports and Analysis Centre, have the power to enter into enforceable undertakings with companies as an alternative to court action. As part of an agreed enforceable undertaking, the regulator and the corporate may agree that an independent monitor or compliance office be appointed to implement the appropriate controls and supervision to prevent noncompliant conduct. In some cases, judges have also ordered in court proceedings that the company’s compliance program be independently reviewed.

IV.          Judicial proceedings to determine corporate liability

1.             Court competent to decide the liability of and penalties applicable to the company

As we are dealing with the Federal jurisdiction in this chapter, the appropriate courts are the Federal Circuit Court of Australia and the Federal Court of Australia. We note that each of the States and Territories have their respective District and Supreme Courts that have similar powers to determine corporate liability and the applicable penalties for the relevant offenses.

2.             Possibility of the application of interim measures

Please refer to Section II(2) above.

3.             Plea bargains and related effects on corporate liability

Companies and individuals alike have the ability to negotiate with the prosecutors to try to agree charges and penalties, but these have to be approved by the courts.

4.             Imposition of sanctions against the company

Please refer to Section II(1) above.

5.             Persistence of corporate liability if the crime is extinguished

No specific legislation addresses whether corporate liability can still be pursued even if the underlying crime alleged against an individual becomes time-barred or cannot be pursued for any reason, such as the death of the individual.

Limitation provisions vary depending on the offenses. For example, for Commonwealth offenses, Section 15B of the Crimes Act 1914 (Cth) provides the following:

  • For individuals where the maximum penalty that may be imposed includes a term of imprisonment for greater than six months for first conviction, no time limit exists to commence actions, but otherwise, the time limit is one year.
  • For companies where the maximum penalty that may be imposed includes a fine of more than 150 penalty units (currently equal to AUD 27,000), there is no time limit on commencing actions, but otherwise, the time limit is one year.

For most offenses, there is no reason why, in theory, the corporate could not be prosecuted even though the employee or agent who took the particular actions could not be prosecuted. However, it will be a question of whether the necessary elements can be proven “beyond a reasonable doubt.” For some offenses where Section 12 of the Criminal Code applies to corporate criminal responsibility, the fault element of the offense can be established by reference to the actions of the board, or a high managerial agent, or the corporate culture, rather than the individual who took the relevant actions.

In cases where actions of the board are being relied upon, it is necessary to show, for example, that the board tactically or impliedly authorized or permitted “the offense,” and “the offense” will often require a fault element on the part of the relevant individual. For example, for an offense of bribing a foreign public official, “the offense” requires the necessary elements of offering the benefit with the “intention of influencing a foreign public official in the exercise of the official’s duties…” If the relevant individual who offered the benefit can no longer be questioned about the intention, it may not be possible to prove that “the offense” took place, unless surrounding documentation and evidence clearly record such intention. In that scenario, the necessary elements for corporate liability also may not be possible to prove.

V.           Corporate liability in multinational groups

1.             Liability of parent companies located abroad in the case of offenses committed by directors, managers or representatives of the local company

A parent company, whether overseas or local, is generally not liable for the offenses of its subsidiary. However, in some limited circumstances, the courts have been prepared to “pierce” the corporate veil to attribute liability to a parent company.

2.             Basis of liability and applicable sanctions

No statutory provision allows the piercing of the corporate veil. It is a decision taken by the courts in certain cases, and it has been commented that “There is no common unifying principle, which underlies the occasional decision of the courts to pierce the corporate veil. Although an ad hoc explanation may be offered by a court which so decided, there is no principled approach to be derived from the authorities.”

The following are factors generally considered to be relevant in determining whether a parent company can be held liable for the actions of its subsidiary:

  • Agency
  • Fraud
  • Sham or façade
  • Group enterprises
  • Justice

The Code may also be used to assert that a foreign company was found to have engaged in an ancillary offense (ie, aiding and abetting the primary offense) if the conduct constituting the primary offense occurred wholly or partly within Australia, regardless of whether the conduct constituting the ancillary offense occurred wholly outside Australia (Section 14.1 of the Code).

VI.          Significant case law concerning corporate liability arising from crimes and draft laws under discussion

1.             Significant case law, if any

Tesco Supermarkets Ltd v. Nattrass [1972] AC 153: In cases where a company is accused of criminal liability, the acts, knowledge and intentions of its directing minds and will in relation to the relevant act or omission are attributed to it. A company can also be determined to be vicariously liable for the acts of its employees or agents acting within the scope of their employment or agency if: (i) the offense does not require proof of a mens rea; or (ii) a statute makes the corporation accountable for the knowledge and intention of its officers and agents.

R v. NYK: This is the first criminal charge against a corporation under the criminal cartel provisions of the Competition and Consumer Act 2010 (Cth), and the defendant pleaded guilty on 18 July 2016. The matter related to an alleged cartel conduct in connection with the transportation of vehicles to Australia between July 2009 and September 2012.

2.             Proposed or contemplated new legislation

Proposed amendments to the foreign bribery offense in the Criminal Code

The Australian government has released an exposure draft on proposed amendments to the foreign bribery offense in the Criminal Code. It has been proposed that there would be a new corporate offense (Section 70.5A) for companies that fail to prevent foreign bribery, which is similar to Section 7 of the UK Bribery Act. In addition, the Australian government is currently conducting consultations on the introduction of deferred prosecution agreements for certain criminal offenses.

This means that a company would be liable for bribery by its employees, contractors and agents (including those who may be operating overseas) unless the company can show that it had proper internal controls and compliance systems in place rather than requiring the prosecution to establish the current elements required for corporate liability under the Criminal Code.

Amendments to the joint venture exceptions under the Competition and Consumer Act

The Competition and Consumer Amendment (Competition Review Policy) Bill 2017 is currently being debated in the Federal House of Representatives. It has been proposed that the joint venture exception with respect to cartel conduct (Section 44ZZRO of the Competition and Consumer Act) be amended such that the burden of proof is reversed and the defendant must discharge both the legal and evidentiary burden, for example, by producing the contract to prove that the cartel provision was for the purpose of a joint venture. This therefore raises the standard of proof to be discharged by a defendant before the joint venture exception could apply.