Corporate Liability – The Buzz About the New Section 17A of the MACC Act

In 2018, the Malaysian Anti-Corruption Commission (MACC) Act was amended to include the corporate liability of Malaysian commercial organizations for corruption offences under the new provision, Section 17A. As the enforcement date is fast approaching (1 June 2020), there had been a growing buzz in the market regarding the implementation of the new Section 17A of the MACC Act, especially among the senior management and directors of companies. We discuss briefly in this article the amendments that were introduced.

The new Section 17A of the MACC Act which had been passed in the Parliament on 5 April 2018 focuses on acts of corruption by commercial organizations which can be subjected accordingly to legal actions. Prior to the passing of this provision, the MACC Act only focused on the prosecution of individuals who are involved in corruption practices.

As per Section 17A(8) of the MACC Act, a commercial organization refers to the following:

a) companies and partnerships that are locally incorporated which conduct businesses in Malaysia or elsewhere; or

b) companies and partnerships that are incorporated elsewhere which conduct businesses or a part of their businesses in Malaysia.

Based on the new Section 17A of the MACC Act, a commercial organization is deemed to have committed an offence if a person associated with the organization commits an act of corruption which would allow the organization to acquire an advantage in the conduct of business.

Simultaneously, individuals which are directors or part of the management of the organization are also deemed to have committed the same offence unless the person can prove that the offence was committed without his consent and that he had exercised due diligence to prevent such offence from occurring.

Upon conviction, the organization shall be liable to a fine of not less than ten times the sum or value of the gratification which is the subject matter or the offence, or one million ringgit, whichever is higher or to imprisonment for a term not exceeding twenty years or both.

The Act states that the line of defence for a commercial organization is to prove that the commercial organization had in place “Adequate Procedures” to prevent persons associated with the commercial organization from undertaking such conduct.

The onus is on the commercial organization to prepare itself in taking the necessary measures to create policies and efforts to prevent corruption in the organization. The Chief of MACC has stated that ignorance of the law is not a legitimate defence.

Find out today on how Baker Tilly Malaysia can assist you and your business to prepare for the implementation of Section 17A of the MACC Act by contacting the following:  

Loke Chee Kien
Director, Global Business Solutions (GBS) 
+603 2297 1535 
Email: cheekien.loke@bakertilly.my