Criminal compliance for companies in Alicante

Short answer. Since 2010 companies have been criminally liable for offences committed for their benefit by their directors and employees (Article 31 bis of the Criminal Code). An organisation and management model adopted and effectively implemented before the offence exempts them from that liability, and partial proof of it mitigates it. This firm designs and reviews those models for companies in the province of Alicante and defends the legal person when it is already under investigation.

Criminal compliance is not a document but a system: the identification of the offences that the company’s specific activity may facilitate, the controls that prevent them, the body that monitors that those controls work and the evidence of all of it. The Criminal Code does not require the company to avoid every offence, which would be impossible, but to have done what is reasonable to prevent it. The difference between a convicted company and an exempt company usually lies in whether it can demonstrate, with documents dated before the facts, that the system existed and operated.

When a company is criminally liable

Article 31 bis.1 of the Criminal Code distinguishes two routes. The first, letter a), covers offences committed in the name or on behalf of the company and for its direct or indirect benefit by its legal representatives or by those authorised to take decisions or holding powers of organisation and control. The second, letter b), covers offences committed by those subject to the authority of the former who were able to act because the duties of supervision, monitoring and control were seriously breached.

The company’s liability is autonomous: under Article 31 ter, it is enforceable even if the natural person has not been identified or proceedings could not be brought against them, and it is not excluded by the death of the director or their evasion of justice. And not every entity is liable for every offence: only in the cases where the Code itself expressly provides for it for each offence.

Exemption: what Article 31 bis requires

For offences by directors, paragraph 2 makes exemption conditional on four cumulative requirements: that the management body adopted and effectively implemented, before the offence, an organisation and management model with monitoring and control measures suitable to prevent offences of that nature or significantly reduce their risk; that supervision of the model was entrusted to a body with autonomous powers of initiative and control; that the offenders committed the offence by fraudulently circumventing the model; and that the body did not omit or insufficiently exercise its functions. If only partially proven, it operates as a mitigating circumstance. For offences by subordinates, paragraph 4 requires an adequate model adopted and effectively implemented before the facts.

Paragraph 5 sets the minimum content of the model: identify the activities within which offences may be committed; establish protocols for the formation of the will, adoption and execution of decisions; have financial resource management models suitable to prevent those offences; impose the obligation to report risks and breaches to the monitoring body; establish a disciplinary system; and periodically verify the model and amend it when relevant breaches come to light or the organisation, control structure or activity changes. In small companies, those authorised to file an abridged profit and loss account, the supervisory functions may be assumed directly by the management body (paragraph 3).

After the facts: the mitigating circumstances of Article 31 quater

When the offence has already been committed, the company can still reduce its liability. Article 31 quater admits as mitigating circumstances, and only these, four forms of conduct carried out through its legal representatives: confessing the offence to the authorities before learning that proceedings are directed against it; cooperating in the investigation by providing new and decisive evidence; repairing or reducing the damage before the trial; and establishing, before the trial, effective measures to prevent and detect future offences. The last one means that implementing a compliance model after the complaint has criminal value, although less than having had it before.

What this means for companies in the province of Alicante

The Alicante business fabric has identifiable criminal risks by sector. In property development and construction, Article 319.4 expressly provides for a fine on the legal person for unauthorisable works on protected or non-developable land, and Article 325 reaches industry and agricultural activity for discharges, emissions and extractions. In hospitality and tourism, workers’ safety and relations with the administration. In the footwear, textile, marble and toy industries, taxation, relations with suppliers and industrial property. In foreign trade and port logistics, money laundering, corruption in business and international sanctions.

The most frequent error we see is the generic model: a purchased or downloaded document that lists every offence in the Code and analyses none of the company’s real processes. Before a court, that document proves nothing, because Article 31 bis requires the model to be suitable to prevent offences of the same nature as the one committed, and that suitability can only be demonstrated if the risk analysis started from the specific activity.

What we do

Design of the model. Map of criminal risks over the company’s real processes, decision protocols, financial controls, internal reporting channel under Law 2/2023 for companies bound by it, disciplinary regime and training plan. With documentary evidence of each step, which is what is produced if an investigation comes.

Review of the existing model. Comparison of the system in place with the six requirements of Article 31 bis.5 and with the actual activity, verification that the compliance body has real autonomous powers and updating after changes in the organisation or the activity.

Defence of the legal person under investigation. The investigated company is a party to the proceedings with its own rights. When the interests of the company and those of its directors may diverge, and in practice they frequently do, the company needs independent representation and defence. We take on that defence before the Tribunales de Instancia and the Provincial Court of Alicante, including establishing the model as a ground of exemption or mitigation and, where appropriate, negotiating the legal person’s plea agreement.

Internal investigation. When the internal channel receives a report or an indication appears, the investigation must be conducted so that its results are usable and do not compromise the company: with respect for the rights of the employees concerned, chain of custody of digital evidence and a reasoned decision on whether the confession of Article 31 quater is appropriate.

The penalties a company may face: Article 33.7 of the Criminal Code

All penalties applicable to legal persons are classified as serious. Article 33.7 lists them: the fine, by daily units or proportional; dissolution, which produces the definitive loss of legal personality and of the capacity to act in commerce; suspension of activities for up to five years; closure of premises and establishments for up to five years; prohibition on carrying out in future the activities in the exercise of which the offence was committed, facilitated or concealed, temporary for up to fifteen years or permanent; disqualification from obtaining subsidies and public aid, contracting with the public sector and enjoying tax or social security benefits, for up to fifteen years; and judicial administration to safeguard the rights of workers or creditors, for up to five years, which may affect the whole organisation or some of its facilities or business units.

The fine is the penalty imposed in every case. The others are imposed according to the rules of Article 66 bis, which requires assessing their necessity to prevent continued offending, their economic and social consequences, especially for workers, and the position held in the company’s structure by the natural person who breached the duty of control. For an Alicante company that contracts with town councils or the Generalitat, or that depends on public aid, disqualification from contracting may in practice be a commercial death sentence, and the defence must be directed from the outset at excluding it.

Which offences give rise to corporate liability: a closed catalogue

The legal person is not liable for every offence, but only for those for which the Criminal Code expressly so provides through a specific clause. The most relevant for the province’s business fabric are the following, with the fine each provision sets for the company: fraud and other swindles (Article 251 bis), a fine of three to five times the amount defrauded if the natural person’s offence carries imprisonment of more than five years, and two to four times in other cases; money laundering (Article 302.2), a fine of two to five years if the natural person’s offence carries imprisonment of more than five years, with an aggravated penalty for obliged entities that commit the conduct in the exercise of their professional activity; offences against the public revenue and social security (Article 310 bis), a fine of one to two times the amount defrauded if the offence carries imprisonment of more than two years, and two to four times if more than five, plus loss of the possibility of obtaining subsidies and tax benefits; planning offences (Article 319.4), a fine of one to three years, or two to four times the profit if higher; environmental offences (Article 328), a fine of one to three years, or two to four times the damage, if the offence carries imprisonment of more than two years, and six months to two years, or two to three times the damage, in other cases; offences relating to the market and consumers, intellectual and industrial property and corruption in business (Article 288), a fine of two to four times the profit obtained or obtainable if the offence carries imprisonment of more than two years, and two to three times in other cases, plus publication of the judgment. In all these cases the court may add the penalties of letters b) to g) of Article 33.7. The risk map of a serious prevention model begins by identifying which of these offences are realistic for the company’s specific activity and ends by designing controls for those, not for all.

Proceedings against the legal person: how a company is investigated and tried

Since 2011 the Criminal Procedure Act has regulated a specific procedural status for the investigated company, which the defence must know because its particularities are a frequent source of irreparable errors.

Summons and appointment of a representative. Under Article 119, the summons is served at the registered office, requiring the entity to appoint a specially designated representative, in addition to a lawyer and a court representative for those proceedings, with the warning that, if it does not, a lawyer and court representative will be appointed ex officio. Failure to appoint a representative does not prevent the proceedings from continuing with the lawyer and the court representative. The judge informs the representative, or failing that the lawyer, of the facts attributed to the company, in writing or by delivering a copy of the complaint. Choosing the representative is a strategic decision: it cannot be someone who will testify as a witness, and it should not be someone with interests opposed to those of the company.

The company’s statement. Article 409 bis provides that a statement be taken from the specially designated representative, assisted by a lawyer, aimed at establishing the facts and the participation in them of the entity and of the other persons who may have been involved. The company enjoys the rights to remain silent, not to testify against itself and not to confess guilt. The non-appearance of the representative suspends nothing: the act is deemed held and the company is deemed to exercise its right not to testify.

The trial. Under Article 786 bis, the accused company may be represented at trial by the person it specially designates, who occupies in the courtroom the place of the accused, may testify on its behalf if that evidence was proposed and admitted, retains the right to remain silent and exercises the right to the last word. Their non-appearance does not prevent the hearing from taking place, which is conducted with the lawyer and the court representative.

Separate defence. In most proceedings, the company and its directors are investigated at the same time, and their interests diverge: the company benefits from proving that the director fraudulently circumvented the prevention model, and the director benefits from maintaining that they acted in accordance with the practices of the house. The same lawyer cannot defend both positions. We take on the defence of the company independently of that of the natural persons, coordinating what can be coordinated and protecting what cannot.

The internal reporting channel: Law 2/2023 and its place in the prevention model

Law 2/2023 of 20 February on the protection of persons who report regulatory breaches requires an internal reporting system for, among others, natural or legal persons in the private sector with fifty or more employees (Article 10.1.a), and for those operating in the sectors regulated by Union law in financial matters, anti-money-laundering, transport safety and environmental protection, regardless of their workforce (Article 10.1.b). Article 5 assigns to the management body responsibility for implementing the system, after consulting the legal representation of the workers, and gives it the status of controller of the personal data.

The channel is not only an administrative obligation: it is the element that satisfies the fourth requirement of Article 31 bis.5 of the Criminal Code, the obligation to report risks and breaches to the monitoring body, and it is the most frequent source of internal investigations. A channel that exists on paper but receives no reports, or receives them and does not process them, is the most damaging evidence a prosecution can produce against the prevention model. We design the channel, its rules and the report management procedure, and act as external manager of the system when the company prefers.

Cancellation of the legal person’s criminal record

Penalties imposed on legal persons are cancelled, under Article 136.3 of the Criminal Code, within the period corresponding under the general rules of paragraph 1, unless dissolution or the permanent prohibition of activities was ordered, in which case the entries are cancelled fifty years after the judgment became final. While they subsist, the company’s record weighs in public procurement and in access to aid, and is a fact that financial institutions and large customers consult.

Legal basis

Article 31 bis.1 of the Criminal Code: legal persons are criminally liable, in the cases provided for in the Code, for offences committed in their name or on their behalf and for their direct or indirect benefit by their legal representatives or by those with powers of decision, organisation and control, and for those committed by their subordinates where the duties of supervision, monitoring and control were seriously breached. Article 31 bis.2: the legal person is exempt if the management body adopted and effectively implemented, before the offence, a suitable organisation and management model; if its supervision was entrusted to a body with autonomous powers; if the offenders fraudulently circumvented the model; and if there was no omission or insufficient exercise of supervision. Partial proof is assessed as a mitigating circumstance. Article 31 bis.5: the model shall identify risk activities, establish decision protocols, have financial resource management models, impose the obligation to report to the monitoring body, establish a disciplinary system and be periodically verified. Article 31 ter.1: the liability of the legal person is enforceable even if the responsible natural person has not been identified or proceedings could not be brought against them. Article 31 quater: the only mitigating circumstances are confession before knowledge of the proceedings, cooperation with new and decisive evidence, repair of the damage before the trial and the establishment, before the trial, of effective prevention and detection measures. Source: consolidated text of the Criminal Code, Official State Gazette, wording of Organic Law 1/2015 of 30 March, in force since 1 July 2015.

Frequently asked questions

Is my company obliged to have a criminal compliance programme?

The Criminal Code does not impose an obligation to have one. What Article 31 bis does is make the company’s exemption from criminal liability conditional on the existence of an effective organisation and management model adopted before the offence. Without a model, the company is liable if the conditions of paragraph 1 are met. In addition, Law 2/2023 requires certain companies to have an internal reporting channel, which is one of the elements of the model.

Is a compliance model implemented after the complaint of any use?

As an exemption, no: Article 31 bis requires the model to have been adopted and implemented before the offence was committed. As a mitigating circumstance, yes: Article 31 quater.1.d) recognises as mitigating the establishment, before the start of the trial, of effective measures to prevent and detect offences that might in future be committed with the means or under the cover of the legal person.

Can a small company assume supervision of the model without a separate compliance body?

Yes. Article 31 bis.3 allows, in small legal persons, meaning those authorised to file an abridged profit and loss account, the supervisory functions to be assumed directly by the management body. The other requirements of the model remain.

Is the company liable even if the employee who committed the offence is not identified?

Yes. Article 31 ter.1 establishes that the criminal liability of the legal person is enforceable whenever the commission of an offence by someone holding the positions or functions of Article 31 bis is established, even if the specific natural person has not been identified or proceedings could not be brought against them.

Which offences are most frequent for a company in Alicante?

It depends on the sector. In property development and construction, the planning offences of Article 319, which expressly provides for a fine on the legal person, and the environmental offences of Article 325. In hospitality, industry and agri-food, offences against workers’ rights, tax offences and environmental offences. In foreign trade and logistics, money laundering and corruption in business. The risk map must be drawn up on the specific activity and not on a generic list.

What penalties, besides the fine, can be imposed on a convicted company?

Those of Article 33.7 of the Criminal Code: dissolution, suspension of activities for up to five years, closure of premises for up to five years, temporary prohibition for up to fifteen years or permanent prohibition of the activity in the exercise of which the offence was committed, disqualification from subsidies, public contracts and tax benefits for up to fifteen years, and judicial administration for up to five years. All are classified as serious.

Who represents the company in criminal proceedings?

A representative specially designated by the company itself, in addition to a lawyer and a court representative (Article 119 of the Criminal Procedure Act). It cannot be someone who must testify as a witness. Their non-appearance suspends neither the statement nor the trial: in the first case the company is deemed to exercise its right not to testify (Article 409 bis), and in the second the trial is held with the lawyer and the court representative (Article 786 bis).

Is my company obliged to have a whistleblowing channel?

Yes, if it has fifty or more employees or if it operates in the regulated sectors referred to in Article 10.1.b) of Law 2/2023, regardless of its workforce. Responsibility for implementing it lies with the management body (Article 5). For other companies it is not compulsory, but it is the most effective way of meeting the risk-reporting requirement of Article 31 bis.5 of the Criminal Code.

Related guides

• Criminal compliance in Spain
• Article 31 bis of the Criminal Code
• Economic and corporate crime lawyer
• Criminal defence in Alicante
• Contact the firm

This article is informative in nature and does not constitute legal advice. For a specific case, consult a lawyer.