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Companies Take Note – Dividends Can Be Proceeds of Crime

02 May 2012

Problems with doing ‘clean’ business in some jurisdictions are almost insurmountable, yet the Bribery Act 2010 is clear that offering inducements can easily amount to unlawful activity.

It may be thought that where such activities are carried on by a subsidiary, the risk of penalty stays within the subsidiary, so if a contract is undertaken using a subsidiary company, the profits can be made there and passed up to the holding company by way of dividends.

However, the approach of the Serious Fraud Office (SFO) in a recent case should leave no one in any doubt that, where it is worthwhile, the SFO is likely to seek a confiscation order over the dividends as being the ‘proceeds of crime’. In the case in point, the SFO has claimed more than £130,000 in dividends received by the holding company of an engineering firm.

SFO spokesman Richard Alderman has issued a stern warning to shareholders who have the ability to influence the behaviour of the companies in which they invest that, even if they are unaware of any inappropriate behaviour, the SFO is prepared to take civil action against them to recover income received that is the proceeds of crime and has warned investors – particularly institutional investors – that they must ‘satisfy themselves with the business practices of the companies they invest in’.

If you are concerned about the business practices followed in any company, joint venture or other business in which you have money invested, contact us for advice.

For more information on this subject or any other legal matter,
please contact us:

Tonbridge: 01732 770660
Sevenoaks: 01732 747900
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