[1] Poorly designed or non-existent corporate liability systems can make it impossible to enforce laws effectively and can lead to profound injustices for individuals or entities seeking accountability and redress for wrongdoing.
Can the concepts of knowledge and intent required for mens rea (guilty mind) even be applied to business entities?
Typically, companies are held liable when the acts and omissions, and the knowledge and intent of its employees or business partners can be attributed to the corporation.
These vary from the all-encompassing approach of strict liability to those that look at the entity’s corporate culture and management systems in order to determine whether these ignored, tolerated or even encouraged criminal activity.
It may therefore unfairly favour larger corporations because they may be able to escape criminal liability for the acts of employees who manage their day-to-day activities.
[4] In effect, this doctrine is relevant to establishing the knowledge (but not the intent) aspect of mens rea for legal persons.
[6] Many legal analysts (e.g. Gobert) argue that if a corporation fails to take precautions or to show due diligence to avoid committing a criminal offence, this will arise from its culture where attitudes and beliefs are demonstrated through its structures, policies, practices, and procedures.
These concepts reflect the structures of modern corporations which are more often decentralised and where crime is less to do with the misconduct by or incompetence of individuals, and more to do with management and compliance systems that fail to address problems of monitoring and controlling risk.
Some countries do not permit management and compliance systems to preclude liability, but nevertheless allow them to be considered as mitigating factors when imposing sanctions.
[6] The problem of successor liability arises when a company does something that alters its organisation or identity, such as a name change or a merger or acquisition.
There is some doubt in many jurisdictions that sanctions are actually set in such a manner as to make them dissuasive.”[7] In some instances of fraud, the court may pierce the veil of incorporation.
Some crimes are considered inchoate because, like a conspiracy or attempt, they anticipate the commission of the actus reus (the Latin for "guilty act") of the full offence.