Laos Introduces Corporate Criminal Liability
Not only natural persons (individuals) but also legal persons, such as companies, NGOs, associations, and foundations operating in the Lao PDR, now face criminal liability under new legislation enacted by the government aimed at strengthening the rule of law in the country.
Prior to the entry into force of the 2018 Penal Code, only natural persons (individuals) could face criminal liability and enterprises only had to worry about civil liability. Although the liability provided for therein bears parallels to Article 10 (Liability of Legal Persons) of the United Nations Convention against Transnational Organized Crime (UNTOC), to which the Lao PDR acceded on 26
September 2003, Articles 88-96 of the 2018 Penal Code apply comprehensively to all criminal offenses, however small, committed within the territories of the Lao PDR by any organization, irrespective of the jurisdiction in which it was established, and appear to act as both a deterrent and a means of preventing organizations from repeating similar offenses in future with the following punishments being made available to the courts:
– The closure of businesses operating under the offending organization;
– A ban on certain business activities (for up to five years);
– A ban on mobilizing capital (from shares or corps in the case of companies or from funds in the case of associations and foundations – for up to five years);
– A ban on using checks and credit cards (for up to five years);
– The seizure of property; and
– Restitution (having to pay damages for any loss or injury caused).
Businesses wishing to remain in operation will have to ensure they comply with the many laws which define criminal offenses, which comprise far more than those specified in the 2018 Penal Code alone and include many which are specific to certain sectors and business activities (far too many to detail here) as bans on engaging in specific business activities, mobilizing capital, and using checks and credit cards can last for up to five years, which could easily cripple an ambitious new venture with
otherwise promising potential.
For criminal liability to apply, the offense must have been “committed in the name of the organization, for the benefit of the legal person, and under the direction and/or management and/or the agreement of the legal person itself” and “the criminal liability of a legal person does not absolve the individual who committed the offense within that legal person from criminal liability” (Article 89 of the 2018 Penal Code, Lao PDR)
For further information, contact VDB Loi at https://www.vdb-loi.com/offices/laos/