A Guide to Texas Penal Code Section 7.22
Criminal Defense North Texas
We often think of “criminals” as individuals, but in the eyes of Texas law, a corporation can be just as liable as a person. Whether it is a multi-national corporation, a local LLC, or a small association, business entities can face criminal prosecution, heavy fines, and permanent damage to their reputation.
Under Texas Penal Code Section 7.22, the state outlines exactly how and when a business entity is held “criminally responsible” for the actions of its employees and agents. At Beltz Law Group, we help business owners and executives navigate these complex legal waters.
The Scope of Business Liability
Section 7.22(a) establishes that a corporation or business entity is responsible for an offense if the conduct is performed by an agent who is:
- Acting on behalf of the entity; and
- Acting within the scope of their office or employment.
This means a company can be held liable for crimes ranging from environmental violations and fraud to even more serious offenses like criminally negligent homicide.
The “High Managerial Agent” Rule for Felonies
While a business can be held liable for minor offenses relatively easily, the bar is much higher for felony offenses. Under Section 7.22(b), a corporation is only criminally responsible for a felony if the illegal act was authorized, requested, commanded, or “recklessly tolerated” by:
- A Majority of the Governing Body: For example, a Board of Directors voting on a course of action that is illegal.
- A High Managerial Agent: This is a key legal term. It refers to someone with enough responsibility that their conduct can be assumed to represent the policy of the company (such as an officer, a partner, or a high-level director).
Important Distinction: A company isn’t always liable for a “rogue employee” committing a felony in secret. For felony liability, there must usually be some level of awareness or participation at the top of the organizational chart.
Strict Liability and Other Statutes
Criminal Defense North Texas
The law also covers “strict liability” offenses. In some regulatory areas—like certain environmental or safety laws—the state doesn’t have to prove the company intended to break the law. If the act happened within the scope of business, the company is responsible by default unless the legislature specifically stated otherwise.
What are the Consequences?
- Significant Fines: Courts can impose fines that far exceed what an individual would pay.
- Asset Forfeiture: The state may seize property or profits gained through criminal activity.
- Notice of Conviction: A court can force a company to “advertise” its conviction to the public or its shareholders, which can be a “death penalty” for the brand’s reputation.
The “Due Diligence” Defense
It is important to note that under the related Section 7.24, a business may have an affirmative defense if a high managerial agent with supervisory responsibility exercised due diligence to prevent the crime. If your company had strong compliance programs, clear ethical policies, and active oversight in place, you may be able to fight the charges.
Criminal Defense Attorney
Protecting Your Business
Criminal charges against a business entity often lead to parallel civil lawsuits and administrative debarment. At Beltz Law Group, we understand that a criminal indictment is a threat to the livelihood of every employee and shareholder involved.
Is your business facing a criminal investigation? The “Corporate Fiction” won’t protect an entity from the Texas Penal Code. You need a defense strategy that addresses both the individual and the entity’s liability.
