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 of the MACC Act 2009

Section 17A of the MACC Act 2009 governs the offence of corruption committed by a commercial organization. Section 17A(1) provides that a commercial organization commits an offence if an associated person promises gratification to any person with an intent “to obtain or retain business” or “an advantage in the conduct of business for the commercial organization”.

Further, Section 17A(8) provides that, for purposes of Section 17A of the MACC Act 2009, “commercial organization” 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

d. A partnership wherever formed and carries on a business or part of a business in Malaysia.

Accordingly, where an offence is committed by a commercial organization, 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. Upon conviction under Section 17A of the MACC Act 2009, a commercial organization may be liable to a fine of not less than ten (10) times the value of the gratification in question or RM1,000,000.00, whichever is higher, or to imprisonment for a term not exceeding twenty (20) years, or to both.

The purpose of Section 17A of the MACC Act 2009 is to foster the growth and development of a business environment that is free of corruption and to encourage all commercial organizations to opt for reasonable and proportionate measures to ensure their businesses and business activities do not involve acts of bribery and/or corruption.

Associated Persons

Section 17A(6) of the MACC Act 2009 provides that associated persons include the directors, partners and employees of the commercial organization and 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. This is in accordance with Section 17A(7) of the MACC Act 2009.

Adequate Procedures

As Section 17A of the MACC Act 2009 creates a strict liability offence for commercial organizations, commercial organizations must be aware of the defence of having adequate procedures in place. Adequate procedures can be prepared, implemented and enforced effectively following the guidelines issued by the Prime Minister’s Office in December 2018 (“Guidelines”). The Guidelines were issued pursuant to Section 17A(5) of the MACC Act 2009, which took a similar approach to Section 9(1) of the UK Bribery Act 2010. These Guidelines assist commercial organizations in understanding the concept, implementation and enforcement of the adequate procedures referred to in Section 17A(4) of the MACC Act 2009.

With reference to the Guidelines, a commercial organization’s adequate procedures should be based on the principle of TRUST, which consists of the following:

(a) Top-Level Commitment:

The top-level management of the commercial organization (“Top-Level Management”) must ensure that the highest level of integrity and ethics is practised in the commercial organization. There should be full compliance with the applicable laws and regulatory requirements on anti-corruption and key corruption risks of the organization must be effectively managed.

The Top-Level Management must provide assurance to its internal and external stakeholders that the organization is operating in compliance with its policies and applicable regulatory requirements.

The Top-Level Management must establish, maintain and periodically review an anti-corruption compliance program and communication of the organization’s anti-corruption policies and commitment internally and externally.

The Top-Level Management must encourage the use of any reporting (whistleblowing) channel. The results of any audit, reviews of risk assessment, control measures and performance are reported to all top-level management including the full Board of Directors and acted upon.

(b) Risk Assessment:

Comprehensive risk assessments are advised to be conducted every three (3) years, with intermittent assessments to be conducted whenever necessary.

Risk assessment should be used to establish appropriate processes, systems and controls approved by the Top-Level Management to mitigate specific corruption risks and/or potential corruption risks that the commercial organization may be exposed to.

(c) Undertake Control Measures:

Appropriate controls and contingency measures, which are reasonable and proportionate to the nature and size of the commercial organization, are advised to be implemented and enforced to address any corruption risks arising from weaknesses in the commercial organization’s governance framework.

The said controls and measures should include due diligence and reporting channels.

Policies and procedures should be endorsed by Top-Level Management, which should be up-to-date and easily available.

(d) Systematic Review, Monitoring and Enforcement:

The Top-Level Management is advised to ensure regular reviews are conducted to assess the performance, efficiency and effectiveness of the anti-corruption programme of the commercial organization and to ensure the anti-corruption programme is enforced effectively.

Reviews may take the form of an internal audit or an external audit.

Reviews should form the basis of any efforts to improve the existing anti-corruption controls in place in the organization.

(e) Training and Communication:

Commercial organizations should develop and disseminate internal and external training and communications relevant to their anti-corruption management system, in proportion to their operations.

The commercial organization’s anti-corruption policy should be made publicly available and appropriately communicated to all personnel and business associates.

When planning strategies for communicating the organization’s position on anti-corruption, the organization should take into account what key points should be communicated, to whom they should be communicated, how they will be communicated, and the timeframe for conducting the communication plan.

Employees and business associates should be provided with adequate training to ensure their thorough understanding of the organization’s anti-corruption position, especially in relation to their role within or outside the commercial organization.

For more information pertaining to the Guidelines, please click on this link.

The onus lies on the commercial organization to be prepared in taking the necessary measures to implement and enforce adequate procedures and anti-corruption programmes and policies to prevent and/or combat actual and potential corruption risks that the commercial organization may face.


In light of the above, directors, partners and other senior personnel of commercial organizations must be aware and stay up-to-date with the rules and regulations surrounding the new Section 17A of the MACC Act 2009 to ensure that their commercial organization’s adequate procedures, anti-corruption programme and policies are well adopted, implemented and enforced.


On 6 May 2020, the Chief Commissioner of the Malaysian Anti-Corruption Commission (“MACC”), Datuk Seri Azam Baki, said that the MACC was studying a proposal to suspend and/or delay Section 17A of the MACC Act 2009 for approximately one (1) year to allow commercial organizations to re-establish their businesses in light of the COVID-19 pandemic and the Movement Control Order.

However, on 21.5.2020, the Prime Minister’s Office made a statement that the Section 17A of the MACC Act 2009 will come into force on 1.6.2020 as planned, after taking into account the current situation and views of all stakeholders.

By Tommy Wong and Chew Jin Heng


Note: This article does not constitute legal advice to any specific case. The facts and circumstances of each and every case will differ and therefore will require specific legal advice. Feel free to contact us for complimentary legal consultation.