Section 17A of MACC Act to Take Effect on 1 June 2020: Are you Ready?

On 21.5.2020, the Prime Minister’s Office announced that section 17A of the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”) remains on course to be implemented on 1.6.2020, despite requests from businesses for its implementation to be put on hold due to the Covid-19 pandemic.

In this article, we will discuss some pertinent points businesses ought to consider in anticipation of the implementation of this provision.

1. What is section 17A of the MACC Act?

Under section 17A of the MACC Act, a commercial organisation, together with its “director, controller, officer or partner”; or persons who are “concerned in the management of its affairs”, may be prosecuted if its employees and/or any persons associated with the organisation carry out corrupt practices for the benefit or advantage of the organisation. In other words, the corrupt practices of an employee and/or a company’s associated persons may be imputed to both the company and the aforementioned relevant personnel pursuant to this provision.

This may be avoided if the commercial organisation has “adequate procedures” in place.

For our discussion on the wordings of section 17A, please see our earlier client alert (http://shooklin.com.my/legal-update/how-adequate-are-your-adequate-procedures/).

2. What preparations should you and your business have to make?

Commercial organisations have been given a moratorium period of approximately 2 years, i.e. from 5.4.2018 when section 17A of the MACC Act was passed until 1.6.2020 to ensure that “adequate procedures” are in place to address any corruption risks that the commercial organisations are exposed to.

These “adequate procedures” are important as they can be invoked as a defence to a section 17A charge.

3. What is meant by “adequate procedures”?

The Prime Minister’s Office has issued Ministerial Guidelines on what would be such “adequate procedures”. In essence, the Guidelines outline the “T.R.U.S.T” principles for the establishing of “adequate procedures”, i.e.:

Top level commitment
Risk assessment
Undertake control measures
Systematic review, monitoring and enforcement
Training and communication

4. The implementation of section 17A is less than a week away and your company has not established any “adequate procedures”. What should you do now?

The failure to establish any “adequate procedures” is not an offence per se under the MACC Act. However, having “adequate procedures” in place may afford businesses a defence should they be investigated or charged under section 17A. It is therefore not only prudent but advisable for businesses to take immediate steps to establish “adequate procedures” if they have not already done so.

5. What else do you need to know?

In line with section 17A of the MACC Act, Bursa Malaysia has similarly amended the Main and ACE Market Listing Requirements to include the requirements for all listed issuers to have anti-corruption measures in place. In addition, listed issuers are required to publish their general anti-corruption policy as well as whistle-blowing policy on their websites. These amendments will come into force on 1.6.2020. Listed companies would be expected to observe such requirements.

For our discussion on the amendments on the Main and ACE Market Listing Requirements, please see our earlier client alert (http://shooklin.com.my/legal-update/bursa-malaysia-berhad-public-consultation-papers-a-proposed-amendments-to-the-main-and-ace-market-listing-requirements-in-the-areas-of-anti-corruption-and-whistle-blowing-measures-and-b-driving/).

Please note that this article does not and is not intended to constitute legal advice. It is for general information purposes only.

If you have any questions or require any legal advice, please do not hesitate to get in touch with us.

Jal Othman

Partner

Tel: +603-20311788 (Ext.204)

[email protected]

Yoong Sin Min

Partner

Tel: +603-20311788 (Ext.242)

[email protected]

Dhaniah Ahmad