BLR  Vol.7 No.3 , September 2016
The Criminal Liability of Parent Corporations for Acts of Its Subsidiaries under Criminal Law in Jordan: A Comparative Study
Abstract: The present study deals with many legal aspects of criminal liability of legal entities, as well tries to explain the legislative and judicial attitude towards this sort of liability. The current research examines laws on criminal liability of parent companies for illegal acts of the subsidiary under criminal legislation in Jordan, and discerns legal norms and applicable aspects related to the doctrine of corporate criminal liability and the legal relationship of the parent company with the subsidiary. This study will first conduct a comprehensive analysis of the provisions of the Jordanian Company Law on the relationship between the parent company and the subsidiary. Issues of corporate criminal liability under the Jordanian legal and other selective comparative legal systems, several aspects of legal systems of common law and civil law about the criminal liability of parent corporations for conduct of parties outside of organization, or for offences of dissolved corporations, or for offences of predecessor’s corporations will be discussed. On the light of secrecy of studies in the direct theme of the present study and ambiguity of regulatory and legal framework in this topic, the researcher will carry out the analysis of the related legislation, including criminal laws merely with respect to the criminal liability of corporation for offences committed by its subsidiaries in order to revamp the legal framework of this issue. An attempt will take into consideration both national and international legal attitudes towards the theme of this research at national and international levels. Finally, this study is a bold step for the detection of weaknesses in the Jordanian legislation in regulating this matter, which is necessary for the interest of the national economy and to protect companies, corporation, economic units and their shareholders, and to create an attractive investment environment for investors.
Cite this paper: Faqir, R. (2016) The Criminal Liability of Parent Corporations for Acts of Its Subsidiaries under Criminal Law in Jordan: A Comparative Study. Beijing Law Review, 7, 212-237. doi: 10.4236/blr.2016.73022.

[1]   Abdel Tawab, M. (1990). The New of Commercial Judiciary: Commercial Judgments of the Court of Cassation in Fifteen Years (1975-1990), Cairo, Egypt. (In Arabic)

[2]   Al Ibrahim, M. (2007). The Nature of the Legal Relationship between the Holding Company and Its Subsidiary. Almanarh Journal, Al-Bayt University, 13, 73-17.

[3]   Al Masada, A. M. (2014). The Relationship between Holding Company and Its Subsidiaries: Comparative Study. The Journal of Academy for Social and Humanitarian Studies, 12, 115. (In Arabic)

[4]   Al Otawer, R. I. S. (2006). Criminal Liability of the Legal Person. Damascus University Journal of Economic and Legal Sciences, 22, 341-381. (In Arabic)

[5]   Al Qudah, M. (2009). Corporate Criminal Liability under the Criminal Laws of Jordan and Australia: A Comparative Analysis. Journal of Shari’a and Law, United Arab Emirates University, 37, 27-88.

[6]   Al Sharosh, M. A. S. (2006). The Criminal Liability of Legal Entities. Master Dissertation, Mu’tah: Mutah University. (In Arabic)

[7]   Al Shawi, A. H. (2002). The General Principles of Penal Law. Kuwait: Al. Resala Printing.

[8]   Aldik, K. (2016). The Criminal Liability of Legal Entity: Comparative Study. Journal of Law and Business, University of Al. Hassan, 5, 3-13.

[9]   Al-Mahazneh, M. (2015). The Criminal Responsibility of the Legal Person in the Case of Absence Representative Characterization to the Member Who Committed the Crime: Comparative Study. Dirasat: Journal of Law and Sharai. The Deanship of Academic Research, University of Jordan, 42, 133-146.

[10]   An Association of Independent Accounting Firms (2015). Permanent Establishment in Romania: Branch or Subsidiary?

[11]   Augustus, M. K., & Erlinda, S. E. (2009). Holding Companies: A Structure for Managing Diversification. Philippine Management Review, 16, 1-12.

[12]   Ayadhi, I. B. M. (2015). The Relationship between the Holding Company and Its Subsidiary and Its Impact on Zakat. SABIC Program for the Study of Islamic Financial Markets, Riyadh: The Islamic University of Imam Muhammad Bin Saud, Kingdom of Saudi Arabia, Ethiopia.

[13]   Ayalew, A. (1998). Criminal Liability of Bodies Corporate. Senior Thesis, Addis Ababa: Faculty of Law, Addis Ababa University.

[14]   Binning, C. (2015). The Changing Face of Corporate Criminal Liability.

[15]   Bonbright, J. C., & Means, G. C. (1969). The Holding Company. New York.

[16]   Bose, M. (2011). Corporate Criminal Liability in Germany, the Series Ius Gentium. Comparative Perspectives on Law and Justice, 9, 227-228.

[17]   Burke, M. J. (1992). Use of the Delaware Investment Holding Company for Intellectual Property Assets. Master Dissertation, United States: University of New Hampshire, Franklin Pierce Law Center.

[18]   Carla, M. (2010). The Introduction of Corporate “Criminal” Liability in Italy.

[19]   Catargiu, M. (2013). The Origins of Criminal Liability of Legal Persons: A Comparative Perspective. AGORA International Journal of Juridical Sciences, No. 3, 26-30.

[20]   Celia, W. (2002). The Reform of Corporate Criminal Liability. The Reform of UK Company Law. London: Cavendish.

[21]   Chella, J. (2012). The Complicity of Multinational Corporations in International Crimes: An Examination of Principles. Ph.D. Thesis, Gold Coast: Law Faculty, Bond University.

[22]   Chertier, B. J. (2015). The Case for Subsidiary Corporate Governance.

[23]   Clapham, A. (2008). Extending International Criminal Law beyond the Individual to Corporations and Armed Opposition Groups. Journal of International Criminal Justice, 6, 899-926.

[24]   Colwell, G. (2013). Criminal Bribery and Corruption Liability of Companies under German Law.

[25]   Cugia di Sant’Orsola, F., & Giampaolo, S. (2011). Liability of Entities in Italy: Was It Not Societas Delinquere Non Potest? New Journal of European Criminal Law, 2, 59-74.

[26]   De Maglie, C. (2005). Models of Corporate Criminal Liability in Comparative Law. Washington University Global Studies Law Review, 4, 547.

[27]   Deckert, K. (2011). Corporate Criminal Liability in France, the Series IusGentium. Comparative Perspectives on Law and Justice, 9, 147-176.

[28]   Diskant, E. B. (2008). Comparative Corporate Criminal Liability: Exploring the Uniquely American Doctrine through Comparative Criminal Procedure. The Yale Law Journal, 118, 126-176.

[29]   Doyle, C. (2013). Corporate Criminal Liability: An Overview of Federal Law. Congressional Research Service.

[30]   Dubber, M. D. (2012). The Comparative History and Theory of Corporate Criminal Liability.

[31]   European Commission (2012). Guidelines on Eligibility Conditions for an AEO and the Procedure to Be Followed in Case of Multinational Companies and Large Businesses (2nd ed.). Brussels, Belgium: Author.

[32]   Farrar, J. H. (1987). Ownership and Control of Listed Public Companies: Revising or Rejecting the Concept of Control. In B. G. Pettet (Ed.), Company Law in Change (pp. 39-67). London: Stevens & Sons.

[33]   Fauchald, O. K., & Stigen, J. (2009). Corporate Responsibility before International Institutions. The George Washington International Review, 40, 1025-1100.

[34]   Fischer, P. (1985). Transnational Enterprises. In R. Bernhardt (Ed.), Encyclopedia of Public International Law (Vol. 7, p. 515). Amsterdam: North Holland Publishing Company.

[35]   Friedman (1996). Law of Agency (7th ed.). Toronto: Butterworth.

[36]   Gajewski, D. (2012). The Holding Company as an Instrument of Companies’ Tax-Financial Policy Formation. Journal of Contemporary Economics, 7, 75-82.

[37]   Gerhard, F. (1998). National Development in Germany: An Overview. In A. Eser, G. Heine, & B. Huber (Eds.), International Colloquium on Criminal Responsibility of Legal and Collective Entities (pp. 83-88). Germany: Max Planck Institute for Foreign and International Criminal Law.

[38]   Gibson, A., & Fraser, D. (2011). Business Law (5th ed.). New York: Pearson.

[39]   Grimes, J., Niblock, R., & Madden, L. (2013). Corporate Criminal Liability in the UK: The Introduction of Deferred Prosecution Agreements, Proposals for further Change, and the Consequences for Officers and Senior Managers.

[40]   Habibzadeh, M., & Sharifi, M. (2013). Imposing Criminal Liability to Corporate Bodies. International Journal of Innovative Research in Science, Engineering and Technology, 2, 5855.

[41]   Hahlo, H. R. (1969). Company Law through the Cases: A Collection of Leading English and South African Cases on Company Law Together with Explanatory Notes and Comments (2nd ed.). South Africa: Juta & Company Ltd.

[42]   Hind, H. M. (1997). The Extension of the Parent Company’s Liability for the Debts of its Fledgling Company in Group of Corporations, with Particular Reference to the Multinational Companies. Ph.D. Thesis, Cairo: Ain Shams University.

[43]   Hudson, S. (2016). The Relationship between a Company and Its Subsidiary.

[44]   Huston, J., & Edwards, J. (2013). Relationships between Parent and Subsidiary Corporations: Implications for Litigation.

[45]   International Commission of Jurists (2008). Corporate Complicity & Legal Accountability: Criminal Law and International Crimes (Vol. 2). Report of the International Commission of Jurists Expert Legal Penal on Corporation Complicity in International Crimes, Geneva, Switzerland.

[46]   Ismail, M. (1990). The Holding Company and Its Relationship with Its Subsidiaries. Mu’tah: Mutah University. (In Arabic)

[47]   Kazim, A. (2007). The Nature of the Holding Company-Subsidiary Company Relationship. Journal of Legal Sciences, University of Bagdad, 22, 30. (In Arabic)

[48]   Kerr, T., Ogiba, C., & Robinson, T. (2014). Behind the Veil and the Blurred Distinction of Entity Liability.

[49]   Koessler, M. (1949). The Person in Imagination or Persona Ficta of the Corporation. Louisiana Law Review, 9, 435-449.

[50]   Kukharchuk, M. (2008). The Relationship between a Parent Company and Its Subsidiary: Does the Family Stick Together? A Comparison of U.S., English and Czech Rules on the Parent-Daughter Companies’ Relationships. The Common Law Review, No. 9, 9-14.

[51]   Latimer, P. (2011). Australian Business Law (30th ed.). Sydney: CCH Australia Limited.

[52]   Lazarus, A. A. (2001). Multinational Corporations. International Encyclopedia of the Social & Behavioral Sciences.

[53]   Lederman, E. (1985). Criminal Law, Perpetrator and Corporation: Rethinking a Complex Triangle. The Journal of Criminal Law and Criminology, 76, 285-340.

[54]   Lederman, E. (2000). Models for Imposing Corporate Criminal Liability: From Adaptation and Imitation toward Aggregation and the Search for Self-Identity. Buffalo Criminal Law Review, 4, 641-708.

[55]   Legum, B. (2005). Defining Investment and Investor: Who Is Entitled to Claim? Symposium on Making the Most of International Investment Agreements: A Common Agenda. Paris.

[56]   Muhammady, M. S. (2000). Introduction to Companies. Da’ar Al. Yosr for Publication.

[57]   O’Mahony, N. (2004). German-Irish Corporate Relationships: The Cultural Dimension Peter Lang AG (pp. 112-115). Hochfeldstrasse: European Academic Publisher.

[58]   O’Reilly, J. T., Hanlon, J. P., Hall, R. F., Jackson, S. L., & Lewis, E. (2009). Punishing Corporate Crime: Legal Penalties for Criminal and Regulatory Violations. New York: Oxford University Press, Inc.

[59]   Parisi, N. (1984). Theories of Corporate Criminal Liability (Or Corporations Don’t Commit Crimes, People Commit Crimes). In H. Hochstedler (Ed.), Corporations as Criminals—Perspectives in Criminal Justice 6 (pp. 41-68). New York: Sage Publications.

[60]   Paul, H. W. (1987). Principles of Accounting (4th ed.). Florida City, FL: Harcourt Brace Publisher.

[61]   Pleasant, D. B. (2013). Using the Single-Enterprise Doctrine to Hold Sister Corporations Liable.

[62]   Prakash, A., & Griffin, J. J. (2012). Corporate Responsibility, Multinational Corporations, and Nation States: An Introduction. Business and Politics, 14, 1-10.

[63]   Ramsay, I. M. (1994). Holding Company Liability for the Debts of an Insolvent Subsidiary: A Law and Economics Perspective. University of New South Wales Law Journal, 17, 520-545.

[64]   Roby, I. C. (2013). Corporate Criminal Liability. How Can International Crimes Be Attributed to a Corporation? A Published Research Paper, Amsterdam: University of Amsterdam.

[65]   Schiller, C. (2002). Civil and Criminal Liability of Managing Directors in Insolvency.

[66]   Singh, S., & Dash, L. (2016). Criminal Liability of Corporations. IOSR Journal of Humanities and Social Science (IOSR-JHSS), 21, 22-27.

[67]   Spencer, R. (2004). Corporate Law and Structures: Exposing the Roots of the Problem.

[68]   Szumański, A. (1996). Legal Regulation of the Holding in the Polish and European Company Law: Conceptual Issues. Commercial Law Review (Przeglad Prawa Handlowego), 8, 39-48.

[69]   Tigar, M. E. (1990). It Does the Crime But Not the Time: Corporate Criminal Liability in Federal Law. American Journal of Criminal Law, 17, 211.

[70]   Wanger, M. (1999). Corporate Criminal Liability National and International Responses, International Society for the Reform of Criminal Law 13th International Conference Commercial and Financial Fraud: A Comparative Perspective. Malta: The International Centre for Criminal Law Reform and Criminal Justice Policy.

[71]   Weissmann, A., Ziegler, R., McLoughlin, L., & McFadden, J. (2008). Reforming Corporate Criminal Liability to Promote Responsible Corporate Behavior. The US Chamber Institute for Legal Reform.

[72]   Werlauff, E. (2003). EU Company Law (2nd ed.). DJOF.

[73]   Wymeersch, E. (2003). Do We Need a Law on Group of Companies. In K. Hopt, & E. Wymeersch (Eds.), Capital Markets and Company Law (pp. 575-579). New York: Oxford University Press Inc.