It was not until the 1940s that English law tolerated the possibility of corporations committing all types of offences. For these, a much more limited doctrine was developed. Known variously as ‘direct’, ‘identification’ or ‘alter ego’ liability, it sought to overcome the objection that an unnatural person such as a company was incapable of forming an intention or being reckless. It opened up the possibility of corporations being liable for the whole range of mainstream offences, including fraud and manslaughter. The notion of identification was brought into play under which the wrongdoing of certain senior officers – natural persons – in the corporation was identified with the corporation itself – the unnatural person. Their acts and accompanying guilty minds, on this version of liability, were those of the company – they acted as the company and sometimes on behalf of the company. Thus, as a juristic person, a corporation itself was capable of committing almost any criminal offence, so long as a director or equivalent had authorized it.
It is not necessary actually to prosecute a director or officer in order to find the company itself liable. It should be sufficient that there is evidence against the director or officer. …
However, in practice such an action is rarely brought. Of more practical significance is the potential for growth in the use of what are known as directors’ liability clauses, which are common in regulatory legislation and are increasingly demanded to satisfy European harmonization. Such legislation often has provided specifically that where the offence is committed by a corporate body with the consent, involvement of, or is attributable to the neglect of any director, secretary or similar officer, they as well as the corporation shall be guilty and liable to be proceeded against and punished accordingly. Prosecutions under these provisions were likely to increase and finally after suffering through an era of financial cutbacks in the early 1980’s, many regulatory agencies learned lessons.
As a matter of public policy, law does not allow insuring against Criminal penalties. The Companies Acts do, however, permit companies to cover the costs of civil claims and the costs of a successful defence of a criminal action. (Celia Wells)
Changing Legal Attitudes
The confusion of the English law resulted in changing legal attitudes to corporate criminal behaviour. As English law takes two different routes to find corporation guilty of an offence. For regulatory offences, the vicarious principle has always been used while for mainstream offences. the much more restrictive identification doctrine was invoked. Under this, only when directors of senior officers were, or should have been aware, of safety shortcuts will liability be possible. It was not until the House of Lords’ decision in Tesco v Nattrass in 19711 that serious consideration was