Business Law Topic 2

Criminal Law

Criminal Law

Criminal law is primarily concerned with maintaining public order, protecting society, and punishing individuals who commit crimes. It involves the prosecution of individuals by the state for engaging in conduct that is deemed harmful to society and breaches the established legal norms.

Purpose of Criminal Law

•Prevention of Vigilantism

•Maintaining Social Order

•Protection of Individuals and Property

•Safeguarding the State

•Expressing Public Opinion and Morality

•Deterrence

•Restitution

•Incapacitation

•Rehabilitation

Actus Reus

Actus reus is the physical component of a crime, which consists of either an act or an omission. An act refers to a voluntary action taken by the defendant, while an omission refers to the failure to perform a legally required duty. In order for an act or omission to constitute an actus reus, it must be the direct cause of the harm or consequence that the crime seeks to prevent. Additionally, the actus reus must be voluntary, meaning that the

defendant had control over their actions and was not forced or coerced into committing the act.

Mens Rea

Mens rea (latin for "guilty mind") is the mental component of a crime. It refers to the defendant's state of mind at the time they committed the actus reus. In order to establish mens rea, the prosecution must prove that the defendant had the required level of intent or knowledge when they engaged in the prohibited conduct. There are different levels of mens rea, ranging from intention (the highest level) to negligence (the lowest level).

Different levels of mens rea

Intention requires that the defendant acted with the purpose of bringing about the prohibited consequence or was aware that the consequence was virtually certain to occur. Recklessness involves a conscious disregard for the risks associated with the defendant's actions, while negligence requires that the defendant failed to exercise the level of care that a reasonable person would have exercised in the same situation.

Strict Liability Offenses

Strict liability offenses are crimes that do not require the prosecution to prove mens rea. In other words, a person can be found guilty of a strict liability offense simply by committing the prohibited act, regardless of their mental state or intentions. Strict liability offenses are generally limited to less serious crimes, such as traffic violations or regulatory offenses. The rationale behind strict liability offenses is that they serve a public interest by promoting compliance with important regulations and encouraging individuals to exercise caution in certain activities.

Theft (Cap 210 Theft ordinance section 2 basic definition)

A person commits theft if he dishonestly appropriates property belonging to another with the intention of permanently depriving the other of it

Joint enterprise

When two or more people agree to carry out a crime, each is guilty of the actions of the others, even if each did not commit every element of the crime. It is to ensure all parties in the act are held accountable for their actions.

Inchoate Crimes

Inchoate crimes are offenses that involve the preparation or planning of a criminal act, rather than the completion of the act itself. Attempt and conspiracy are the two most common types of inchoate crimes.

Attempt

Attempt refers to the act of taking a substantial step toward committing a crime, with the intent to complete the crime. In order to be found guilty of an attempt, the defendant must have both the mens rea (intent) to commit the crime and the actus reus (a substantial step) toward its commission. The substantial step must be more than mere preparation; it must be an act that comes dangerously close to the successful completion of the crime.

Conspiracy

Conspiracy, on the other hand, is an agreement between two or more people to commit a crime. A conspiracy can be charged even if the actual crime is never committed, as long as the prosecution can prove that there was an agreement to commit the crime and that at least one of the conspirators took an overt act in furtherance of the conspiracy. The overt act does not need to be a criminal act in itself, but it must be an act that is intended to help bring about the commission of the crime.

Rights of Defendants

•Legality

•Presumption of Innocence

•Double Jeopardy

•Rights to Representation

•Right to Silence

•Right to a Fair Trial

•Right to Appeal

Examples of white collar crimes

Fraud, commercial bribery, money laundering, and market misconduct(e.g insider dealing)

Fraud

Fraud is the intentional deception to deprive a victim of a legal right or to gain from a victim unlawfully or unfairly.

CAP 210 Theft Ordinance - Section 16A Fraud

(1) If any person by any deceit (whether or not the deceit is the sole or main inducement) and with intent to defraud induces another person to commit an act or make an omission, which results either

(a) in benefit to any person other than the second-mentioned person; or

(b) in prejudice or a substantial risk of prejudice to any person other than the first-mentioned person,

the first-mentioned person commits the offence of fraud and is liable on conviction upon indictment to imprisonment for 14 years.

Money laundering

Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money) such as drug trafficking, underground sex work, terrorism, corruption, embezzlement, and treason, and converting the funds into a seemingly legitimate source, usually through a front organization.

CAP 455 Organized and Serious Crimes Ordinance

Section 25 Dealing with property known or believed to represent proceeds of indictable offence

(1) Subject to section 25A , a person commits an offence if, knowing or having reasonable grounds to believe that any property in whole or in part directly or indirectly represents any person's proceeds of an indictable offence, he deals with that property.

Commercial Bribery

Commercial bribery is the giving by the seller to the agent or employee of the buyer, without the knowledge or consent of the buyer, a commission or gratuity for the purpose of influencing the agent or employee in favor of the goods of the seller. The bribery of agents and employees, in order to influence sales, has long been regarded as fraudulent and immoral.

CAP 201 Prevention of Bribery Ordinance

Section 9 Corrupt transactions with agents

9. Corrupt transactions with agents

(1) Any agent who, without lawful authority or reasonable excuse, solicits or accepts any advantage as an inducement to or reward for or otherwise on account of his—

(a) doing or forbearing to do, or having done or forborne to do, any act in relation to his principal's affairs or business; or

(b) showing or forbearing to show, or having shown or forborne to show, favour or disfavour to any person in relation to his principal's affairs or business,

shall be guilty of an offence.

(2) [Any person who offers the above is likewise guilty]

Insider dealing

In broad terms insider dealing takes place where a person buys or sells shares in a listed company when he has inside information - that is, knowledge of certain facts about that company which the public does not have and which (non-public), if known to the public, would have an impact on the price of that company's shares.(price-sensitive)

Insider Dealing #2

Under the SFO, insider dealing occurs when an individual possesses inside information and, in relation to securities or futures contracts:

· Deals in the securities or futures contracts or their derivatives;

· Encourages another person to deal in the securities or futures contracts or their derivatives;

· Discloses the inside information to another person, knowing or having reasonable cause to believe that the person will use the information to deal in the securities or futures contracts or their derivatives.

Securities and Future Ordinance, Section 291 - Insider dealing

A connected person knowingly holding inside information shall not deal in the listed securities or counsel another to deal. A person who received what they know to be inside information, from an insider, shall not deal or counsel another to deal.

Connected persons can be

Directors

Employees

5% shareholders

Expected insiders (including family)

Inside information is about

Company

Shareholder / Officer

Listed securities

That is:

Material, non-public, price-sensitive.