Towards appropriate and effective responses to commercial transgressions by companies and their directors

LL.M. (Corporate Law)Commercial transgressions have a significantly negative impact on a large number of people, entire organisations, economies and society as a whole. These types of transgressions should be studied to arrive at appropriate and effective responses, which both prevent them from occurring and redress the harm caused when they do; including determining who should be held responsible. The individual liability approach to corporate transgressions only recognises individual liability and therefore proposes that a corporation cannot be held liable. The notion that juristic persons such as corporations cannot commit transgressions is however no longer followed in a number of jurisdictions. An increase in corporate crime has led many countries to a realisation that a more allencompassing approach to corporate liability is required. An enterprise liability approach holds that the corporation itself deserves to be held liable for its offences and commensurately punished. The accountability model goes a step further and proposes that all the individuals and parties (including the corporation) to a transgression should be allocated responsibility. There are broadly two approaches to attributing blame to a corporation, these being either on a nominalist or on a realist basis. On a nominalist basis the corporation’s liability arises or is derived from the actions of individuals within the corporation. The aggregation doctrine is based on the notion that the liability of a corporation is based on a derivative but collective responsibility. On a realist basis a corporation can be held liable in its own right, separate from any individual’s fault. Unlike with a nominalist/derivative liability approach, in terms of a realist or organisational model approach, a corporation can be held directly liable for its own acts and omissions. An organisational approach to corporate liability is seen as a workable and practical solution to holding modern corporations accountable for wrongdoing. The practices of levying administrative penalties and criminal prosecution are both widely used types of sanctions to corporate transgressions, although there are other forms of sanctions. To be effective a combination of sanctions may be warranted. If we are to focus on both deterrence and compliance in effectively responding to commercial transgressions, we cannot ignore the importance of effective and well-implemented compliance programmes. The role that regulatory agencies can play in promoting an understanding of the value of strong corporate codes and effective compliance programmes should be harnessed ..