ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour
Bolt Trading Co, a company, is prosecuted for a criminal offence requiring intent. Its managing director, acting within her authority and as the company's directing mind, authorised the offence. Under the identification principle, what is the effect on the company?
The company is liable. Under the identification principle, the intent and actions of a senior person who is the company's directing mind, acting within authority, are attributed to the company itself. Shareholder knowledge is not required, and a company can have a guilty mind through such individuals.
- AThe company cannot be liable because only individuals can have a guilty mind
- BThe company is liable because the managing director's mind and acts are attributed to itCorrect
- CThe company is liable only if every shareholder knew of the offence
Explanation
Under the identification principle, the acts and state of mind of those who are the directing mind and will of the company are treated as those of the company. The first option is wrong because companies can be criminally liable through this attribution. Shareholder knowledge is irrelevant.
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