What Is The New Section 17A MACC Act, and How Are Your Businesses Affected?

“Corporate Liability Provision” Under Section 17A

The new Section 17A MACC Act [1], which will come into effect 1st June 2020, (hereinafter referred to as “the new provision”) is of great significance for all companies incorporated in or carrying on business in Malaysia. The new provision will impact businesses of all shapes and sizes regardless of the industry in which you operate. It will present heightened liability risks not only for companies engaging in corrupt practices, but it also imposes personal liability on directors and corporate officers of that company.



Hence, if you think your business will not be affected by this new provision, it’s time to think again.


The Implications for the Company

In this respect, the new provision expressly provides that a commercial organisation commits a criminal offence, if it is found that the employees or any person(s) associated with the commercial organisation corruptly gives, offers or promises any gratification to any person(s) for the benefit of the said commercial organisation.[2]


As we speak, the term “commercial organisation” under the new provision is loosely defined to include not only Malaysian companies but also companies incorporated overseas that carry on a business or part of its business in Malaysia. Hence, a local branch office with its head office in Beijing, for instance, is likely to be caught under the new provision.


Moreover, the offence under the new provision is one of strict liability. This means that it would be enough to prove that the company committed the corrupt practice, and the question of whether or not there was actual intent, or knowledge on the part of a company’s directing mind will be irrelevant.


The Implications for The Boards and Management

From this perspective, the new provision also imposes personal criminal liability on directors and corporate officers to align them with corporate faults.


In simpler terms, if your company is found guilty for the offence under the new provision. Then it should be borne in mind that the directors, controllers, officers, partners, and other senior key personnel of that company would also be deemed to have committed the same offence. Unless you or the relevant individuals can prove that the said offence is committed without your consent, or you have conducted all of the required due diligence you ought to have exercised in your capacity in the company to prevent the said offence from being carried out.


In this context, as one can see, the new provision pins responsibility firmly on senior decision-makers within the business, making them personally liable. Hence, making it more critical than ever before for senior key personnel of a company to ensure proper anti-corruption policies and mechanisms are in place, and everyone in the company strictly follow such procedures.


Importantly, as in many cases of the law, ignorance of this new provision, or merely lousy practice can never be a defence.


What is the Defence under Section 17A?

It is noteworthy that under the new provision the only Defence that can shield a commercial organisation from prosecution for the strict liability offence of failing to prevent corrupt practices is to demonstrate and prove that it had in place “adequate procedures” and controls to prevent bribery and corruption.


What are the Penalties under Section 17A?

A commercial organisation that commits an offence under the new provision shall on conviction be liable to a fine of no less than 10 times the value of the gratification, or RM1,0000,000, whichever is higher or be subjected to a prison term of not exceeding 20 years, or both.[3]


What are “Adequate Procedures” under the new provision?

The MACC (Amendment) Act 2018 does not define “adequate procedures”, but the MACC has published the “Guidelines on Adequate Procedures [4]” about procedures that commercial organisations can put into place to prevent corrupt practices.


Notably, the guidelines are not authoritative. However, we highly recommend a company to use them as a reference point when designing or fortifying their internal procedures & policies, or corruption risk management to establish “Adequate Procedures” as a compliance defence in the event of being implicated in accusations of corrupt practices. We reproduce these principles as follows:

  • Top-Level Commitment
  • Risk Assessment
  • Undertake Control Measures
  • Systematic, Review, Monitoring And Enforcement
  • Training and Communication

Bearing the above in mind, the internal controls programme and the steps of action that we recommend for your company will be proportionate to the risks you face and the size of your business. Particular attention should be given if your company is operating in one of the following industry:

  • Entertainment
  • Construction
  • Government contracting company
  • Retail & Financial services
  • Logging
  • Plantation


How We Can Assist You?

Our comprehensive “Section 17A Compliance Programme for SMEs” typically includes 5 stages that can be tailored to the needs of your business requirements and budget as seen below: –


1st Stage:-

Perform Risk Analysis to determine the areas in which potential risks of corruption lie.

2nd Stage:-

Recommend/ Implement Robust Internal Controls to address “gaps” found in Stage 1.

3rd Stage:-

Staff Training & Raise Awareness in what concerns the prevention controls and detection processes we install for your company in Stage 2.

4th Stage:-

Testing to evaluate the application and effectiveness of the internal controls. At this Stage, we will work closely with your internal key personnel, primarily your legal advisor or HR department to ensure the programme we design for you is practical and working as it should.

5th Stage:-

Periodic Follow up to test your compliance programme and to offer retraining sessions to key personnel if needed.


DisclaimerThis article is intended for general information and education purposes only and not to provide legal and professional advice. If you have any questions about our “Section 17A Compliance Programme for SMEs”, please contact us today at info@chernco.com.my, or send us a direct message through the WhatsApp button on our website.



[1] Section 17A MACC (Amendment) Act 2018

[2] Section 17A(1) MACC (Amendment) Act 2018

[3] Section 17A(2) MACC (Amendment) Act 2018


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