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Enforcement of section 17A of the MACC Act - How does it affect an Employer

Submitted by Firm:
Shearn Delamore & Co.
Firm Contacts:
Sivabalah Nadarajah, Suganthi Singam, Vijayan Venugopal
Article Type:
Legal Article


In this article, Benedict Ngoh Ti Yang looks at the new section 17A under the Malaysian Anti-Corruption Commission (“MACC”) (Amendment) Act 2018.



Pursuant to the recent Legal Notification PU(B) 247/2020, the Malaysian Anti-Corruption Commission (“MACC”) (Amendment) Act 20181 has come into force effective 1 June 2020. The principal effect of the MACC (Amendment) Act 2018 is the introduction of section 17A under the MACC Act.



Under section 17A of the MACC Act, a “commercial organization” commits an offence if a person “associated” with the organisation 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 to:

  • obtain or retain business for the commercial organisation; or
  • obtain or retain an advantage in the conduct of business for the commercial organisation.2

A “commercial organization” is defined as follows3:

  • a company incorporated under the Companies Act 2016 and carries on a business in Malaysia or elsewhere;
  • a company wherever incorporated and carries on a business or part of a business in Malaysia;
  • a partnership

- under the Partnership Act 1961 and carries on a business in Malaysia or elsewhere; or

- which is a limited liability partnership registered under the Limited Liability Partnerships Act 2012 and carries on a business in Malaysia or elsewhere; or

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

Where a commercial organisation commits an offence, a director, controller, partner or officer or someone who is concerned with the management of its affairs is also deemed to have committed such offence (unless it is shown that the said individual did not consent and had exercised due diligence to prevent such corrupt activities).

Hence, it is important for employers to bear in mind that section 17A does not only provide for corporate liability but also personal liability, particularly for top-level management officers.

The essential aspects for a breach of section 17A include, without limitation”

  • the activities were for the benefit of the commercial organisation; and
  • the “corrupt” activities were committed by a person “associated” with the commercial organisation.

Corrupt activities” which were not committed for the benefit and/or retention of an advantage for the commercial organisation appears not to be caught under this new provision.

Who are associated persons?

An interesting feature in the new provision is the concept of “persons associated”.

For the purposes of section 17A, a person is associated with a commercial organisation if he/ she is

  • a director;
  • partner;
  • an employee of the commercial organisation;
  • a person who performs services for or on behalf of the commercial organisation4.

Based on the new provision, an associated person may not necessarily even be an employee of the commercial organisation.

For example, where Company A engages a third-party contractor who offers bribes/gratification to other parties which would eventually benefit Company A. Under section 17A, Company A may still be liable.

Therefore, the threshold for a commercial organisation to be found guilty under section 17A is significantly lower than the provisions pre-amendments. There may even be instances where commercial organisations may be guilty despite having no “direct knowledge” of such activities by its employees, directors or partners.

What can an employer do?

On that note, however, a commercial organisation charged under section 17A may raise a defence by proving that it had placed “adequate procedures to prevent persons associated with the commercial organization from undertaking5 such “corrupt activities”. It is pertinent to note that “adequate measures” are not defined under the MACC Act.

On 4 December 2018, the Prime Minister’s Department released the Guidelines on Adequate Procedures (“GAP”) to provide a skeletal outline of what commercial organisations can implement as part of its compliance with the “adequate procedures”. The GAP outlined five main principles:

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

(In short, T.R.U.S.T.) Briefly, the guidelines suggest the following:

Top Level Commitment

The GAP proposes that the all measures of anti-corruption start from the responsibility of the “top level management”, which is defined as a person “who is its director, controller, officer or partner” or “who is concerned in the management of its affairs”. Under this branch, top-level management officers of the commercial organisation are advised to carry out necessary efforts against any form of corrupt practices or potential corrupt activities. Amongst other things, the commercial organisations are advised to promote an integrity culture within the organisation. The idea is that the measures against corruption starts from the efforts taken by the top-level management and to be cascaded to its employees.

Risk Assessment

Under the Risk Assessment principle, commercial organisations are advised to regularly undertake corruption assessments to assess whether there are any risks for corruption, either internally or externally. The GAP also advised the commercial organisations to undertake these assessments every three years or whenever there is any update of the law.

Undertake Control Measures

According to the “Undertaking” measures, commercial organisations are advised to implement and put in place measures proportionate to the size of their organisation to address any corruption risks. Such measures include:

  • carrying out due diligence on all relevant third parties and employees;
  • implementing confidential reporting channels to promote whistleblowing and to prohibit retaliation against reports made in good faith; and
  • establishing clear policies to govern matters relating to potential corrupt activities (for example, gifts, conflict of interest, donations).

Systemic Review, Monitoring and Enforcement

Pursuant to emplacing the necessary procedures, employers are required to monitor such measures. It is insufficient to merely introduce the measures without any enforcement. In this regard, top-level management officers are advised to implement monitoring programmes to ensure the employer’s standard of compliance with its policies and procedures. These measures are put in place to encourage the employers to enforce their own internal policies.

In fact, the GAP suggested that commercial organisations engage external independent auditors once every three years to undertake these systemic reviews.

Training and Communication

The idea of this principle is that employers ought to communicate to their employees (or even third-party contractors) of these anti-corruption measures. Some examples of such communication could be by way of emails, memorandums, code of conduct or training programmes.



As the new section 17A is now in force, employers must play an active role in the battle against corruption. Employers are even more susceptible of being guilty under the new provision given the lower threshold. That said, employers ought to consider the Guidelines on Adequate Procedures and put in place sufficient measures against corruption.


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For further information regarding employment and administrative law matters, please contact our Employment and Administrative Law Practice Group.



  1. Act A1567.

  2. Section 17A (1).

  3. Section 17A (8).

  4. Section 17A (6).

  5. Section 17A (4).