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Section 17A of the Malaysian Anti- Corruption Act 2009 – The New Corporate Liability Offence for Corruption

August 2018

by Yap Yeong Hui

Malaysia – Section 17A of the Malaysian Anti-Corruption Act 2009 – The New Corporate Liability Offence for Corruption*

The Malaysian Anti-Corruption Commission (Amendment) Bill 2018 which amends the Malaysian Anti-Corruption Act 2009 was tabled in the Malaysian Parliament and passed on 4 April 2018. Royal assent was given on 27 April 2018. The Bill introduces a new strict liability offence for failing to prevent bribery and places a burden on those covered by it to proof they have adequate procedures in place to prevent bribery.

A new Section 17A has been added to the MACCA, which is modelled on Section 7 of the UK Bribery Act 2010, and will have the force of law once the Government announces a date for the amendments to come into force. More on when the amendments will come into force later in this article.


The following are the material provisions introduced by the Bill:

A. The Offence Introduced

A commercial organisation commits an offence if a ‘person associated with the commercial organisation’ corruptly gives, agrees to give, promises or offers to any person gratification with the intent to secure business or an advantage for the commercial organisation. The offence appears to be one of strict liability.

The penalties could be in the form of a fine of not less than ten times the value of the gratification (if capable of being valued), or RM 1 million, whichever is the higher, or imprisonment for a term not exceeding 20 years, or both.


B. ‘Person associated with the commercial organisation’

A person is associated with the commercial organisation if:

  • He is the commercial organisation’s director, partner, employee or agent of the commercial organisation; or
  • He performs services for or on behalf of the commercial organisation.

What is conspicuously missing from the definition of ‘person associated with the commercial organisation’ in Section 17A is specific reference to ‘subsidiaries’ and ‘joint venture partners’ which are specifically referred to in Section 7 of the UK Bribery Act 2010. On the one hand, the intentional leaving out of these terms from Section 17A can be interpreted as meaning that the Malaysian legislators intended to leave out non- individuals from coverage by this new provision. However, pursuant to the Interpretation Acts 1948 and 1967, the term ‘person’ is defined to cover all bodies of persons, corporate and incorporate. If one adopts the definition set out in the Interpretations Act, a ‘person associated with the commercial organisation’ in Section 17A should include individuals as well as corporations.


C. ‘Commercial Organisation’

A ‘commercial organisation’ that is covered by Section 17A is widely defined as:

  • A company incorporated under the Companies Act 2016 and carries on a business in Malaysia and elsewhere;
  • A company wherever incorporated and carries on a business or part of a business in Malaysia;
  • A partnership under the Partnership Act 1961 or a limited liability partnership under the Limited Liability Partnerships Act 2012 and which carries on a business in Malaysia or elsewhere; or
  • A partnership wherever formed and carries on a business in Malaysia or elsewhere.

Like the UK Bribery Act 2010, the corporate liability provision introduced in Malaysia will have extra-territorial reach as it covers locally incorporated companies and partnership as well as companies and partnerships incorporated overseas with business presence in Malaysia. In relation to foreign entities, what amounts to carrying on business in Malaysia is not defined. It is possible that it would suffice if the foreign entity carries on business in Malaysia through an agent. As regards local entities, it appears that they could be liable for failing to prevent bribery which occurred outside of Malaysia, even if the acts were committed by its overseas agents.


D. Defence Available to the Commercial Organisation

It is not a defence to the corporate liability offence if the commercial organisation is not aware of the actions of the associated person. The defence for the commercial organisation stipulated in the new Section 17A is if it is able to prove that it had in place ‘adequate procedures’ designed to prevent persons associated with the commercial organisation from committing the offence. The amended Act does not define what amounts to ‘adequate procedures’. However Section 17A provides that the Minister shall issue guidelines as to what constitutes adequate procedures. No guidelines have been issued to date.


E. Office Holders and Senior Management Imputed with Liability

The new Section 17A goes further than Section 7 of the UK Bribery Act 2010 in one material respect. Section 17A(3) provides that where an offence under the Section is committed by a commercial organisation, the director, controller, officer, partner and persons managing its affairs at the time of commission of the offence is deemed to have committed the offence of failing to prevent corruption. These individuals will then need to prove that the offence was committed without his consent or connivance and that he exercised due diligence to prevent the commission of the offence.


F. When the Amendments Will Take Effect?

When the Bill was presented to the Parliament, the Parliament was informed that the corporate liability offence will only be enforced two years after it is approved. In the meantime, guidelines will be developed by the relevant authorities to provide guidance to the public. This is to allow all stakeholders affected by the amendments to take the necessary steps to ensure they do not run afoul of this new law.


G. Impact for Employers

When Section 17A comes into force, actions of an ordinary employee will have an impact on the company engaging the employee as well as on officers and members of senior management of the company. This is the exact reason objective of introducing the corporate liability provision. It will be more difficult for employers evade any liability by arguing that the corruption committed by their employees which they benefit from, were not on their instructions or were committed without their knowledge.

Instead, employers will be expected to have in place policies and procedures aimed at preventing commission of bribery offences by their employees. As for what amounts to adequate policies and procedures, the guidelines which will be issued by the relevant authorities will hopefully provide guidance.

The guidance issued by the UK authorities responsible for enforcing the UK Bribery Act 2010, which the Malaysian guidance will likely be modelled on, has 6 principles. They are (a) proportionate procedures, (b) top-level commitment, (c) undertaking of risk assessment, (d) due diligence procedures, (e) communication (including training) and (f) monitoring and review.


H. Conclusion

There have been talks about the introduction of the corporate liability offence since before 2013. The introduction of the corporate liability offence will bring Malaysia’s anti-bribery laws closer into line with its international obligations under the OECD Anti-Bribery Convention, in particular the provisions recommending corporate liability for bribery.

It bears repeating that Section 17A not only imposes liability on companies but also imputes strict personal liability on their officers and members of senior management.

Given how easy it will be for companies and its officers as well as managers to potentially be brought to the courts for bribery committed by their employees, agents and other associated parties, it has become alarmingly important for them to ensure there is in place some form of procedures to prevent commission of bribery. Although there may be a two years grace period for companies to put these procedures in place, the clock is ticking and given how severe the penalties are, companies with business in Malaysia should start performing risk assessments of its business to ascertain what resources its needs and steps it needs to take to put in place some form of bribery prevention mechanisms.

* This article was first published in American Bar Association International Employment Committee Newsletter – Summer 2018 Edition.

This material is for general information only and is not intended to provide legal advice. If you have any queries regarding the above, please feel free to contact us at