In December 2018, Malaysia charged three Goldman Sachs subsidiaries and two employees under section 179 of the Capital Markets and Services Act 2007 (CMSA) for their role in the misappropriation of billions of dollars from the country’s state investment fund, 1MDB. On 9 August 2019, Malaysia went on to file criminal charges against 17 current and former executives of the Goldman Sachs subsidiaries under section 367(1) of the CMSA, which provides that company officers may be held liable for company offences. In this article, we will compare the threshold for personal liability for company offences under the securities legislation of Hong Kong, the Securities and Futures Ordinance (SFO), and that of Malaysia.

Comparing the relevant sections under the SFO and the CMSA

Under section 390 of the SFO, both the corporation and a director, or other officer, are liable for any offence committed by the corporation under the SFO if the prosecution proves that the offence was aided, abetted, counselled, procured, induced by or committed with the consent of or attributable to the recklessness by the individual. The burden remains on the prosecution throughout to prove its case against the individual beyond reasonable doubt.

In contrast, under section 367 of the CMSA, where a body corporate commits an offence under the CMSA or any regulation made thereunder, any director or other officer at the time of the offence is deemed to have committed that offence, unless he proves that (1) “the offence was committed without his consent or connivance” and that (2) “he exercised all such diligence to prevent the commission of the offence as he ought to have exercised, having regard to the nature of his functions in that capacity and to all the circumstances”. In other words, once the prosecution proves beyond reasonable doubt that the firm has committed an offence, the burden shifts to the officer to prove that he is not liable. This burden could be onerous: the officer needs to satisfy both limbs of the rebuttal.


Directors of securities firms working in both Hong Kong and Malaysia should be aware of the different thresholds for imposing criminal liability on individuals under the SFO and the CMSA. Whilst it appears that a prosecution is easier under the CMSA than under the SFO, it is prudent for directors and officers in all jurisdictions to adhere to stringent internal control measures and avoid contravention of relevant legislation. It is also advisable to keep proper records of all due diligence and other measures adopted to promote compliance.