A Brief Guide To Corporate Liability For Companies In Malaysia

Consult with Malaysia Corporate Lawyer to learn more about Corporate Liability under the Malaysian Anti-Corruption Commission Act:


What Is Corporate Liability?

Corporate liability refers to the liability of the company should they commit a wrong. More specifically (in this article), this refers to the recent update/ amendment made in the Malaysian Anti-Corruption Commission Act1, where the government introduces a provision to deal with companies (or in this case, commercial organization) that conspires with other companies/ parties/ individuals to commit acts of fraud or dishonesty that involves bribery i.e. corruption.

Why the sudden inclusion of an additional section? If you take the time to read the Act, you will realize that MACC only focuses on prosecuting individuals involved in corruption- nowhere does it reel in the bigger fish in the transaction i.e. the company itself.  The inclusion was therefore necessary to redress the shortcomings of the Act.

So what happens if a company was caught for corruption? What is the law on this issue? Are there any defences at all?

The Law On Corporate Liability

THE LAW
The law governing this topicSection 17A of the Malaysian Anti-Corruption Commission Act (MACC) Act2.
What is a commercial organization?It means3:
1. A company running its business in Malaysia/ outside of Malaysia or part business in Malaysia/ outside of Malaysia and is incorporated under the Companies Act4;
2. A partnership  running its business in Malaysia/ outside of Malaysia or part business in Malaysia/ outside of Malaysia and is incorporated the Partnership Act5; or
3. A limited liability partnership running its business in Malaysia/ outside of Malaysia and is incorporated the Limited Liability Partnership Act6.
How would a commercial organization land itself in hot soup?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 the intent to obtain or retain:
1. Business for the commercial organization; or
2. An advantage in the conduct of business for the commercial organization.
Who will be caught in the crossfire?The law states that if a commercial organization is caught under this section, the following individuals will be assumed to committed corruption7:
1. Director/ controller/ officer/ partner; or
2. Anyone who is involved in the management of the affairs of the commercial organization.
What happens if a commercial organization is found to have committed an act of corruption?If found guilty8, the commercial organization will be liable to a fine of not less than ten times the sum or value of the amount received, whether sum/ value is capable of being valued or is of pecuniary nature, or one million ringgit, whichever is the higher, or to imprisonment for a term not exceeding twenty years or to both.

The Available Defence(s)

For the individuals mentioned above, they will presume to be guilty unless9:

  1. They can prove that the offence was committed without their consent or knowledge; and
  2. They can prove they have exercised due diligence to prevent the commission of the offence as they ought to have exercised, having regard to the nature of their role and also to the circumstances of the case.

For the commercial organization, assuming it’s being charged under Section 17A, it can raise the fact that it had in place adequate procedures to prevent persons associated with the commercial organization from undertaking such conduct (and yet the person still managed to do it) as a defence10.

Ps: An “associated person” is defined as a director, partner or an employee of the commercial organization or a person who performs services for or on behalf of the commercial organization11.
Pss: The definition of “services” is dependent on the circumstances of each case not merely by reference to the nature of the relationship between the associated person and the commercial organization.

What Can Be Done To Mitigate The Risk Of Corporate Liability

While non-exhaustive, below are some of the common practices a commercial organization should consider adopting to mitigate the risk of corporate liability:

  1. Lay down a standard guideline (with the help of all the relevant parties i,e, customers, suppliers, government authorities) for all staff to comply with- this will provide a certain degree of certainty if what can be done or cannot be done or what is considered an act of corruption vice versa.
  2. Create a safe haven for staff to report any instances of corruption without the fear of retaliation/ retribution from the higher ups.
  3. Implement special/ stricter procedures for jobs/ departments that have a higher risk of committing such offences and ensure that their work is being consistently monitored/ screened/ audited to mitigate the risk of corruption.
  4. Provide staff with regular training/ development programmes on the topic itself.
  5. Vet the potential employees before hiring them- any red flags should be immediately investigated to mitigate potential future damage that might be caused by the potential employee to the organization.

There you go, hopefully, it helps!


Consult with Malaysia Corporate Lawyer to learn more about Corporate Liability under the Malaysian Anti-Corruption Commission Act:


1. 2009.

2. Ibid.

3. Section 17A (8), Malaysian Anti -Corruption Commission Act 2009.

4. 2016.

5. 1961.

6. 2012.

7. Section 17A (3), Malaysian Anti -Corruption Commission Act 2009.

8. Section 17A (2), Ibid.

9. Section 17A (3), Malaysian Anti -Corruption Commission Act 2009.

10. Section 17A (4), Ibid.

11. Section 17A (6), Ibid.