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On 5 April 2018, the new Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act 2009”) was passed which introduces corporate liability on commercial organizations in Malaysia. The introduction of Section 17A of the MACC Act 2009, which takes effect on 1 June 2020, enables commercial organizations and associated persons to be subjected to legal proceedings should the person associated with the commercial organization commits corruption offences.

Section 17A(1) states that a commercial organisation commits an offence if a person associated with it corruptly gives, offers or promises any gratification to any person with an intent to obtain or retain business or a business advantage for the said commercial organisation.

The provision under Section 17A MACC Act 2009 is a provision that stipulates a corporate liability principle where a commercial organisation can be considered guilty if any of its employees and/or associates commit corruption for the benefit of the organisation. The commercial organization’s director, controller, officer, partner or any member in the management of the commercial organization’s affairs will be deemed to have committed the offence, unless it can be proven that the offence was committed without the person’s consent and that due diligence to prevent the commission of the offence was exercised.

The burden of proof then lies on the commercial organization to prove to the Court that adequate procedures were communicated, implemented and enforced effectively within the commercial organization to prevent associated person(s) from committing an act of corruption. 

If a commercial organisation is found guilty under Section 17A, the penalty under Section 17A (2) is a fine of not less than 10 times the value of the bribe or RM 1 million, whichever is higher, or imprisonment for up to 20 years, or both. However, the commercial organisations can defend themselves if they can show that the organisation has implemented ‘Adequate Procedure’ in its operation.

Section 17A(6) of the MACC Act 2009 provides that associated persons include the directors, partners and employees of the commercial organization and any persons who perform services for and on behalf of the commercial organization.

In relation to the latter, a person performing services for and on behalf of a commercial organization is determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between that person and the commercial organization.

Section 17(8) further clarifies that commercial organisation includes the following:
a. A company incorporated under the Companies Act 2016 and carries on a business in Malaysia or elsewhere;
b. A company wherever incorporated and carries on a business or part of a business in Malaysia;
c. A partnership registered under the Partnership Act 1961 and carries on a business in Malaysia or elsewhere;
d. A partnership registered under the Limited Liability Partnerships Act 2012 and carries on a business in Malaysia or elsewhere; and
e. A partnership wherever formed and carries on a business or part of a business in Malaysia.

Local companies could be liable for failing to prevent bribery which occurred beyond the borders of Malaysia, even if these acts were committed by its foreign agents. Similar to the UK Bribery Act 2010, the corporate liability provision will have extra-territorial effect as it covers locally incorporated companies and partnership as well as companies and partnerships incorporated overseas with business presence in Malaysia.

With the implementation of the new Section 17A of MACC Act 2009, the directors, partners and senior personnel of commercial organizations are encouraged to implement adequate procedures, anti-corruption programme and policies to ensure their businesses are conducted with integrity and without corruption.

Click here for the press release from the Prime Minister Office in Bahasa Malaysia.