Criminal liability of corporate bodies and associations

Companies and other corporate bodies (e.g. parastatals) have legal personality separate from that of their members, but they cannot act except through the agency of their directors and employees.  Partnerships and associations, similarly, can act only through their members.  If a director, employee or member acts unlawfully then the company, corporate body or association on whose behalf the act was done may become criminally liable for the act.  This liability can arise in the following ways:

• In the case of a company or other corporate body, through vicarious liability or, more broadly, through section 277 of the , which imposes liability on a corporate body for any act performed:
  
  • by a director or employee of the corporate body;or
  • by anyone on the instructions of a director or employee of the corporate body;or
  • by anyone with express or implied permission given by a director or employee of the corporate body.

But liability will attach only where the director, employee or authorised person was acting in the exercise of his powers or duties as such, or was furthering or trying to further the interests of the corporate body.

• In the case of an unincorporated association, through section 277(4) of the , which imposes liability on a member of the association (or, where there is a managing committee, on a member of the committee) for criminal acts committed by other members, where the member was acting in the exercise of their powers or duties as such, or was furthering or trying to further the interests of the association.The member can however escape liability if he or she can show that he or she did not take part in the commission of the crime.

Conversely, directors or employees of a corporate body are personally liable for the crimes of the corporate body (i.e. they can be charged personally for the crimes) unless they can show on a balance of probabilities that they did not take part in the commission of the crimes (sec 277(3) of the Criminal Law Code).  It is very doubtful if sec 277(3) is constitutional even though it should probably be construed so as to impose liability on only those directors and employees who form part of the “directing mind” of the corporate body.  In S v Coetzee & Ors 1997 (3) SA 527 (CC), the South African Constitutional Court struck down the SA equivalent of sec 277(3) of the Criminal Law Code, on the ground that by making directors liable for their companies’ crimes it laid an unconstitutional onus on them to prove that they took no part in the crime.  Our Constitutional Court might well come to the same conclusion.

Note that the word “director” is given an extended meaning by section 277:  it means anyone who governs or controls the corporate body, whether lawfully or otherwise, or who is a member of a committee that governs or controls it, whether lawfully or otherwise.

Charging corporate bodies and associations

Where a company or other corporate body is charged with a crime, a director or employee must be cited as representative of the corporate body.  If he is individually liable for the crime, then he will be cited in his personal capacity as well.  A director or employee who is cited in his representative capacity may not be committed to prison pending trial, nor may he be punished personally for the crime (and, of course, the corporate body cannot be sentenced to imprisonment if it is convicted of the crime).

In the case of an association, the charge will aver the commission of the crime by one member and the vicarious liability of any other member who is being charged.

Evidence and presumptions

Proof of a body’s corporate nature

In the case of a company, proof of incorporation is provided by a certified copy of the company’s certificate of incorporation issued by the Registrar of Companies.  This may be handed in by the prosecutor.

Proof of the corporate status of a statutory body, including a local authority, is provided by reference to the statute under which the body is incorporated (though such proof would seldom if ever be needed because courts can take judicial notice of statutes).

Evidence of the constitution of any other body would be needed to prove its corporate status.

Presumptions

Documents and records that were made or kept by a director, employee or agent of a corporate body, or that were in the custody or under the control of a director, employee or agent, are admissible in evidence against the corporate body.  And if a record or document is proved to have been at any time in the custody or under the control of a director, employee or agent then it is presumed to have been made or kept by him within the scope of his activities as a director, employee or agent.

Similar provisions exist for unincorporated associations:  records kept by a member of such an association within the scope of his duties as such, and documents that were at any time in the custody or under the control of a member, are admissible in evidence against the accused member, and those records and documents are presumed to have been made or kept within the scope of the member’s activities.

As already indicated, section 277(3) of the Criminal Law Code states that where a corporate body is liable for prosecution for a crime for any conduct, “that conduct shall be deemed to have been the conduct of every person who at the time was a director or employee of the corporate body” unless it is proved that he took no part in the conduct.

And section 277(4) of the Criminal Law Code has a similar deeming provision in regard to members of unincorporated associations.