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On the 23rd December 2010 the new reformed Penal code will come into force. This is one of the major law updates since 2003. The new modifications are designed to provide new devices for fighting town planning and organised crime and for the Spanish legal system to adjust to other legal systems within the EU. 150 law articles are being updated, both in term of types of crimes and types of sanctions.

The major new change is the introduction in Spain of criminal responsibility for Legal Entities. “Legal Entity” is a juridical term for companies, cooperatives, business associations, corporations and municipalities, as opposed to “natural person” which is an individual.

These types of laws are already in force in countries like the UK, Italy, France and Germany and it is a step forward for the integration of legal systems in the EU.

There will be many other innovations concerning corruption both nationally and internationally, terrorism and changes in all sectors of the law, including traffic law.  In general sanctions and possible punishments will be more severe.

Here is a non-exhaustive list of the major changes.

1) Criminal responsibility for Legal Entities

Criminal responsibility will be extended to Legal Entities. In practice according to the magnitude and the type of crimes, the sanctions will be targeted at the company as well as the company managers or the employees committing the crimes. Responsibility will be extended to the managers who do not enforce control measures to prevent the crimes.

The legal entity will be considered responsible for offenses committed on its behalf and for its benefit by its representatives, as well as crimes due to the lack of control mechanisms over their representatives.

Even though penal responsibilities of individuals and legal entities will be mostly related, they will be treated independently, leading to cases where perhaps the legal entity is considered responsible while the individuals are absolved.

For these crimes sanctions for individuals can vary from 6 months to 6 years in prison including fines ranging up to ten times the amounts transacted.

For the Legal Entities apart from fines, the sanctions can range from the exclusions from contracts with the public administration to the dissolution of the entity.

2) Corruption in international commercial transactions

This law extends criminal responsibilities to Legal entities for international bribery cases. This new law introduces the concept of “foreign public official” to Spain.

3) Corruption between persons in the private sector

This new law is an almost direct transcription of a new European Union law to fight international corruption with the objective to make the EU market more fair and competitive. It is intended to punish anyone who promises, offers or confers an illegal advantage to officers, directors, employees or partners of a business, a society, association, foundation or organization. Furthermore, recipients of these benefits will be equally punished.

In practice this law is to ensure the proper and fair functioning of the market, eradicating unfair business practices that allows in some way competitive advantages that would not otherwise have been possible.

4) More severe general sanctions for corruption, town planning crimes and tax evasion in Spain

There will be up to 4 years of prison for illegal construction both for the promoter and for the officials that allow them, increased sanctions for bribery cases, plus invariably a prison sentence apart from fines and the disqualification from public functions.

5) Harder punishments for terrorists and sexual abusers.

Apart from harder sentences there will also be sentence extensions with house arrests for up to 10 years, along with closer follow-ups. The measures are particularly tough with sexual abusers on minors.

6) Illegal copyrighted sales, squatters and graffiti

For low volume sellers of illegal CDs, DVDs and other counterfeits prison is replaced with fines or forced public service, as long as any profits are under 400 Euro.
Graffiti will be punished with house arrest for up to 7 days or forced public service.
Squatters will be punished with prison replacing the present fines.

7) Traffic laws

Speeding at more than 60km/h than the limit on urban roads or more than 80km/h on interurban roads will be sanctioned with prison between 6 to 12 months, permanent confiscation of the vehicle or forced public service. The different types of sanction that the offender will be able to choose from are offered in order to avoid the standard prison sentences.

8) Piracy

Piracy against a ship or a boat will be sanctioned with up to 15 years in prison.

9) Human trafficking and slavery

The punishment will be very hard for human traffickers; particularly the law will better protect women and children soldiers.

10) Changes in the sanctions

There will be a more general introduction of house arrest and controlled freedom, with the objective of preventing the social psychological problems generated by prison terms.  At the same time recidivism will be considered a major aggravation and it will be punished accordingly.

The new laws will mostly affect companies

The list above is in no way exhaustive but it gives a synopsis of the most important changes which will mostly affect companies and businesses in Spain operating internationally or operating in the construction business. Your Spanish lawyer will be able to advise you and help you to prepare your company regarding these new laws.