In its 2022 review of corporate criminal liability, the Law Commission highlighted longstanding concerns that complex corporate structures allowed large companies to distance themselves from misconduct.
Prosecutors had to prove that the company’s “directing mind” – such as board-level executives or directors – was responsible for the wrongdoing.
From the end of June, the position will change. Organisations may now be criminally liable for offences committed by senior managers if they are shown to have been acting within the actual or apparent scope of their authority.
The changes, which form part of the Crime and Policing Act 2026 (CAPA), will expand the so-called “identification doctrine”, the legal principle governing when an individual’s conduct can be attributed to a company.
Who counts as a senior manager?
The legislation defines a senior manager as someone who plays a significant role in:
- making decisions about how all or a substantial part of the organisation’s activities are managed; or
- managing or organising all or a substantial part of those activities.
This is a factual test rather than one based purely on job title, meaning that someone with a relatively junior title could still be considered a senior manager if they exercised significant managerial authority within the organisation.
Which offences are covered?
The reforms dramatically widen the range of offences for which organisations may face prosecution.
The Economic Crime and Corporate Transparency Act 2023 (ECCTA) had already expanded liability for certain economic crimes, including fraud, bribery and money laundering offences.
CAPA now extends the principle to all criminal offences capable of being committed by an organisation. These include:
- fraud and financial crime
- bribery offences
- modern slavery offences
- data protection offences
- environmental offences
- Computer Misuse Act offences
- contempt of court and obstruction offences
This represents a substantial increase in potential criminal exposure for businesses operating in the UK.
Interaction with “failure to prevent” offences
The reforms may also create compliance issues for businesses already subject to “failure to prevent” legislation, which makes companies criminally liable if they fail to stop employees or associated persons committing offences such as bribery, fraud or the facilitation of tax evasion.
For example, a company accused of failing to prevent bribery under the Bribery Act 2010 may rely on a defence that it had adequate procedures in place.
However, under the expanded identification doctrine in CAPA, the same company could potentially face direct prosecution for bribery based on the actions of a senior manager — without any equivalent statutory defence being available.
This significantly increases the importance of robust compliance and governance procedures.
What are the risks for businesses?
The reforms reflect a wider political and regulatory trend towards greater corporate accountability for criminal conduct.
For businesses, the consequences of investigation can extend well beyond criminal penalties and may include:
- reputational damage
- regulatory scrutiny
- shareholder claims
- disruption to operations
- costly internal investigations
Early legal advice is critical where concerns arise regarding potential corporate criminal exposure.
Managing corporate criminal risk
The new regime means organisations should urgently review their compliance frameworks and risk management procedures.
Practical steps may include:
- identifying individuals who may qualify as senior managers
- reviewing fraud, bribery and compliance training
- updating internal reporting and whistleblowing procedures
- conducting fresh risk assessments
- reviewing investigation and escalation procedures
- strengthening governance and oversight controls
Regulated businesses may also need to review responsibilities under the Senior Managers and Certification Regime (SMCR).
How Lewis Nedas Law can help
Lewis Nedas Law advises companies, directors and senior professionals facing allegations of financial crime, regulatory breaches and corporate misconduct.
Our solicitors can assist with:
- internal investigations
- fraud and bribery allegations
- regulatory investigations
- compliance reviews
- interviews under caution
- Serious Fraud Office matters
- corporate criminal defence
Where businesses face potential exposure under the UK’s expanding corporate criminal liability regime, proactive legal advice can be essential in managing risk and protecting your organisation.
About us
Lewis Nedas has been a top tier firm in the Legal 500 rankings for the past 14 years and has been voted into The Times Best Law Firms list eight times since its launch in 2019.
Our founder, Jeffrey Lewis, and non-executive director, Siobhain Egan, have extensive experience advising clients facing corporate crime investigations, regulatory scrutiny and enforcement action.
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Siobhain Egan, Director (Non-Executive)