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Luxembourg: New Law on Criminal Liability of Legal Entities

(May 4, 2010) Luxembourg's Law of March 3, 2010, Introducing the Criminal Liability of Legal Entities into the Penal Code and the Code of Criminal Investigation, was published in the MÉMORIAL, Luxembourg's official gazette, on March 11, 2010 (Loi du 3 mars 2010 introduisant la responsabilité pénale des personnes morales dans le Code pénal et dans le Code d'instruction criminelle, MÉmorial (Journal Officiel du Grand-Duché de Luxembourg), Legilux online database,
(last visited Apr. 30, 2010)).

Luxembourg had been pressured by the European Union and several international organizations (the Council of Europe, the Organization for Economic Cooperation and Development, and the United Nations) to provide for a criminal liability regime for legal entities. The new Law was necessary to implement several international treaties signed by Luxembourg that include such liability. Until the Law was adopted, only members of a legal entity's board of directors could be found criminally liable. The provisions of the Law have been incorporated into the Penal Code and the Code of Criminal Investigation.

The Law applies to most types of legal entities, with the State of Luxembourg and Luxembourg's municipalities expressly excluded (id. art. 34). Criminal liability of the legal entity will arise whenever a felony or a lesser offense (délit) is committed by one or more of the entity's legal representatives or one or more of its legal or de facto directors on behalf of and for the benefit of the entity (Id.). TheLlaw further provides that the criminal liability of the legal entity does not preclude the criminal liability of the natural persons, authors, or accomplices who committed the relevant offenses (id).

The following penalties may be imposed:

● Fines: the minimum fine applicable to a legal entity is €500 (about US$662), while the maximum rate in felony cases is €750,000 (about US$993,000) (id. at art. 35). This maximum rate may be multiplied by five for certain offenses, including offenses against the security of the state, terrorism, financing of terrorism, trafficking in human beings, and money laundering (id at art. 37);

● Confiscation of assets (id. at art. 35);

● Exclusion from participating in public contracts (id. at art. 35); or

● Dissolution of the legal entity if it was created for the purpose of committing the offense (id. at art. 35). This penalty is not imposed in the case of public law entities (id. at art. 38).