US/UK Company Directors facing Criminal Charges in India under new Indian Criminal Laws-1: Complete Criminal Defence Strategy and Enhanced Corporate Criminal Liability Framework for Foreign Directors before Indian Courts & Investigating Agencies
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International business executives working in India face significantly greater personal criminal risk under the Bharatiya Nyaya Sanhita, 2023. The new framework has widened the corporate conspiracy provisions and increased responsibilities and accountability on the shoulders of individual directors, going beyond traditional company protections. Criminal litigation lawyers in India working with foreign companies are required to perform risk assessment and prepare defence strategies at an early stage, as the new framework focuses on decisions made at the board level and holds companies responsible for oversight responsibilities.
Under Section 111 (which replaces IPC Section 120B), the law introduces stricter corporate conspiracy regulations. The directors can now be held personally liable if the organisation fails to comply with the regulations or makes decisions which violate them. This includes approvals from the Board, subsidiary management choices, cross-border business transactions, and policies impacting regulatory compliance.
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Enhanced Corporate Criminal Liability Framework
The Bhartiya Nyay Sanhita 2023 has introduced provisions aimed at targeting corporations and their business activities, significantly raising personal legal risks for directors and executives of multinational companies operating in India. This has created an emergency for Indian criminal lawyers working with residents of the USA or USA-based company leaders to coordinate Indian operations for these multinational corporations to manage commercial risks. As there are stricter penalties imposed under sections 318 to 322 for economic offences, these are directly impacting international business transactions. Additionally, the liabilities of an individual director are increased, meaning directors or executives can now be personally held responsible for failures in managerial oversight and compliance.
They can face problems for their negligent approvals for regulatory compliance, such as board resolutions, authorising cross-border deals that require government approval, supervising subsidiaries that violate Indian laws, or implementing corporate policies that lead to regulatory breaches. The corporate indemnities and insurance policies may not protect against criminal charges under this updated legal framework. That makes it essential to adopt personal legal protection strategies in advance. Investigating authorities of the Prevention of Money Laundering Act (PMLA) have become more aggressive as they have been given more powers. A wider range of financial offences now qualify as criminal acts. Any violations under the Foreign Exchange Management Act (FEMA) can also lead to criminal proceedings under the new criminal code. Furthermore, the Companies Act 2013 criminal liability has been strengthened by stricter enforcement between regulatory bodies and criminal investigation agencies, amplifying the legal risks faced by corporate decision-makers.
Industry-Specific Risk Assessment and Protection
The provisions of Bhartiya Nyaya Sanhita also impose high criminal liability on financial services, which leads Indian criminal lawyers to do an intense risk assessment for UK clients while consulting for services with banks, investment firms, and payment gateway processors. The regulatory agency is holding individual executives accountable for the institutional compliance failures. The directors’ liabilities extend to transaction monitoring, non-compliance with beneficial ownership disclosures, oversight of correspondent banking relationships, and to look into the anti-money laundering programs for them to be effective.
Tech companies have also been facing increased exposure under cybercrime laws and issues with data localisation rules. In the tech sector, the focus of criminal defence lawyers should be on the software licensing, cross-border data transfer of employees, IP protection, visa status management and data transfer authorisation management decisions, as all of this now carries a personal criminal liability for the approving directors and executives.
Environment laws are now more stringently imposed on manufacturing and industrial units, and the labour law compliance should also be taken care of by the director of the company for the operational safety of the labourers. For foreigners, it becomes essential for Indian lawyers to coordinate the pollution control violations, workmen safety rules, or environmental clearances that can later, after an incident, trigger criminal investigations for the director.
In pharmaceutical and healthcare companies, complex regulatory frameworks involve the drug approval process, Quality control and assurance of manufactured drugs, clinical trials oversight, and regulatory communication management. These areas also fall under the liability of the director. Therefore, the understanding of acting in good faith and the business judgment rule may no longer be acceptable in such cases which risk public health and safety.
Authored by: Adv. Anant Sharma (Connect on Linkedin)
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