The Legal Aid, Sentencing and Punishment of Offenders Act 2012

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 (“LASPO”) received royal assent on 1 May 2012.  The primary purpose of the bill was to reform the civil litigation costs and funding framework in England and Wales.  However, a number of other significant changes to the law were also included in the final version of the bill, including the abolition of the statutory maximum fine that can be issued to a guilty party on conviction for a summary offence in the magistrate’s court (currently set at £5,000).

This means that, where an offence currently carries a fine capped at the statutory maximum, no upper limit will apply to the amount of the fine that the court can impose.  The government has stated that the removal of the cap will enable magistrates courts to impose more proportionate fines on wealthy or corporate offenders and organisations.

Criminal liability is often thought of as a remote risk for businesses operating in a commercial environment, but there is a surprisingly large number of criminal offences set out in primary and secondary legislation that apply to companies.

As a few simple examples:

  • a director who fails to declare his/her interest in a transaction or arrangement proposed to be entered into by a company commits an offence punishable on summary conviction by a fine not exceeding the statutory maximum (section 183 Companies Act 2006);
  • a failure by a company to file its accounts with the Registrar of Companies within the prescribed time period constitutes not only a civil offence on the part of the company, but also a criminal offence on the part of every director of the company at the relevant time.  The current maximum fine available on summary conviction is an amount not exceeding the statutory maximum and, for continued delay, a daily default fine of not more than one tenth of the statutory maximum (section 451 Companies Act 2006);
  • a company or an individual guilty of any offence under the Data Protection Act 1998 (“DPA”) will be liable on summary conviction to a fine not exceeding the statutory maximum (section 60 DPA).

With directors and companies facing potentially unlimited fines, what may previously have been seen as a minor risk worth taking will have to now be reconsidered and companies should review their approach to compliance.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 020 7404 0606 and ask for your usual Goodman Derrick contact.