Written By Chin Kah Wei


As Malaysia embarks on the journey to become a developed and high-income status country, the fight against corruption has become the country’s top priority. The Government acknowledges that there is a need to tackle corruption and create a better Government system with high integrity for stability and people’s well-being.

In order to improve the effectiveness in the fight against corruption, it is pivotal to reform some of the existing laws by recommending and introducing changes to them. To that effect, the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) has been amended, among others, to introduce corporate liability provision for bribery and corruption under the new Section 17A, which is modelled on Section 7 of the UK Bribery Act 2010 and will be brought into force on 1st June 2020.


With the introduction of Section 17A, corporate liability will be imposed on commercial organizations for any corruption-related actions by associated persons done for the benefit of the organization. This seeks to enhance Malaysia’s fights against corruption particularly those arising from commercial transactions allowing for businesses to be carried out in a corruption free environment and to ensure that adequate measures are put in place to prevent corruption.



1. Offence by a commercial organization – Section 17A(1)

Section 17A(1) states that a commercial organization 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 organization. 

2. Severe Penalties for the Corporate Liability – Section 17A(2)

The potential penalties are severe which could be in the form of a fine of not less than 10 times the value of the gratification in question or RM1 million, whichever is higher or imprisonment for a term not exceeding 20 years, or both. Note that this penalty is much higher compared to the existing financial penalty for a bribery offence which is a fine of not less than 5 times the value of the gratification in question or RM10,000/- whichever is higher and no imprisonment. 

3. Deemed Personal Liability for Management Personnel – Section 17A(3)

Where a commercial organization commits an offense, the management personnel which includes directors, controllers, officers, partners or persons concerned with the management are deemed to have committed the same offence unless they are able to prove that the offence was committed without their consent and that they exercised due diligence to prevent the offense. 

4. Scope of Associated Persons – Section 17A(6) and (7)

If a person is a director, partner, employee or a person who performs services for or on behalf of the commercial organization, that person is deemed to be associated with a commercial organization. Association is determined by reference to all the relevant circumstances and not merely by reference to the nature of the relationship between the person and the commercial organization. This is a rather extensive category as a commercial organization could be found liable due to the act of its director, partner, employee, agent, distributor etc as it uses the concept of guilt by association. 

5. Wide Definition of Commercial Organization – Section 17A(8)

The definition of a “commercial organization” is wide and it includes a company or partnership incorporated / formed locally and carries on a business in Malaysia or elsewhere; and a company or partnership wherever incorporated / formed and carries on a business or part of a business in Malaysia. 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. 


As noted above, when the new Section 17A comes into force, it will impose strict liability on commercial organizations in that organizations can be held liable regardless of whether they had actual knowledge of the corruption-related actions by their associated persons. 

That being said, it is a defence for a commercial organization if it is able to prove that it had in place adequate procedures to prevent the corrupt conduct which contained in Section 17A(4) of the MACC Act. Therefore, the only defence available to the offence, which may otherwise result in a fine or imprisonment or both, is that adequate preventive measures were in place. 

To safeguard both the organization itself as well as its directors and officers, it is crucial to have in place such a system of adequate procedures. In this regard, the Government has issued the Guidelines on Adequate Procedures (“GAP”) pursuant to Section 17A(5) of the MACC Act. 



The GAP demarcates the five (5) guiding principles of T.R.U.S.T which are summarized as follows:
Top Level Commitment: the top-level management’s commitment to prevent corruption.

Risk Assessment: periodic, informed and documented assessment of the external and internal risks of corruption.

Undertake Control Measures: due diligence procedures and reporting channel in order to mitigate risks.

Systematic Review, Monitoring and Enforcement: monitor and review procedures designed to prevent corruption by persons associated with corruption.

Training and Communication: internal and external communication, including training, within the commercial organization.



In the face of globalisation, the Government has little choice but to develop an integrated and comprehensive strategy in combating corruption. The provisions recommending corporate liability for corruption will have the effect of promoting better corporate governance in Malaysia, in particular corruption arising from commercial transactions. 

Given the strict liability imposed, it has become alarmingly crucial for commercial organizations to ensure there is in place some form of procedures to prevent commission of bribery. 

The GAP is not intended to be prescriptive and not “one-size-fits-all” and should be applied practically, in proportion to the scale, nature, industry, risk and complexity of the organization. With about a month time left to the enforcement of Section 17A, the clock is ticking for all commercial organizations to ensure anti-corruption efforts become an integral part of their corporate culture at all levels.

This publication is intended for our clients’ general information only and should not be taken as legal professional advice. If you have any questions or require advice based on specific facts, please contact us.