When regulators start corporate investigations, we are often asked whether directors, managers and other company officers can be prosecuted. The answer can be “yes”.

An Irish Court of Appeal decision of January 2018 has clarified when prosecutions of individuals can occur. The Court held that individual liability depends on whether the individual has functional responsibility for a significant part of the company's activities and direct responsibility for the area in controversy.

Detailed Findings from the Court of Appeal

Many Irish statutes (such as companies acts, competition acts, environmental legislation, telecoms legislation and certain consumer protection legislation) expressly envisage prosecution of individuals where offences are committed by a company. Such statutes state, for example, that a “director, manager, secretary or other similar officer of a body corporate or a person who is purporting to act in any such a capacity” may also be guilty where an offence is committed by the company “with the consent, connivance or approval of” that individual or where the company’s offence was facilitated by that person’s neglect.

Older court cases suggested that a director or manager could only be criminally liable if he or she was a decision maker within the company, having both the power and responsibility to decide corporate policy and strategy.

The Court of Appeal decided that the phrase "director, manager, secretary or other similar officer of a body corporate or a person who is purporting to act in any such a capacity" must be seen in a modern context. In the Court’s view, the term “body corporate” makes it clear that individuals must hold responsibility at a corporate level. For example, the manager of an individual branch of a bank is not to be equated with a manager of the bank (unless the bank is local and has only one branch).

The Court noted that it is not unusual to find, for example, Finance Directors, Human Resource Directors and IT Directors in large corporations, while in other companies those individuals may be referred to as Finance Managers, Human Resources Managers and IT Managers. Responsibilities may be distributed in such a way that it is difficult to say that any one individual is responsible for the management of the whole affairs of the company. However, while there may be some particular areas of the company activity with which an individual does not have an involvement, he can still be considered as a manager of the company, if the individual's role is a significant one.

Very significant responsibilities can be entrusted to, for example, an Assistant General Manager or to regional managers but also to individuals such as safety managers to whom very important areas of responsibility are entrusted. Such individuals can be regarded as "other similar officers" who can be the target of prosecutions.