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ACCA Applied Skills · Corporate and Business Law (Global) · Fraudulent and criminal behaviour

Zeta Ltd's finance director, acting within her authority and as the directing mind of the company, knowingly signs false invoices to deceive a lender. Under the general rule on corporate criminal liability in most common-law based systems, what is the position of Zeta Ltd?

Zeta Ltd may be criminally liable because the finance director, as its directing mind, acted with intent within her authority, and her acts and state of mind are attributed to the company. Shareholder approval is not needed and a company can commit offences.

  1. AThe company cannot be liable because a company has no mind of its own
  2. BThe company may be criminally liable because the director's acts and state of mind are attributed to itCorrect
  3. COnly the director may be prosecuted, as criminal liability never extends to a company
  4. DThe company is liable only if all shareholders approved the false invoices

Explanation

Under the identification doctrine, the acts and intent of those who are the directing mind and will of the company are treated as those of the company. A company is therefore capable of criminal liability. Shareholder approval is not required, so the other options misstate the rule.

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