CORPORATE CRIMINAL LIABILITY
· It encompasses two elements: Mens Rea and Actus Reus.
· A company being an artificial person cannot have requisite Mens Rea. It is difficult to identify and prove the criminal intent of a Juristic Person.
· Corporates cannot be imprisoned; it requires the person to go behind the bars. Physical persons for proceedings are required.
· Therefore, the law was that a company cannot be prosecuted for offences that require the imposition of a Mandatory Punishment
Corporate crimes are committed by a corporation or by individuals acting on behalf of the corporation. There is a need for recognition of white-collar crimes. A corporate fraud occurs when a company or an entity deliberately changes and conceals sensitive information. There can be several reasons for which companies commit such frauds like making more falsified money, creating a false image of the company for the market scenario, and misguiding Governmental authorities for tax evasion. The financial and corporate frauds or scams like the Harshad Mehta case, Satyam fiasco, Sahara case required the attention of lawmakers. Such frauds made it imperative to evaluate the standards set in corporate governance and stringent methods were needed to be implemented to tackle corporate frauds.
PERSONAL LIABILITY OF DIRECTORS AND MEMBERS
The directors and members of the company are personally bound by certain liabilities imposed upon them by the regulations of the Companies Act, regardless of the existence of the primary concepts of “separate personality” and “limited liability.” This happens in the following cases:
1) Shortage of membership: Under Section 45 of the Companies Act, a statutory limit is imposed upon the minimum requirement of members to constitute a lawful firm. A minimum of 7 members are needed to form a public company, and a minimum of 2 is needed for a “Company Law” Page 19 of 26 private company
2) Incorrect description of company name: Under Section 147 of the Companies Act, if any contract, promissory note, bill of exchange, order, cheque, or hundi is signed by an officer, and he does not correctly or entirely mention the name of the Company in the instrument, then he will be made personally liable to the holder of the instrument.
3) Fraudulent conduct of business: Under Section 542 of the Companies Act, if the court or a competent authority discovers that a business is being conducted to deceive or defraud the customers, creditors, shareholders, or other stakeholders of the company for any fraudulent motives, then those members of the organization who had willingly partaken in the fraud would be held personally liable for any consequences arising from the same.
4) Failure to return application money: Under clause 5 of Section 69 of the Companies Act, in case the limit of minimum amount for a subscription of shares has not been received from shareholders, if the application money is not repaid to the shareholders within 30 days of the happening, the director of the public company will be held personally liable
5) Ultra vires acts: In case any ultra-vires or beyond the law acts are done by the directors on behalf of the company, they would be made personally liable for the same
6) Non-payment of taxes: When a private company is being wound up, the liabilities are assessed in the course of liquidation. If any such unpaid taxes are calculated as to be paid on the income of any previous year, and if such an amount cannot be recovered from the assets of the company, then this amount will be personally recovered from every director of the company at the time, and they would be liable jointly and severally.
7) Subsidiary company: Under Sections 212 and 214 of the Companies Act, the parent company or holding company is by law required to fully disclose the accounts as well as the list of members of the subsidiaries in their holding. Although subsidiaries have their distinct identity and are an entity which is separate from its holding company, it cannot be treated fully independently in certain situations.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being.