A company will not be indicted for criminal offences of a target company prior to a merger

An indictment was made against a company and its officers for violations of environmental laws and acts of water pollution carried out. The polluting company was merged into another company and the indictment was made against the merged company (and not against the polluting company which was cancelled as part of the merger).

The Court held that a merging company need conduct full due diligence prior to a merger in order to learn about duties and rights of the other company. In this case, however, it is not possible to impose criminal liability on a company that did not commit the offenses. However, it is possible to prosecute officers of the merging company in respect of offenses attributed to them, even after the merger.