Responsibility for actions of limited company

[kenpoken]

Hi everyone

I would appreciate your advice on the following:

Company X is a small private limited company in the UK that develops scientific software and sells it around the world.
Mr A works for Company X in customer liaison/sales type role.
Company X realises that - with no intention at all of doing anything wrong - some of its sales have breached UK export controls.
Company X immediately hires lawyers to guide it through the correct procedure for applying for an export licence for future sales. However some past sales have already been made.
Mr A has been involved in some of these past sales (in sales/customer liaison role). All of his actions have been in the full view of Company X directors (all emails copied to the directors etc.). Mr A was also completely ignorant of the fact that some of these sales breached UK export controls.
In this situation, does the legal responsibility for the breaches rest entirely with the directors, or is Mr A also deemed to have broken the law?

Many thanks
Ken

[tacpot12]

This link suggests that A could be personally liable: https://www.osborneclarke.com/insights/ ... july-2017/

However it also suggests that the chance of being prosecuted is low. Unless A was particularly senior in the company, or was primarily involved in developing the market into which the goods were being sold, I think there is very little chance of them being prosecuted. If they have home insurance that includes Legal Expenses cover, they should give their Legal Help Line a ring and let them know about this, just in case anything comes of it and them are invited to an interview under caution. They may or may not be covered for this issue, it will depend on the terms of the policy, but it would be a good idea to check if now.

[bluedonkey]

If insurance cover is current, early notification of the claim is advisable, even if it is only a potential claim.

[didds]

Not particularly a legal answer i suppose but Mr A should be ascertaining form the Directors of X what legal help and "help" X will be providing etc etc.

If X (directors etc) are standing well away its time for A to be finding another job as well


didds

[dealtn]

The specifics of this are different but there are parallels with how individuals A, B, C etc. who were involved in the "Libor" issue were treated by the "Prosecutors" and by Banks who employed them X, Y, Z etc.

Many were simply following procedures learnt and instructed from precedents within the Banks, some were prosecuted, some not. Some Banks stood by them, some didn't, or at least to a lesser extent.

It can be horrible, and the disparity of treatment and support from Directors and employers, can make the uncertainty extremely difficult.

As this is a "Practical" board I would only suggest early co-operation and admission, which is what you appear to have done. The "politics" in your situation are much more favourable than the comparative I draw, so must be considered a likely more favourable outcome too.

[dspp]

I am responsible for export controls in the company I run at present, and I am a director. I ensure that our staff fully comply. That said it is easy to be ignorant, indeed until I explained to our staff what was going to be required they were ignorant, and it is likely that our predecessor company (not my problem, none of my involvement) was ignorant and in breach and nothing ever came of it. This area is a minefield.

My opinion, FWIW, and not as a lawyer is :

1) Mr A should not at this stage say anything to a Home Insurer if with Legal Expenses cover. I say this because even notifying an insurer of a potential claim, however unlikely, has far-reaching consequences. (I no longer use the insurer that I once informed of the potential for a subsidence claim on a neighbour .... who at renewal time told me that I had made a claim - which I had not, and they assured me at the time that a notification was not a claim, but they lied - and therefore my premiums would rise very significantly).

2) Mr A should discreetly make a copy of all pertinent records offsite, ideally stored somewhere safe other than his own house. Perhaps in the parents attic. Do this exceedingly discreetly, and think carefully through how to do this. Probably in small chunks. Do not mention this to anyone in the company, ever. The first person Mr A might mention this to would be his own lawyer if ever things go pear-shaped. Include in the records a copy of the company organisation diagram. And any staff reports for the period, or pay rises, or performance bonuses, or etc.

3) Study that organisation diagram carefully. Who was Mr A's line manager. What did Mr A put in their reports to them. Make copies of that and any diary/daybook entries and any relevant meeting agendas/minutes/invoices/etc. (If they are ISO 9000 then they must have an organogram).

4) Ask, in writing, to the line manager (who, from the sounds of it is either the Sales Director or the Managing Director, if I read the runes aright) for confirmation that in the event of legal action that a) the Company Legal Insurance will be available for the benefit of Mr A. Ask for confirmation that XX is their line manager. Ask for a copy of the policy summary. Ask for a response in writing. Now, I would not necessarily do this if Mr A is some lowly peon and the Company is behaving responsibly and standing behind its own staff, but I sense from your enquiry that is not the case. If I am mistaken then be much gentler.

5) Consider how best to find alternative employment if that were to become necessary. Take steps to best safeguard that option if it were to arise.

6) All the above is on the basis that the company is now fully behaving properly. If not then be even more cautious.

regards, dspp

[MyNameIsUrl]

4) Ask, in writing, to the line manager...

May I ask if you would recommend writing from one's home address using personal notepaper, rather than an internal company email or letter? There may be a legal nuance I'm unaware of, but I'm asking from the point of view of possessing a copy of an internal document to use personally might breach some company protocol, and may also prompt a comment along the lines of 'You shouldn't have a copy of an internal document, what else have you got?' which would put one on the spot especially regarding your point 2.

[dspp]

4) Ask, in writing, to the line manager...

May I ask if you would recommend writing from one's home address using personal notepaper, rather than an internal company email or letter? There may be a legal nuance I'm unaware of, but I'm asking from the point of view of possessing a copy of an internal document to use personally might breach some company protocol, and may also prompt a comment along the lines of 'You shouldn't have a copy of an internal document, what else have you got?' which would put one on the spot especially regarding your point 2.

I don't have an opinion on the point you raise. I guess a lot depends on the reality of the relationship and where it is heading, so it becomes slightly circular. On the one hand my heart sinks whenever I have had to deal with 'difficult' employees. On the other hand I have myself had cause to make careful backups of some key documents over the years, and careful entries in my own daybooks. Sorry not to be of any particular help, maybe any lawyers can chip in.

regards, dspp

[kenpoken]

Many thanks to everyone who has replied.
I've forwarded your replies to Mr A.
Mr A tells me that - for now at least - everyone involved is behaving well.
Thanks again
Ken