The Draft Amendment, which represents a landmark shift, will enable the prosecution and criminal sanctioning of Andorran and foreign legal entities for certain offences committed on behalf of or for the benefit of such entities. This regime operates in addition to the individual criminal liability of natural persons.
Andorra thus aligns with the international standards promoted by GRECO, FATF, the Moneyval Committee and the United Nations, thereby fulfilling its commitments under the international conventions to which the Principality is a party or aspires to become.
- ATTRIBUTION OF LIABILITY AND PROCEDURAL REPRESENTATION
A legal entity shall be criminally liable where an offence has been committed for its benefit, whether direct or indirect, and either of the following circumstances exists:
- Acts of directors or representatives: where the offence is committed by a de facto or de jure director, a statutory or voluntary representative, or any person vested with decision-making or supervisory authority within the entity.
- Material failure of oversight: where the offence is committed by an employee or another person subject to the authority of the foregoing, as a result of the absence or inadequacy of supervisory and monitoring measures, or the grossly negligent application thereof.
The Draft Reform establishes the autonomy of the criminal liability of the legal entity and delineates its scope in three respects:
(i) The entity may be prosecuted even where the natural person who committed the offence has not been identified or it has not been possible to bring proceedings against that person. It shall be sufficient to establish that the offence was committed by a person holding one of the positions described above; the death or other personal circumstances of such natural person shall neither exempt nor modify the liability of the entity.
(ii) Criminal liability shall survive corporate restructuring. Such liability shall not be extinguished by the transformation, merger, merger by absorption or demerger of the legal entity, but shall pass to the successor entities. Nor shall it be extinguished by a simulated dissolution where the business activity continues and substantial identity with the former entity is preserved. Accordingly, in any corporate restructuring process, a review of the potential criminal liabilities of the entities involved will be essential.
(iii) From a subjective standpoint, the regime extends to all private entities, excluding public administrations and their dependent bodies, public bodies and quasi-public entities, international organisations governed by public law and, in general, those exercising sovereign prerogatives or administrative functions.
A legal entity facing such charges must specifically designate a person to represent it in the criminal proceedings. Such designation must be made by its governing body or its legal representative, and participation in the proceedings shall in all cases require legal representation. The designated representative may make statements on behalf of the entity, whilst retaining the right to silence, the privilege against self-incrimination on behalf of the entity, and the right not to enter a guilty plea.
- PREDICATE OFFENCES: NUMERUS CLAUSUS
The new corporate criminal liability regime does not impose a general liability clause but instead sets out, by way of a closed list (numerus clausus), the offences that may give rise to such liability, provided that the attribution criteria are met.
Specifically, the offences currently contemplated in the Draft Amendment are as follows:
- Trafficking in human beings for the purposes of organ harvesting, forced labour or services, slavery, servitude, begging, exploitation for criminal activities or non-consensual marriage.
- Offences relating to prostitution and pornography.
- Offences against the socio-economic order.
- Offences against workers’ rights.
- Offences against collective safety, public health and the environment.
- Terrorism and terrorist financing.
- Corruption and influence peddling.
- Illegal financing of political parties.
- Money laundering.
- Offences against the security of legal transactions.
- SENTENCING FRAMEWORK FOR LEGAL ENTITIES
The Draft Amendment provides for a regime of specific penalties for legal entities, structured into principal and supplementary penalties.
- As a principal penalty, a fine is provided for, which may reach up to five times the amount prescribed for natural persons under the relevant criminal provision. Where the offence does not provide for a fine for natural persons, the maximum amount shall be determined according to the seriousness of the act. Specifically, in the case of major offences, the fine may amount up to €300,000 or four times the damage caused or the benefit obtained, whichever is greater. In the case of minor offences, the limit shall be €60,000 or three times the damage caused or the benefit obtained, whichever is greater.
- In addition to the fine, where expressly provided for by the relevant criminal provision, the following may also be imposed as principal penalties: exclusion from public procurement and disqualification from carrying on business activities.
In addition to the principal penalties, the court may impose supplementary penalties:
- Dissolution of the legal entity;
- Suspension of activities for a maximum period of six years;
- Disqualification from carrying on business activities;
- Exclusion from public procurement; and
- Disqualification from keeping animals.
In addition, the court may order certain ancillary measures of a distinct legal nature, including publication of the judgment at the expense of the convicted entity, and the appointment of a judicial administrator.
- EXEMPTION THROUGH EFFECTIVE COMPLIANCE PROGRAMMES
The implementation of an effective compliance programme, adopted prior to the commission of the offence, may exempt the legal entity from criminal liability. Beyond its exculpatory function, the compliance programme serves as a key instrument for the prevention and mitigation of the entity’s criminal exposure. To produce these effects, it must include the following elements:
- Risk map: identification of the activities and operations in which criminal risks may materialise.
- Internal procedures: decision-making and execution protocols aimed at prevention.
- Financial controls: financial resource management models adequate to prevent the commission of offences.
- Reporting channel: duty to report risks and non-compliance to a supervisory body.
- Training: ongoing training programme for employees and directors.
- Disciplinary regime: internal sanctions system for non-compliance with the program.
- Periodic review: periodic updates in response to organisational or legislative changes.
- Supervisory body: autonomy, own resources, functional independence and direct access to the governing body.
Small entities will be subject to a more flexible regime. The supervisory function may be assumed by the governing body itself, without the need for a formal disciplinary regime, and compliance with the remaining requirements shall be assessed proportionally to the specific characteristics of each entity.
In the case of corporate groups, the compliance programme may be implemented at group level, with common measures and procedures, provided that its proper application is ensured and it is adapted to the particularities of each entity.
- ENTRY INTO FORCE AND PRACTICAL IMPLICATIONS FOR DOMESTIC AND FOREIGN OPERATORS
As at the date hereof, the Draft Amendment is at the parliamentary amendments stage and may undergo substantial modifications before its final approval, although no fundamental structural change is anticipated. The final text will enter into force one year after its publication in the Butlletí Oficial del Principat d’Andorra (BOPA), without prejudice to any specific vacatio legis that may be provided for in respect of any particular provision.
This legislative reform represents a turning point for Andorra and will require local economic operators across multiple sectors —financial services, real estate, advisory firms, tobacco companies, distribution and logistics, including hydrocarbons and retail— to adopt proactive measures, prepare realistic risk maps and implement adequate controls.
Compliance programmes stand as the primary line of defence —though not the only one— against potential indictments and as the most effective tool for preventing criminal and reputational consequences. However, the new regime will not only affect local legal entities; rather, particularly in an enclosed country such as Andorra, it will require foreign companies —financial, industrial and service companies, among others— with cross-border operations involving Andorra to reassess their risk maps and redefine their activities in a wide range of areas, from anti-money laundering to the unlawful exercise of regulated professions, workers’ rights, collective safety and the socio-economic order.
