Management decisions always involve risk. In business life, there may be a failed investment, an underperforming contract, an insolvent partner, lost revenue or a loss-making project. These facts do not in themselves mean that a criminal case arises.
Criminal proceedings become a real risk when, according to the authorities, a management decision may conceal intentional asset damage, unlawful gain, budgetary loss, evasion of creditors, accounting manipulation or other conduct relevant under criminal law.
When can criminal liability arise?
Proceedings against company directors are often initiated for breach of trust, negligent management, embezzlement, fraud, budget fraud, insolvency offences, accounting offences or money laundering. The legal classification depends on what assets the director controlled, what obligations they had, and whether their decision caused a financial disadvantage relevant under criminal law.
When examining directors’ liability, civil-law, company-law, tax-law and criminal-law liability must be separated. Not every breach of contract, insolvency, tax debt or loss-making decision is a criminal case. Criminal law is an ultima ratio instrument and may be applied only if every statutory element of the offence can be proven.
Breach of trust, negligent management and insolvency offences
In breach of trust cases, the authority must prove that the company director was entrusted with managing another person’s property, breached that management duty and thereby caused financial disadvantage. The dispute often turns on whether a decision was truly a breach of duty or merely a business risk that later proved loss-making.
In negligent management cases, careless asset-management conduct may come to the fore, while in insolvency offences the key issues may include a situation threatening insolvency, frustrating creditors’ satisfaction, asset withdrawal or accounting and document-management conduct.
Budgetary and accounting risks
A significant proportion of criminal cases involving company directors have a tax or accounting background. In budget fraud cases, the authority examines whether there was false reporting, fictitious invoicing, unauthorised tax deduction, misuse of subsidies or intentional avoidance of tax payment obligations.
In accounting-related cases, disorganised bookkeeping, missing documents, inaccurate balance-sheet data or the disappearance of records may in themselves pose serious risks. At the same time, criminal liability also requires examining who made the decisions, who had actual influence and what the director knew about the relevant economic events.
Aggravated cases and sentencing ranges
In cases involving company directors, sentencing ranges are often determined by the amount of damage or financial disadvantage caused. There may be a substantial difference between lower-value cases and cases causing particularly large or exceptionally significant financial disadvantage.
Aggravating factors may include business-like commission, a criminal association, multiple victims, conduct over an extended period, the use of a company network, the involvement of nominee persons or conduct indicating the withdrawal of assets. The defence must examine these circumstances separately.
Specific defence considerations
One of the most important tasks of the defence is to reconstruct the decision-making environment. It must be shown what information was available at the time of the decision, what the business objective was, whether expert, accounting, legal or shareholder input existed, and to what extent the decision was reasonable based on the information available at that time.
It may also be important to clarify the internal corporate structure: who was authorised to sign, who actually made decisions, who handled tax matters, who directed finances, and to what extent the company director relied on an accountant, financial manager or other professional.
When is it advisable to contact a lawyer immediately?
If a company director is summoned as a witness or suspect, a NAV investigation begins, accounting records are seized, a bank account is frozen, or suspicion of breach of trust, budget fraud or an insolvency offence arises, prompt legal assistance is especially important.
If you or a relative are involved in criminal proceedings as a company director, it is advisable to review the documents, the economic background and possible defence directions with a defence lawyer before the first interrogation.
Sources
- Act C of 2012 on the Criminal Code. net.jogtar.hu
- Act XC of 2017 on Criminal Procedure. net.jogtar.hu
- Curia of Hungary – published criminal-law decisions and jurisprudence-analysis materials. kuria-birosag.hu
Do you need legal assistance?
If you or a relative need legal assistance in a criminal case, in connection with an official summons, house search, seizure, suspicion, coercive measure or victim representation, it is advisable to consult a lawyer as soon as possible. A prompt legal response can often determine the later direction of the proceedings.
