Subsidiary and criminal liability: how to minimize risks?

On July 27, the final, fourth online conference dedicated to bankruptcy was held by MCBA “Bureau of Lawyers “De Jure” together with the portal Dolg.RF and Rykov Group. This time, legal experts spoke about the risks for managers associated with subsidiary and criminal liability in the event of bankruptcy of companies.

The conference moderator, Head of MCBA “Bureau of Lawyers “De Jure” Nikita Filippov, set the tone of the discussion from the very beginning, saying: “Legislation is actively developing, closing the gaps, introducing new grounds for bringing to subsidiary and criminal liability.  So, in order to combat nominals, provisions on active repentance were introduced – when the nominee can be freed from responsibility, providing active assistance in finding and attracting beneficiaries.  But more and more new schemes appear – nominal directors and owners are often attracted from foreign countries, so it is more difficult to bring them to justice. “

Alexander Pogodin, Deputy Head of MCBA “Bureau of Lawyers “De Jure” for Criminal Cases, devoted his report to the analysis of risks for the leaders of the “second echelon” in the course of company bankruptcies.  According to him, if the head of the second echelon took part in the work of the company’s governing bodies and in the coordination of transactions, then this sharply increases the risks of prosecution.  To minimize risks, Pogodin advised to adhere to the principles of honesty and reasonableness in relations with counterparties, to observe all corporate procedures as clearly as possible, to carefully analyze all risks and rely on the help of teams of forensic lawyers.

Adelina Poluvaltseva, Director of Legal Affairs at Cirque du Soleil in Russia, inquired about the risks of bringing lawyers of a bankrupt company to subsidiary and criminal liability.  According to Alexander Pogodin, if the lawyer was not a member of the collegial management bodies of the company, then the risks of prosecution are minimal.  But if he was, for example, a member of the Board of Directors, then the situation is different.  “However, in this case, the claims will be presented to him not as a lawyer, but as a beneficiary,” – the representative of “De Jure” said.

Twice winner of the Best Lawyers 2020 & 2021 rating, lawyer Alexey Kasatkin continued the topic of risks for lawyers, devoting his presentation to how law enforcement agencies can qualify the work of a company’s internal lawyers.  According to him, they can be accused of such types of complicity in a crime as incitement (expressed, for example, in consultation and misleading), aiding (drafting documents, giving advice on tax optimization schemes), mediation (in bribery and commercial bribery)..

Expert of GC “Rykov Group” and journalist of Dolg.RF Jamilya Sadykova highlighted the issue of who the actual beneficiary is.  This is a person who has obtained a significant (relative to the scale of the company’s activities) benefit in the form of an increase (saving) of assets, which could not have been formed if the actions of the debtor’s management were in accordance with the law, including the principle of good faith.  Sadykov also touched upon the question of whether subsidiary liability can be inherited.  “The testator’s debt arising as a result of bringing to subsidiary liability is included in the inheritance mass.  In other words, if you inherit assets, then you will also have to take liabilities,” – she explained.

The speeches of the conference organizers aroused a keen interest of the audience and a lot of clarifying questions regarding specific cases.

The full recording of the online conference can be viewed on the YouTube channel of “De jure”.