Identification Doctrine: Limitations in Establishing Corporate Criminal Liability The identification doctrine is the traditional method by which companies are held liable under the principles of the common law. According to this theory, the solution for the problem of attributing the unlawful acts to a corporation for offences that require intention was to merge the identified individual with the corporation. For the purpose of establishing corporate liability, a company may be responsible for the wrongful acts of living persons although it is an artificial entity which cannot act and think by itself. And by what Viscount Haldane noted: “A corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.”1 , the attribution then has depended on the “directing mind and will”. Under normal circumstances, the directing mind of a company is found in the board of directors, the managing director and perhaps other superior officers rather than their subordinates.2 However, the junior employees may also participate in the directing mind if they are delegated by the board of directors some part of the functions of management such as act independently in particular circumstances.3 The physical act (actus reus) and mental state (mens rea) of the employees involved may be took into account when establish corporate liability.4 Many cases concerning various fields of daily life including those that trace back to the early time when corporations appeared demonstrate that a company could be prosecuted for a criminal offence.5 What may incur debates is whether the criminal offence could make a company criminally liable. Two elements required in English law for a person as well as a company being charged criminal liability, they are the guilty mind and the guilty act. A corporation is a legal entity allowed by legislation6, to commit an offence, it may exercise the guilty act during its operations through living person. When the acts of a person follow the orders of a company within the articles of association or, in other words, “a person is an embodiment of the company”,7 then he acts as the company. However, determining the guilty mind is not the same because it is difficult to judge who could represent the will of a corporation especially when there might be many people in a corporation. The identification doctrine provides a solution method. In Deutsche Genossenschaftsbank v Burnhope8, a company had been liable for theft of property from a bank because the chairman who was identified with the company had the dishonest intention of theft, although the only person present on the premises is the junior employee whose involvement had been entirely innocent, and it was incorrect to take the view that the employee was "the company" for the purpose of liability. However, to this extent, there are limitations for the identification doctrine in finding the identified person for corporate criminal liability. In small private companies, the situation is not complex, the directing mind of a corporation would often be found in a person who is regarded as the alter ego of a company. In large private companies and public companies the directing mind of the company may be one or more members of the board of the directors.9 Moreover, the junior employees’ acts may also be involved to attributing the corporate criminal liability. The application of the identification doctrine could be tricky. Ambiguity exists in the description of the identification doctrine. Literally, it is only indicated that the purpose of the identification doctrine is to fund corporate liability. How to achieve it, which is the “directing mind and will” theory, has developed case by case. The...
Gerard Forlin, ’Directing minds: caught in a trap’ (2004) 154 NLJ 326
Stephen Griffin, David Southern and Peter Walton: Company Law Handbook (3rd edn), The Law Society, London, (2013)
http://www.duhaime.org/LegalDictionary/C/Company.aspx (accessed on 21/11/2014)
Please join StudyMode to read the full document