Company as a Criminal Suspect: Liability, Rights and Defence

Criminal proceedings do not only concern natural persons. In Estonia, a legal person – a company itself – may also become a suspect in a criminal offence. For a company, this may mean much more than a possible fine: criminal proceedings may involve searches, seizure of assets, disruption of day-to-day business and difficulties in relations with banks and business partners.

However, the initiation of criminal proceedings does not mean that the company is guilty of an offence. The presumption of innocence also applies to a corporate suspect, and the company has the right to defend itself in the proceedings. Below, we explain when a company can be held criminally liable and what the management board should do if the company becomes a suspect in criminal proceedings.

When can a company be held criminally liable?

Under § 14 of the Estonian Penal Code, a legal person can be punished only in the cases provided by law. A company does not become liable automatically merely because an offence has been committed in connection with its activities.

A legal person may be held liable where an act has been committed in its interests or in breach of its legal obligations by its body, a member of its body, a senior official or a competent representative. Under certain conditions, liability may also arise from the conduct of another person, if that person acted on the instructions of the above persons or if the act was made possible by insufficient work organisation or supervision within the legal person. Where a company is legally obliged to act, it may also be held liable for failure to act.

The time when the act was committed is also important. The grounds for corporate criminal liability were broadened on 1 November 2023. For acts committed before that date, the earlier, narrower liability model applies.

The Supreme Court of Estonia explained the content of the new rules in its order no. 1-25-4382/18 of 15 April 2026 (in Estonian), which concerned alleged abuse in a care home. The dispute concerned a refusal to initiate criminal proceedings; the court therefore did not decide whether the care home operator was guilty, but explained in which situations corporate liability cannot be ruled out from the outset. The court emphasised that a company may be criminally liable even where the offence is committed by an employee in breach of the company’s legal obligations and this was made possible by insufficient work organisation or supervision within the company. It is not necessarily required that a member of the management board or a senior official has personally committed the offence. A company is not released from liability merely because its management was unaware of the violations.

Insufficient work organisation and supervision are assessed, among other things, against the requirements applicable in the relevant sector and the duty of care of a prudent entrepreneur. As examples of possible deficiencies, the Supreme Court mentioned understaffing, the use of unsupervised employees and inadequate supervision. However, it is not sufficient for liability that the company’s work organisation could have been better. The elements of a specific offence must be established, as well as a link between the organisational deficiencies and the offence – the so-called nexus of unlawfulness. In other words, it must be assessed whether the offence would not have been committed had work organisation and supervision been adequate.

The criminal liability of a company neither requires nor excludes the liability of the natural person who committed the act. Therefore, criminal proceedings may be conducted in respect of the same events against both the company and, for example, a member of its management board.

What rights does a company have as a suspect?

Under § 34 of the Estonian Code of Criminal Procedure (CCP), a corporate suspect also has, among other things, the right to know the substance of the suspicion, to give or refuse to give statements, to the assistance of defence counsel, and to submit evidence, requests and complaints.

A company participates in criminal proceedings through a representative. Under § 36 of the CCP, this may be its legal representative, an employee authorised by the legal representative, a trustee in bankruptcy or a contractual representative. However, only the legal representative or the trustee in bankruptcy has the right to give statements on behalf of the legal person.

In practice, the management board must decide who will represent the company in the proceedings. The company’s defence position should be developed already in the pre-trial proceedings, not only once the case reaches court.

The interests of the company and of a board member may differ

At the outset of the proceedings, a potential conflict of interest must also be assessed. If the investigative body suspects that a member of the management board committed an offence from which the company benefited, their defence positions may differ.

The board member may wish to emphasise that they acted in the company’s interests or in accordance with established practice within the company. For the company, however, it may be important to show that the conduct in question cannot legally be attributed to it or that other prerequisites for the liability of a legal person are not met.

Their interests are not always in conflict, but any potential conflict must be assessed before a joint defence position is adopted.

Under § 42(3) of the CCP, one defence counsel may represent several clients only if their interests do not conflict. Therefore, it may not always be possible or advisable for the same lawyer to represent both the company and a member of its management board.

The company’s defence must be based on the company’s own rights and interests, not automatically on the personal defence position of a member of its management board.

What should the management board do at the start of the proceedings?

When a company learns that it is suspected of an offence, it is important to act carefully from the very first stages of the proceedings. The management board should focus in particular on the following.

1. Establish the substance of the suspicion and the company’s procedural position. First, it must be determined what the company is suspected of, which circumstances are known and which procedural acts have already been performed or are planned. This makes it possible to assess the company’s legal risks and plan the next steps.

2. Organise the company’s defence and assess potential conflicts of interest. Engage defence counsel as early as possible. If a member of the management board or an employee is also a suspect, assess the conflict of interest described above and whether separate defence counsel is needed.

3. Preserve the documents and data needed for the defence. As a suspect, the company is not obliged to assist the proceedings or to gather evidence against itself. However, it is in the company’s own interest that documents, correspondence and electronic data are preserved, as they may be needed to build the defence position and to prove circumstances in the company’s favour. Relevant information should be gathered and handed over to defence counsel. It should also be borne in mind that an obligation to retain documents may arise from other legislation, such as the Accounting Act.

4. Organise communication with the investigative body. Decide who will communicate with the authorities on behalf of the company and how information will be exchanged. This helps avoid uncoordinated or contradictory explanations. At the same time, employees and members of the management board have their own procedural rights, and the company must not influence the content of their statements or obstruct a lawful investigation.

5. Assess the possible impact of the proceedings on the business. Already at the start of the proceedings, consider whether a possible search, seizure of documents or equipment, or seizure of assets could disrupt the company’s day-to-day operations. Where necessary, assess together with defence counsel how to ensure business continuity and whether disproportionate restrictions can be challenged.

Searches and seizure of assets

The company’s premises may be searched and documents, data carriers and electronic data may be taken. The Prosecutor’s Office may also apply for the seizure of the company’s assets, including funds in its bank accounts, for example to secure possible confiscation or compensation for damage.

The existence of criminal proceedings does not, however, mean that the authorities may seize the company’s assets without limits. As a rule, a search or seizure of assets requires court authorisation, and the restriction must be proportionate. Where necessary, both the seizure of assets and the lawfulness of a search can be challenged. An appeal against a court order on the seizure of assets must be filed within ten days, so it is important to act quickly.

How do criminal proceedings affect the company’s business?

A company may face difficulties in its relations with banks, financiers, clients and contractual partners. In certain sectors, criminal proceedings or a subsequent conviction may also affect matters related to activity licences, participation in public procurement or compliance with other requirements.

The initiation of criminal proceedings does not automatically lead to the loss of an activity licence, termination of contracts or exclusion from public procurement. The specific impact depends on the applicable legislation, the terms of the contracts and the circumstances of the case.

The company’s defence should therefore cover not only the criminal law aspects but also the assessment of potential business consequences. Where necessary, consider how to communicate with contractual partners and employees, what information must be disclosed and how to avoid unwarranted reputational damage.

Summary

When a company becomes involved in criminal proceedings, the management board must act carefully. In addition to possible criminal liability, the impact of the proceedings on the company’s assets, management, business relationships and reputation must be taken into account.

Most importantly, a company’s criminal liability is not automatic, and as a suspect the company has its own procedural rights. There is no need to wait for the end of the pre-trial investigation or for court proceedings to begin in order to exercise these rights. Depending on the circumstances, it may be possible to challenge procedural acts restricting the company’s rights, to apply for termination of the criminal proceedings or to reach another procedural solution that takes the company’s interests into account.

If criminal proceedings have been initiated against your company, or you suspect that this may happen, contact the criminal law team at Law Firm Lepmets & Nõges. Early and well-considered defence helps assess legal risks, avoid procedural mistakes and protect the company’s interests throughout the proceedings.