Malaysia has strengthened its anti-bribery laws, which had previously been described as ineffective, inadequate, and under-enforced. On April 5, 2018, the Malaysian Parliament amended the Malaysian Anti-Corruption Commission Act 2009 (MACC Act) to incorporate, among others, a new Section 17A on corporate liability for corruption. While the amendment took effect on June 1st, 2020, many businesses remain unsure about how to demonstrate due diligence has been taken to prevent corruption. This article outlines the changes, how businesses can demonstrate adequate procedures, and what all this means for Directors & Officers (D&O) Liability insurance.



The new Section 17A of the Malaysian Anti-Corruption Commission Act emulates the UK Bribery Act with which many international businesses are familiar. It addresses corporate liability for corruption in a similar way to the UK Act, but it shifts the burden of proof to the directors, controllers, and management. Under Section 17A, a director, controller, officer, partner, or manager of a commercial organisation is personally liable for the same offence if the commercial organisation is found liable, unless the relevant individual can prove the offence was committed without their consent and that they exercised the necessary due diligence to prevent the offence being committed.

The new section also goes beyond the Singapore Prevention of Corruption Act in its reach and the scope of penalties. Under Section 17A, the penalties may take the form of a fine of no less than ten times the value of the bribe (if it can be valued), or RM 1 million (whichever is higher), and/or imprisonment for a term not exceeding 20 years.



Under Section 17A, a person associated with a commercial organisation is a director, controller, or management. It also includes a person who performs services for or on behalf of the commercial organisation, including their supply chain, which could arguably be the most difficult to monitor.

Although typically referred to as corporate liability, Section 17A also applies to partnerships (both under the Limited Liability Partnership 2012 and the Partnership Act 1961). Section 17A also applies to any company or partnership incorporated or established outside Malaysia but which carries out business in Malaysia. It has extra-territorial jurisdiction by including Malaysian incorporated companies and partnerships committing corrupt practices outside Malaysia.



The Guidelines on Adequate Procedures (GAP) were published at the end of 2018. Similar to the guidelines in the UK Bribery Act, the GAP assists commercial organisations in understanding procedures that should be implemented to prevent corrupt practices in their business activities. An organisation can show due diligence was taken by demonstrating adequate procedures were in place to prevent the associated person’s corrupt conduct.

The GAP refers to top-level commitment principles that commercial organisations can use as reference points for their anti-corruption policies, procedures, and controls. The principles are:

1) Top Level Commitment

2) Risk Assessment

3) Undertaking Control Measures

4) Systematic Review, Monitoring, and Enforcement

5) Training and Communication

The GAP also appears to widen the term “person associated” to include nominees, trustees, and to a certain extent, even other corporations.



Since Section 17A took effect, we continue to receive queries from our clients relating to coverage under their D&O Liability insurance programs.

Reflecting the borderless world in which companies operate, regulators around the globe are sharing information as part of a widespread effort to apply greater scrutiny to company and individual behaviour. Companies implicated in bribery and corruption in Malaysia or abroad are at risk of prosecution.

While a D&O policy is designed to protect directors’ and officers’ personal assets, it may not always respond to a bribery and corruption event in the manner expected. This is due to the serious nature of the conduct in question, given unlawful and dishonest conduct is not usually covered by an insurance policy.

Some D&O policies provide coverage to directors and officers for ‘reasonable’ costs and expenses incurred from formal investigations in any jurisdiction. However, in the context of the hardening global insurance market and the impacts of COVID-19, a D&O policy should provide cover for:

    • civil fines and penalties awarded in accordance with anti-bribery legislation to the extent insurable at law,
    • legal expenses incurred in relation to investigations related to anti-bribery laws, and
    • legal expenses in relation to prosecutions or follow-on civil suits after bribery and corruption allegations.

A company has more limited cover in relation to anti-bribery and corruption allegations compared to the protection offered to its directors and officers. However, coverage may be available if the allegations relate to the company’s securities.

Based on our discussions with key insurance carriers in Malaysia, coverage is unlikely if the claim relates to criminal fines and penalties, disgorgement orders, or civil recovery orders. Such restrictions on coverage are standard practice in D&O insurance based on the principle that such losses are uninsurable on public policy grounds.



With regulators sharpening their focus on corruption allegations and having taken a tough stance with the amended MACCA, businesses need to understand and manage their risk exposures. For companies looking to protect their reputation, the priority must lie in ensuring appropriate risk management frameworks are in place to prevent, detect and respond to corruption, while also reinforcing a culture of compliance.

To discuss your businesses’ directors’ and officers’ needs, please reach out to us at any time.


Jasminder Kaur

Chief Executive Officer – MP Honan




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