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Laos Introduces Corporate Criminal Liability

Laos Introduces Corporate Criminal Liability

December 22, 2020

Not only natural persons (individuals) but also legal persons, such as companies, NGOs, associations, and foundations operating in the Lao PDR, now face criminal liability under new legislation enacted by the government aimed at strengthening the rule of law in the country.

Prior to the entry into force of the 2018 Penal Code, only natural persons (individuals) could face criminal liability and enterprises only had to worry about civil liability. Although the liability provided for therein bears parallels to Article 10 (Liability of Legal Persons) of the United Nations Convention against Transnational Organized Crime (UNTOC), to which the Lao PDR acceded on 26 September 2003, Articles 88-96 of the 2018 Penal Code apply comprehensively to all criminal offenses, however small, committed within the territories of the Lao PDR by any organization, irrespective of the jurisdiction in which it was established, and appear to act as both a deterrent and a means of preventing organizations from repeating similar offenses in future with the following punishments being made available to the courts:

  • The closure of businesses operating under the offending organization;
  • A ban on certain business activities (for up to five years);
  • A ban on mobilizing capital (from shares or corps in the case of companies or from funds in the case of associations and foundations – for up to five years);
  • A ban on using checks and credit cards (for up to five years);
  • The seizure of property; and
  • Restitution (having to pay damages for any loss or injury caused).

Businesses wishing to remain in operation will have to ensure they comply with the many laws which define criminal offenses, which comprise far more than those specified in the 2018 Penal Code alone and include many which are specific to certain sectors and business activities (far too many to detail here) as bans on engaging in specific business activities, mobilizing capital, and using checks and credit cards can last for up to five years, which could easily cripple an ambitious new venture with otherwise promising potential.

For criminal liability to apply, the offense must have been “committed in the name of the organization, for the benefit of the legal person, and under the direction and/or management and/or the agreement of the legal person itself” and “the criminal liability of a legal person does not absolve the individual who committed the offense within that legal person from criminal liability”[1].

To ensure successful navigation through the sometimes complex and constantly evolving legal system of the Lao PDR and avoid falling into the above pitfalls, contact us at VDB-Loi and get things right from the outset to ensure a smooth journey along your road to success.

You can visit us in person at 4th Floor, Kolao Tower II, 23 Singha road, Nongbone village, Saysettha district, Vientiane Capital, Lao PDR, reach us by telephone on +856-21-454-679, +856-20-5552-8680, or +856-20-5555-5103, fax us on +856-21-454-674, or email us at [email protected].

[1] Article 89 of the 2018 Penal Code, Lao PDR


Sornpheth is an attorney-at-law with an impressive legal background, having been a district court judge, a legal researcher and a law lecturer in Laos. He was part of the working group that prepared the civil law textbook, and amended the contract, tort and economic arbitration organization laws. An expert in anti-corruption, he was a member of a working group that worked with the UNODC to implement the UN anticorruption convention in Laos. At VDB Loi, Sornpheth and the Lao team provide legal advisory to clients from a broad range of industry sectors on their Lao law matters, including BCEL on a financing to Champa Hydropower Co., Ltd, and CEXIM on a financing to the Government of Laos. He and his team also assisted Maruhan Japan Bank Lao Co., Ltd with drafting template loan agreements and security agreements, LALCO on the financing of a new real estate company, and KB KOLAO Leasing Co., Ltd. in drafting a financial leasing contract template. His previous experience includes acting as the legal counsel team leader for Krung Thai Bank Public Co., Ltd on its financings of Tad Salen Hydropower Company Ltd, the Government of Laos on the Xayaburi Hydropower Project, Electric Du Laos, Xe Pien and Xe Nam Noy Hydropower Project, Cement Luangphrabang Co., Ltd., and Cement Oudomxay Co., Ltd.
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