The Corporate Manslaughter and Corporate Homicide Act 2007 came into force on 6 April 2008
On 15 February 2011 Cotswold Geotechnical Holdings Limited (CGH) became the first company to be convicted of corporate manslaughter under the Corporate Manslaughter and Corporate Homicide Act 2007 (the Act). See the press release from the Crown Prosecution Service here.
Under the Act, an organisation is guilty of corporate manslaughter if the way in which its activities are managed or organised causes a death and amounts to a gross breach of a duty of care to the person who died. A substantial part of the breach must have been in the way activities were organised by senior management.
Sentencing under the Act, and the possible effect on smaller companies
The sentence for corporate manslaughter is an unlimited fine. Under the guideline issued by the Sentencing Council in February 2010, the appropriate fine will “seldom be less than £500,000 and may be measured in millions of pounds”.
According to Companies House records, CGH qualifies for the small companies audit exemption, meaning that its turnover is £6.5 million or less and its balance sheet total is £3.26 million or less (see section 477 of the Companies Act 2006). Given the sentencing guideline, whatever fine is imposed by the court may have the effect that Cotswold Geotechnical Holdings has to cease trading (if indeed it continues to do so).
UPDATE 18 February 2011: CGH was sentenced to a fine of £385,000 on 17 February 2011. This is less than the suggested lower threshold of £500,000 contained in the Sentencing Council guideline (see above) and reflects the small size and financial position of CGH. The judge, in sentencing, permitted CGH to pay the fine at a rate of £38,500 per year for ten years; but stated that if the fine nevertheless caused CGH to go into liquidation, that was a consequence of the company’s serious breach of the law.
That the judge sentenced such a small company (which reportedly has only four employees) to a fine of £385,000 suggests that the fine for a larger, or financially more sound, company for the offence of corporate manslaughter could run into the millions of pounds suggested by the Sentencing Council guideline.
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