The Malaysian Anti-Corruption Commission Act 2009 (MACC Act) has been revised to include, among other things, a corporate liability provision for bribery and corruption under Section 17A, which will take effect on June 1, 2020.

The purpose of enforcing Section 17A of the MACC Act would be to meet international standards under Article 26 of the United Nations Convention Against Corruption (UNCAC), which addresses the culpability of legal persons. At the moment, the MACC Act solely focuses on prosecuting those who have been involved in corruption. Thus, section 17A was introduced to allow organizations engaging in bribery to face legal prosecution, and individuals linked with the organizations are presumed to have committed the relevant offense.

Section 17A of the MACC Act 2009 defines “commercial organization” as the following:

• A company formed under the Companies Act 2016 that operates in Malaysia or internationally;
• A firm that is incorporated anywhere in the world and operates a business or portion of a company in Malaysia;
• A partnership formed under the Partnership Act 1961 that conducts business in Malaysia or internationally;
• A partnership formed under the Limited Liability Partnerships Act 2012 that conducts business in Malaysia or internationally; and
• No matter how it is established, a partnership operates a business or part of a company in Malaysia.

As a result, if a commercial organization commits an offense, the retail organization’s director or any member of the management affairs will be held responsible unless the crime was achieved without the person’s permission.

Association is defined by considering all relevant facts, not just the nature of the relationship between the person and the business organization. Thus, as the notion of guilt by association is used, a commercial organization could be found accountable owing to the act of its director, partner, employee, agent, distributor, subsidiary, and so on. As a result, when an organization commits an offense, its directors and essential personnel are immediately charged with the same crime.

Aside from the MACC Act, directors are already required to act as fiduciaries in the company’s best interests and exercise care, skill, and diligence under the Companies Act 2016, common law, and service contracts (where such a responsibility is stipulated under their contract). The duties above may include encouraging compliance with anti-corruption laws and ensuring proper procedures to detect, prevent, and minimize corrupt practices.

The Securities Commission Malaysia recently announced that it would be building a framework to encourage the proper fulfillment of directors’ obligations in the context of anti-corruption efforts. This will undoubtedly be beneficial to both directors and firms.