Introduction of Section 17A

Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) came into force on 1st June 2020 through an amendment bill gazetted back in May 2018. This addition establishes a new statutory corporate liability on commercial organizations for the offence of corruption committed by its ‘associated persons’ – for example, its employees – under the MACC Act.

Section 17A(1) provides that:

“A commercial organization commits an offence if a person associated with the commercial organization corruptly gives, agrees to give, promises, or offers to any person any gratification whether for the benefit of that person or another person with intent:

  1. to obtain or retain business for the commercial organization; or
  2. to obtain or retain an advantage in the conduct of business for the commercial organization.”
  1. What is a ‘Commercial Organization’?

    Under Section 17A(8) of the MACC Act, ‘commercial organization’ includes companies, partnerships and limited liability partnerships incorporated or registered in Malaysia as well as companies and partnerships formed elsewhere but carries on their business or part of their business in Malaysia. Consequently, Malaysian-incorporated companies, partnerships and limited liability partnerships that commits corruption outside of Malaysia will still be caught under Section 17A.

  2. Who is a ‘Person Associated with the Commercial Organization’?

    Under Section 17A(6) and (7) of the MACC Act, such a ‘person’ would include employees, directors, partners, as well as persons performing services for and on behalf of the commercial organization. In determining whether a person is ‘associated’, consideration is given to all the relevant circumstances, and not just to the status, function, or nature of the relationship between the person and the organization. This encompasses a rather wide category, and may mean that a commercial organization could potentially be found liable even for the actions of its agents, vendors, or other third party contractors.

  3. What is ‘Gratification’?

    Section 2 of the MACC Act defines ‘gratification’ to include, amongst others, money, donation, gift, loan, fee, reward, valuable security, property, financial benefit or any other similar advantage; any office, dignity, employment, agreement to give employment or render services; or any valuable consideration of any kind; or any other service or favour of any description.


Under Section 17A(3), in the event a commercial organization has been found to be liable to have committed a Section 17A offence, the key personnel of a commercial organization such as its director, controller, officer, partner, or management-level executives, will be automatically deemed to have committed the same offence, unless such key personnel are able to prove that the offence was committed without his consent or connivance, and that he has exercised the necessary due diligence to prevent such offence, taking into account the nature of his function and to the relevant circumstances.

If a commercial organization is found liable and fails to prove its defence, conviction may result in such an organization being liable for a fine of not less than ten times the sum or value of the gratification or RM1 million, whichever is higher, and a maximum jail term of 20 years, or both.

Defense to Offence under Section 17A

Section 17A(4) of the MACC Act provides for the only defense against an offence under Section 17A of the MACC Act. Section 17A(4) provides that a commercial organization found liable can raise, as a defense, the fact that it has adequate procedures in place to prevent such an offence.

What are the Adequate Procedures?

Section 17A does not specifically state what amounts to ‘adequate procedures’. However, pursuant to Section 17A(5) of the MACC Act, the Prime Minister’s Office has issued the Guidelines on Adequate Procedure (the “Guide”) to assist commercial organizations understand what amounts to ‘adequate procedures’ and form the foundation of their respective anti-corruption policy. Organizations should keep in mind that the Guide merely provides basic principles for general application purposes, and the Guide should be adapted and applied practically to fit the specific needs of each organization based on its size, nature, industry, risk and complexity. If a commercial organization is found liable for a Section 17A offence, the burden of proof will be on the organization to prove that they have an ‘adequate procedure’ in place and it will be for the courts to decide whether the organization has established the necessary safeguards to prevent the offence.

The Guide lays down five (5) key principles – the TRUST principles – which are briefly summarised as follows:

  1. Top-level Commitment

    The top-level management of a commercial organization should cultivate an organizational culture which practices the highest level of integrity and ethics, and complies fully with the applicable laws and regulatory requirements on anti-corruption. They are responsible for the effective management of corruption risks and must lead the organization’s efforts in implementing the TRUST principles within its organization’s anti-corruption policy.The top-level management should have first-hand knowledge of all anti-corruption related audits, reviews, assessments and other reports. They must be able to satisfy both its internal and external shareholders that the organization is in compliance with its own anti-corruption policy and any applicable regulatory requirements.

  2. Risk Assessment

    A thorough risk assessment exercise should form the basis of an organization’s anti-corruption policy and should be used to establish the appropriate policy required to mitigate corruption risks faced by the organization. Such assessment should identify any risks or opportunities for corruption, suspicious financial transactions and business activities, and non-compliance by third parties.It is recommended that the risk assessments should be repeated every 3 years or sooner as and when required, such as when there has been a change in law or circumstances of the business.

  3. Undertake Control Measures

    Commercial organizations should implement control and contingency measures that are appropriate and proportionate to its size, nature, industry, risk, and complexity. Such measures should include conducting due diligence exercises on all relevant personnel or parties who may potentially be a ‘person associated’ with the organization, and setting up secure and discreet reporting channel to protect anonymity and encourage whistle-blowing.Organizations should also establish general policies in respect of anti-bribery, anti-corruption, conflicts of interest, entertainment and hospitality, donations and sponsorships, financial controls, and other such matters to guide the conduct of its employees and third party contractors.

  4. Systematic Review, Monitoring and Enforcement

    Commercial organizations, and principally its top-level management, should ensure that reviews and audits on the performance, efficiency and effectiveness of its anti-corruption policies are conducted in regular intervals. Organizations should also consider engaging a qualified and independent third party to audit its anti-corruption policies and procedures once every 3 years at the very least in order to be satisfied that its business is operated in accordance with the applicable internal and external policies and regulations.Organizations should also continuously monitor and improve its anti-corruption policies and procedures following the results of such review and audit. Organizations should also strictly enforce its anti-corruption policies and set up disciplinary proceedings to handle any non-compliance.

  5. Training and Communication

    A commercial organization’s anti-corruption policies and procedures (and any changes to such policies and procedures) should be properly communicated to its employees, third party contractors and other relevant persons. Such persons should be provided with training and be properly informed of the contents of the policy, the appropriate reporting channels and the consequences of non-compliance.

For more details pertaining to the Guide and/or TRUST principles, please visit this link:

Prevention is Better than Cure

In conclusion, to the bosses and managers out there, it is either you take proactive and appropriate steps to adopt Section 17A and the adequate procedures now, or be prepared to suffer the consequences later as you get sanctioned under Section 17A – your choice.

This article is written by 
Fiona Fong
Partners, Low & Partners
Chin Chyu Ern
Associate, Low & Partners
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