MONACO Law and Practice Contributed by: Donald Manasse, Donald Manasse Law Offices
3. Corporate Entities, Ultimate Beneficial Owners and Shareholders 3.1 Imposing Liability for Fraud on a Corporate Entity A company or legal entity can be held liable for a crime or delict under the provisions of Article 4-4 of the Penal Code. The company’s responsibility does not preclude the responsibility of the directors or officers. The entity may therefore be held liable for the fraud to the victims in a criminal trial. In a civil case, the directors may be held responsible for their actions on behalf of the company. 3.2 Claims Against Ultimate Beneficial Owners In criminal matters, the ultimate beneficial owners – having benefitted from the infractions – can be included along with a company and its directors and officers. In civil cases, the legal personality of the company has been respected in case law where, for example, a claim is against an ultimate beneficial owner or share - holder, and an asset is held by the corporate vehicle. However, there has been a recent tendency towards allowing the seizure of the corporate asset on the basis that the corporate vehicle is a sham. In a recent case, the Court of Appeals refused to make a New York judgment rendered against a Panamanian com - pany’s alleged beneficial owner enforceable against that company. However, in the separate action to vali - date the seizure order, the same Court of Appeals ren - dered a judgment against the Panamanian company for the same amounts (including punitive damages, which it is not possible to award in Monaco courts) awarded by the New York judgment. Where civil companies (companies that hold assets and do not trade) hold property, there has been a growing tendency of judges to allow pre-judgment liens on property, to secure the claims against the shareholders. This is particularly the case where civil companies have low capitalisation (for example EUR1,500) and purchase properties worth many mil - lions of euros.
own Bars. French lawyers, for example, swear an oath to exercise the profession with “dignity, conscience, independence, probity and humanity.” There are no known or published cases of Monaco lawyers being sanctioned or disciplined for failing to respect these standards or any other violations, although malprac - tice suits are not entirely unknown. It is accepted practice that a defendant in a crimi - nal case will seek to settle with a civil complainant, who will then withdraw the complaint. This will not end the criminal investigation, nor the possibility of the defendant being condemned, but will prevent the civil party from receiving damages or participating in the trial. Certain members of the Monaco Bar will file criminal complaints as a means of pressuring defend - ants or civil party victims in criminal cases. While this strategy is disliked by prosecutors and investigating magistrates alike, it does not always fail and has never been known to be sanctioned or result in disciplinary measures or prosecution. 2.8 Claims Against “Unknown” Fraudsters It is possible to file a criminal complaint against X, as unknown parties, and this often occurs. One reason that this tactic is used is that it prevents the defend - ant from filing criminal charges in calumnious denun - ciation if the criminal complaint fails. It is not possi - ble to file a civil summons and complaint against an unknown party. 2.9 Compelling Witnesses to Give Evidence The investigating magistrate in a criminal case may compel witnesses to give evidence for their own investigations. In civil matters, Article 326 et seq of the CPC provide for the possibility of demanding an investigation and testimony, but this has not been known to have been put into practice. In any event, spouses, ex-spouses and children may not be compelled to testify, nor may anyone who is professionally bound by confidentiality. The new Article 277 of the CPC provides that third parties may be compelled to produce documentation. Monaco is a signatory to the Hague Evidence Con - vention.
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