AS global scrutiny of corporate wrongdoing intensifies, governments are being pressed to close gaps in legal frameworks that allow powerful organisations to escape accountability.
The United Kingdom’s (UK) proposed Crime and Policing Bill 2025, which builds on the Economic Crime and Corporate Transparency Act 2023 (ECCTA), signals a fundamental shift in how corporate criminal liability is approached.
For Malaysia, grappling with recurring corporate scandals and persistent enforcement gaps these developments offer a timely lesson in legal reform.
The UK’s current reforms break from its traditionally narrow “identification principle”, under which corporate criminal liability hinged on proving that the directing mind and will (typically, board-level executives) possessed the necessary criminal intent.
This model had long struggled to hold large, complex corporations accountable, as misconduct often occurred several layers below board level.
The result was a form of de facto immunity for major corporations an issue Malaysia knows too well from high-profile cases like 1MDB.
The ECCTA, along with the proposed Crime and Policing Bill, challenges and reshapes the existing status quo.
The UK is introducing a broader “senior manager” test that attributes liability to a corporate entity if a senior manager, acting within their actual or apparent authority, commits an offence.
Initially limited to economic crimes such as fraud and bribery, the new Bill proposes to expand this principle to all criminal offences, including environmental breaches, health and safety violations, and potentially even regulatory offences under data protection or competition law.
Should Malaysia give serious consideration to this matter?
The relevance for Malaysia
Malaysia has made progress in recent years with frameworks like the corporate liability provision under Section 17A of the Malaysian Anti-Corruption Commission Act 2009, which imposes liability on companies for bribery committed by associated persons.
But unlike the UK’s evolving regime, Malaysia’s framework remains limited in scope. It does not yet offer a comprehensive system that attributes liability to senior individuals beyond bribery, nor does it extend to a broader array of corporate misconduct.
In an era where corporate actors are transnational, crimes like money laundering, tax evasion, and environmental damage frequently cut across jurisdictions.
Yet Malaysia’s legal system lacks the robust extraterritorial reach that both ECCTA and the proposed UK Bill provide. The UK reforms allow for corporate liability even where only part of the conduct occurs in the UK, or where the victim is a UK national.
Malaysia must adopt a similarly outward-facing approach, particularly given the global footprint of its GLCs, listed companies, and state-linked institutions.
Why reform is crucial now
First, Malaysia is at a credibility crossroads. Although enforcement agencies have made strides in tackling corruption and economic crime, public confidence in institutional accountability remains fragile.
Legal reform that closes loopholes in corporate criminal liability can help restore faith in the system and signal a genuine commitment to good governance.
Second, the global enforcement landscape is shifting. The creation of a new taskforce involving the UK, France, and Switzerland aimed at prosecuting international financial crime shows that enforcement is becoming more collaborative and less tolerant of inaction.
The US, traditionally a leader in anti-corruption enforcement via the Foreign Corrupt Practices Act, has slowed enforcement. This vacuum is being filled by European actors.
Malaysia, a regional economic hub, risks reputational harm and legal isolation if it does not modernise its approach.
Third, as ESG (environmental, social and governance) accountability becomes mainstream, companies are being judged not just by profitability but by compliance and integrity.
A modern liability regime that deters wrongdoing by making corporations answerable for the actions of their senior personnel aligns with this global shift.
This is especially pertinent given Malaysia’s reliance on natural resources, extractive industries, and a growing digital economy sector where regulatory breaches can have far-reaching effects.
Key takeaways for Malaysian reform
Malaysia should consider key corporate liability reforms, drawing from the UK’s legal framework. First, the basis of liability should be broadened beyond bribery to encompass all serious economic crimes, environmental offences, and regulatory breaches, ensuring comprehensive accountability.
A ‘Senior Manager’ test should also be introduced, holding companies liable for misconduct by individuals with significant decision-making authority, even if they are not board members.
Additionally, the scope of authority must be clarified to include “apparent authority,” preventing firms from denying liability for criminal acts carried out in role-relevant contexts.
Malaysia should also enhance the extraterritorial application of its laws, enabling prosecution of offences that affect Malaysian interests, even when elements occur abroad.
Finally, to foster a culture of prevention, Malaysia could adopt a mechanism similar to the UK’s Deferred Prosecution Agreement regime, which encourages companies to implement robust compliance programs and self-report misconduct in exchange for more flexible enforcement.
These reforms would significantly strengthen corporate accountability and regulatory integrity. ‒ June 26, 2025
R. Paneir Selvam is the principal consultant of Arunachala Research & Consultancy Sdn Bhd, a think tank specialising in strategic national and geopolitical matters.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
Main image: Shutterstock
