The recent Law 18/2026, of 15 July, known as the Penal Code, introduces a paradigm shift that will affect Andorran companies from 2027: certain crimes will no longer involve only natural persons, but also the company itself, which will be criminally responsible.
For many years, when discussing criminal liability within a company, the focus was only on individuals, administrators, managers or workers. With the new Law 18/2026, this paradigm changes completely. From the entry into force of the law, scheduled for the month of August 2027, a commercial company may be criminally convicted for various crimes.
The company’s liability will not be automatic, but is based on two major assumptions. The first, that the crime is committed for the direct or indirect benefit of the company, by a de facto or de jure administrator, a representative or a person with decision-making or control capacity, whether acting in an individual capacity or as a member of the administrative body. The second, that due to the serious lack of adequate measures of supervision, surveillance and control, or their negligent use, has made it possible for a person placed under the authority of the administrative body or the natural person who exercises the representation of the company, to commit, for the direct or indirect benefit of the company, the crimes provided for by law.
In other words, from now on it will no longer be sufficient to state that the board of directors or management “did not know”. It will also be answered by default. In the future, the question will also be what the managers of the company have done to prevent crimes from being committed.
What crimes can the company commit?
The criminal responsibility of the legal person will only be given for those crimes that the law expressly lists. The list is, however, quite extensive, as it affects a large part of Andorra’s business fabric: crimes against workers’ rights, crimes against the socio-economic order, against collective security or public health, environmental crimes, corruption and influence peddling, money laundering and crimes against legal trafficking, among others.
Therefore, the rule affects not only large companies, banks or insurers, but all companies in the country. A service company, a construction company, family companies, businesses or real estate companies, as well as many other sectors, can incur criminal liability.
And what will need to be done from now on to mitigate the risks?
The same law provides for a regime of exemption from responsibility for the company: that it has implemented, before the commission of the crime and effectively, an adequate system of organization and management to significantly reduce the risk that occurs.
Compliance is therefore no longer a good practice and becomes a key element to avoid and minimize criminal risks in companies.
And the implementation of measures will have to be done effectively. It will not be enough to prepare a generic manual and keep it in the drawer. The model that is implemented must identify the company’s criminal risks, establish decision-making procedures, incorporate controls, have a complaint channel, inform and train people in the organization, set a disciplinary system, periodically review the model, assign supervisory functions and, in general, ensure the effective implementation of the created model.
What can happen if the law is not followed?
The law provides for several types of penalties for legal entities. The main one is the fine, which can be up to five times that provided for the natural person or be calculated based on the damage caused or the profit obtained. In addition, additional consequences can be added, such as the prohibition to contract with the Administration, the disqualification for the exercise of the business activity, the suspension of the activity or even the dissolution of the company.
In conclusion, before the law enters into force (August 2027), Andorran companies will have to do their homework and have the necessary mechanisms in place to prevent the commission of crimes. We have a year to prepare. And, well used, it is an opportunity to order processes, reduce risks and strengthen the culture of responsibility within the company. And not doing so will pay very, very dearly…
