Spain: Amendments to the Criminal Code Increase Corporate Criminal Liability Exposure

The Criminal Code was amended through Organic Law 1/2019 (the “Law”) to incorporate certain EU Directives, specifically Directive 2014/57/EU of the European Parliament and of the Council of 16 April 2014 on criminal sanctions applicable to market abuse; Directive 2017/541/EU of the European Parliament and of the Council of 15 March 2017 on combating terrorism and Directive (EU) 2017/1371 of the European Parliament and of the Council, of 5 July 2017 on the fight against fraud affecting the Union’s financial interests through criminal law; and the further transposition of Directive 2014/62/EU of the European Parliament and of the Council of 15 May 2014 on the criminal-law protection of the euro and other currencies against counterfeiting:

Fight against corruption:

• The Law extends the scope of the offence of private corruption (art. 286 bis) not only to those who receive, request or accept an unjustified benefit or advantage, but also to those who accept an offer or promise of such benefit or advantage.
• The Law increases the amounts for fraud to be committed against the EU Treasury (art. 305.3) or for a subsidy fraud (art. 308) from Euro 5,000 to Euro 10,000. The aggravated penalty applies for amounts defrauded from Euro 100,000 rather than from Euro 50,000.
• The Law extends corporate criminal liability, for the first time, to the crime of embezzlement of public resources (art. 435) and therefore to those legal entities who manage public resources or are responsible for such public resources.
• The Law extends the offence of public bribery to international jurors and arbitrators (art. 423).
• The Law extends the concept of public official for purposes of bribery and embezzlement (art. 431) to any person exercising public service functions based on the management of financial interests of the European Union.

Stock market offences (triggering corporate criminal liability):

• The Law extends the offence of alteration of prices (included within the crimes against the market and the consumers) (art. 284): (i)  to include the alteration of prices using devices and information technologies; (ii) to include the alteration of prices in spot contracts on raw materials related to financial instruments and reference indices; and (iii) to increase sanctions. Additionally, a specific aggravation of the penalty has been included when the person responsible for the crime is an employee or employee of an investment firm, credit institution, supervisory or regulatory authority, or entities governing regulated markets or trading venues.
• The Law amends the regulation of the offence of use of inside information (included within the crimes against the market and the consumers) (art. 285): (i) to specify the cases in which it is legally understood that a person has reserved access to inside information; and (ii) to add a specific aggravation of the penalty when the person responsible for the crime is an employee or employee of an investment firm, credit institution, supervisory or regulatory authority, or entities governing regulated markets or trading venues.
• The Law included three new articles in the Criminal Code: (i) art. 285 bis, to define the illicit communication of inside information when it endangers the integrity of the market or the confidence of investors; (ii) art. 285 ter, to refer certain definitions (financial instruments, contracts, conduct, operations and orders envisaged) to that provided for in the European -and Spanish- regulations on markets and financial instruments; and (iii) art. 285 quater, to expressly sanction acts of proposition, conspiracy and provocation of the stock market offences.
• The Law extends the offence of organ trafficking (which triggers corporate criminal liability) to new cases (art. 156 bis), and provides for the forfeiture of profits obtained through its commission.
• The Law (i) extends the offence of currency counterfeit (art. 386) (which triggers corporate criminal liability) to the import of counterfeited currency into any country of the European Union; (ii) extends the offence to currency which has not yet been officially issued or put into circulation but which is intended to be issued and circulated; and (iii) provides for the possibility to impose on the company committing the offence not only a fine but also the other penalties which may apply to companies (dissolution and liquidation, closure of premises, etc.).
• The Law (i) increases the penalties of the offence of terrorism (art. 572); and (ii) extends the offence also to documentary falsification (art. 573) and to those who, in order to commit the offence, move to a foreign territory even though that territory is not controlled by a terrorist group or organization (art. 575.3) (both triggering corporate criminal liability).