Criminal Liability of Legal Entities

Criminal Liability of Legal Entities

In the past, legal scholars held differing views on the criminal liability of legal entities. Some believed that legal entities were incapable of committing crimes or that criminal punishment could not be imposed upon them.

Today, however, there is no longer any serious disagreement on this issue. For example, instead of capital punishment, the permanent dissolution of an institution may be imposed, and instead of imprisonment, temporary suspension of activities or similar sanctions may be applied.

In Iranian statutory law, relatively few explicit provisions address this issue. Pursuant to Article 568 of the Islamic Penal Code, with respect to the crimes outlined in Chapter Nine concerning the destruction of historical and cultural property, if legal entities commit such crimes, any managers or officials who issued the relevant orders shall, as applicable, be sentenced to the prescribed punishments.

According to Article 19 of the Check Issuance Law, where a check is issued by way of agency or representation on behalf of the account holder, whether a natural or legal person, both the issuer of the check and the account holder bear joint liability for payment.

Accordingly, enforcement measures and damage awards may be issued jointly against both parties. In addition, the signatory of the check shall bear criminal liability under the law unless it is proven that the non-payment resulted from the act of the account holder or a subsequent representative, in which case the individual who caused the non-payment shall be criminally liable.

Theoretical and Historical Foundations of the Criminal Liability of Legal Entities

Aside from the foregoing provisions, reference may be made to the Guild Affairs Law of 1972, which provides that in all cases where responsibility is imposed upon legal entities under the law, the managing director or responsible manager of the legal entity who issued the order shall be deemed the offender and shall be subject to the prescribed punishment.

Beyond such limited provisions, there has historically been no comprehensive statutory framework explicitly governing the criminal liability of legal entities within Iranian law.

In press-related offenses, both the author and the responsible editor are subject to punishment. This reflects a broader tendency within Iranian law to attribute criminal responsibility to natural persons acting on behalf of legal entities, rather than to the legal entities themselves.

Criminal Liability of Legal Entities under Iranian Statutory Law

The Iranian criminal justice system, before the enactment of the Computer Crimes Law in its specific sense and the Islamic Penal Code of 2013 in its general sense, did not expressly recognize the criminal liability of legal entities. Judicial practice likewise interpreted references to “persons” in criminal statutes as referring solely to natural persons. Nevertheless, even before the enactment of the 2013 Islamic Penal Code, and independent of the Computer Crimes Law, both pre-revolutionary and post-revolutionary legislation included instances in which criminal sanctions were imposed upon legal entities.

The legislator’s approach to criminal liability has not been uniform. In certain cases, responsibility and punishment are imposed directly on the legal entity itself, whereas in others, liability is attributed to natural persons, namely the legal entity’s managers or officials.

Among the most significant laws, both before and after the Revolution, that impose criminal liability directly upon legal entities are the following:

• The Commercial Code, which in certain provisions refers to the punishment of companies. For example, Article 220 of the Code provides for monetary fines against companies.
• Article 173 of the Constitution of the Islamic Republic of Iran establishes the Administrative Justice Court, which adjudicates violations committed by legal entities. Article 11 of the Administrative Justice Court Law, adopted on 4 February 1982, defines the jurisdiction of this court to include the review of complaints and objections raised by natural and legal persons against decisions and actions of governmental bodies, ministries, organizations, public institutions, state-owned companies, municipalities, revolutionary institutions, and affiliated entities.
• Article 4 of the Law on Medical, Pharmaceutical, and Food Regulations, adopted on 19 June 1924, refers to the closure of an institution as a sanction for violations committed by legal entities.
• Article 17 of the Governmental Discretionary Punishments Law, adopted on 14 March 1989 by the Expediency Council, refers to the imposition of fines as a form of criminal sanction upon legal entities.
• Article 15 of the Preventive Measures Law, adopted on 2 May 1960, provides for monetary fines and the closure of institutions as penalties for violations committed by legal entities.

Attribution of Criminal Liability to Natural Persons in Crimes of Legal Entities

Significant laws enacted both before and after the Revolution that attribute criminal liability arising from offenses committed by legal entities to natural persons include the following:

• Article 76 of the Guild System Law, adopted on 4 July 1980, provides that in all cases where responsibility is imposed upon legal entities by law, the managing director or responsible manager of the legal entity who issued the order shall be deemed the offender and shall be punished accordingly.
• Article 8 of the Law on the Translation of Books, Publications, and Audio Works, adopted on 27 December 1973, provides that where the offender is a legal entity, the natural person responsible for the decision giving rise to the offense shall compensate the private complainant from their personal assets.
• Article 109 of the Social Security Law, adopted on 4 July 1975, provides that where the employer is a legal entity, criminal responsibility shall attach to the company or to any other person whose act or omission caused harm to the organization or to insured individuals.

Frequently Asked Questions Regarding the Criminal Liability of Legal Entities