LiabilityLiability of undertakings
What are the risk and compliance management obligations of members of governing bodies and senior management of undertakings?
As part of the undertaking’s management activities, these individuals may be held liable for infringements of the legislation referred to herein, but only to the extent of their guilt or intent. More precisely, new local criminal theories - such as the Theory of Final Domain of Fact - may expose executives to administrative and criminal prosecution resulting from a failure in their duty (omissive action) to supervise their subordinates once an executive is aware of - and should have acted on - the facts involving the decision-making process of their subordinates.
Do undertakings face civil liability for risk and compliance management deficiencies?
There are no direct consequences for deficiencies in risk and compliance management mechanisms; however, there could be penalties if these deficiencies result in infringement of Brazilian statutes. Moreover, deficiency in compliance controls will prevent undertakings from benefitting from reductions on possible administrative fines.
Do undertakings face administrative or regulatory consequences for risk and compliance management deficiencies?
As in question 11, there are no direct consequences for deficiencies in risk and compliance management mechanisms; however, there could be penalties if these deficiencies result in infringement of Brazilian statutes.
Do undertakings face criminal liability for risk and compliance management deficiencies?
In Brazil, there is no criminal liability for legal entities except for issues related to the environment. However, it is possible for directors and officers of an undertaking to be criminally liable for infringements they have committed, but only to the extent of their guilt or intent. In these cases, the applicable procedures and penalties will be the ones provided for in the Criminal Code and related legislation.Liability of governing bodies and senior management
Do members of governing bodies and senior management face civil liability for breach of risk and compliance management obligations?
According to the BCCA, these individuals are liable to the extent of their guilt, regardless of the legal entities’ liability. The individual will be subject to the provisions of the Improbity Law that determines that offenders repair the damage or return the goods that were illicitly obtained, as well as the ones provided in the Civil Code and Law No. 6,404/75 (regarding corporations and their partners).
Do members of governing bodies and senior management face administrative or regulatory consequences for breach of risk and compliance management obligations?
The BCCA does not provide for liability of individuals. Regarding the antitrust legislation, individuals may be subject to a fine and may be prevented from exercising commerce for a period of up to five years. According to the terms of the Improbity Law, individuals may be subject to freeze of assets, return of money illegally obtained or a fine of up to three times of the value obtained illegally, in addition to the restoration of the damages caused.
Do members of governing bodies and senior management face criminal liability for breach of risk and compliance management obligations?
To the extent that a criminal infringement (such as corruption, money laundering, fraud, cartel, etc) is proved against a member of a governing body or senior management, criminal liability provided for in the Brazilian statutes may vary according to the nature of the infringement in question.
Criminal liability is only applicable to individuals in Brazil (except for environmental issues where there may be corporate criminal liability). Private corruption is not considered a crime (therefore there must be a public agent or public body involved in order for it to be considered a crime).