In today’s complex and ever-evolving business landscape, the role of compliance officers has become increasingly vital in ensuring effective corporate governance. As companies face mounting regulatory pressures and ethical challenges, the need for robust compliance programs and dedicated professionals to oversee them has grown exponentially. Compliance officers play a crucial role in safeguarding organizations against legal and reputational risks, promoting ethical conduct, and upholding transparency and accountability.
This article reviews the regulatory developments in criminal law and how these developments indicate a growing requirement for the role of regulatory compliance officer.
The enactment of the first Criminal Code of Equatorial Guinea, by Law No. 4/2022, dated August 17,2022, marked a departure from the code inherited from the Spanish colonial era. This enactment came into force in January 2023, and has brought a significant change in the criminal liability of legal persons.
Before this new criminal code, the criminal liability of legal persons, was subtly suggested, in articles 276, 421, 853-9, 879, 888-891, etc of the OHADA Uniform Act on Commercial Companies and Economic Interest Groupings (hereinafter AUSMAIE). Article 46 of Regulation 03/CEMAC-UMAC, pertaining to the prevention and suppression of money laundering and terrorist financing in Central Africa, as well as Law No. 1/2004, dated September 14, 2004, addressing migrant smuggling and human trafficking, tangentially broached the subject.
Although this article does not intend to delve into a doctrinal analysis of the criminal liability of moral persons, it is important to point out that except for regulation 03/CEMAC-UMAC, which included specific pecuniary penalties for certain conduct, no pre-existing local regulation had adequate penalties for legal persons. Moreover, apart from the conduct (without established penalties) included in article 886 of the AUSMAIE, there was no broad criminal regulation on the criminal conduct of legal persons and their liability.
However, with the entry into force of the new criminal code, the criminal liability of legal persons been introduced. The new enactment creates a separate legal entity criminal law framework, encompassing aspects of corporate law, from inception to dissolution, as well as infractions under labour law, violations within the domain of industrial property law, and offences related to intellectual property.
Specifically, Article 18 of the new criminal code establishes that “legal entities shall be criminally liable for crimes or misdemeanours committed by their legal representatives or de facto or de jure administrators, as well as by anyone to whom they have delegated them, provided that both have acted in the exercise of their functions as such, on their behalf and with the intention or purpose of benefiting them”.
According to the above secction, companies may be held criminally liable for crimes committed in their name or on their behalf by their legal representatives or employees. In addition, they can also be held liable if they have not exercised due control over their employees and legal representatives to prevent the commission of crimes.
This new criminal liability regulation has had a great impact on the Equatoguinean business environment, and the reason is very simple.
Companies must now take measures to prevent the commission of crimes and establish internal control systems to prevent their employees and legal representatives from committing crimes in their name or on their behalf. In addition, the reform has also established economic sanctions and other measures for companies that are found criminally liable. These penalties may include fines, closure, or suspension of operations or even the dissolution of the corporate entity itself.
While delving into a granular analysis of these specific behaviours would require an individualized consultation, it is possible to illuminate a couple of emblematic examples that now necessitate heightened vigilance.
The first pertains to workplace discrimination, which, while previously subject to punitive measures under labour regulations, lacked the criminal gravitas to warrant economic penalties for the company.
However, with Article 364 of the criminal code now in play, not only are severe fines, reaching up to 30,000,000 XAF (approximately 50,000 USD) for particularly egregious instances, imposed on the company’s managers or department heads responsible for the offending department, but also on those who, cognizant of the transgression and capable of redress, failed to institute appropriate preventive measures.
As can be surmised, the expansive purview of this regulation has the potential to implicate a significant segment of a company’s organizational structure that lacks a robust legal compliance framework.
Secondly, the convening of company meetings and the ensuing resolutions—activities commonplace in corporate operations—have acquired a new layer of scrutiny since the advent of the criminal code. Diverse behaviours exhibited by administrators or shareholders, such as manipulating meeting resolutions, advocating for decisions detrimental to the company’s welfare, among others, can now potentially attract legal censure. The multitude of such behaviours underscores the imperative of formulating a comprehensive regulatory compliance strategy.
The position of compliance officer is responsible for designing, implementing, and maintaining programs and policies that ensure a company’s compliance with applicable laws and regulations. This may include conducting internal audits, identifying, and mitigating risks, training staff on compliance issues, and working with regulators to ensure ongoing compliance. For example, depending on your sector of activity, it may be necessary to verify your internal processes on staff recruitment to avoid discriminatory criteria, or to verify the shareholder meeting procedures your company follows to ensure the authenticity and integrity of the content of shareholder meeting minutes.
In conclusion, the new criminal code has had a great impact on the criminal liability of legal entities. Companies must now take measures to prevent the commission of crimes and establish internal control systems to prevent their employees and legal representatives from committing crimes in their name or on their behalf. In addition, the economic penalties established by the reform can have a major impact on the financial viability of companies found criminally liable. One of the best ways to do this, is through a compliance officer, or a firm with the appropriate experience and understanding of the new criminal code in force in Equatorial Guinea.
Reach out to our team of lawyers and business advisors at Centurion Law Group. We seamlessly guide our clients through Africa’s abundant investment opportunities.
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Author: Pablo Obama Mitogo Akele, Associate Attorney, Centurion Law Group, Equatorial Guinea.