India's New Anti-corruption Law Targets Bribe-givers And Establishes Corporate Liability Offence Modelled On The UK Bribery Act.

Legal News & Analysis – Asia Pacific - India - Regulatory & Compliance

Asia Pacific Legal Updates


14 August, 2018


India's New Anti-corruption Law Targets Bribe-givers And Establishes Corporate Liability Offence Modelled On The UK Bribery Act.


India's long-awaited Amended Prevention of Corruption Act 2018 came into force on 26 July. Originally proposed in 2013, the amendments introduce a new regime and highlight the emerging focus in Asia on supply-side bribery and corporate liability. Companies and businesses operating in India should familiarise themselves with the new provisions and ensure that they implement adequate compliance procedures.

This e-bulletin summarises the main amendments relevant to corporates.


New offence for bribe-givers


The PCA 1988 was criticised as it only allowed for prosecution of supply-side bribery through its abetment offences. As such, private sector players who offered or gave bribes could only be prosecuted for assisting ("abetting") the public officials they had bribed. Whilst there were occasional prosecutions, the PCA's provisions lacked depth and force.


Section 8 of the Amended PCA rectifies this by making it an offence for any person to give (or promise to give) an undue advantage (bribe) to another person with the intention of inducing or rewarding a public servant to improperly perform his/her public duty. It is immaterial whether the person to whom the bribe is promised/given is the public servant in question, likewise whether the bribe is given/promised directly or through a third party. The key issue is whether there is an intention on the part of the giver to induce or reward a public servant to improperly perform his/her duties.


It is a defence for a bribe-giver to show that he/she was compelled to give the undue advantage, provided that they report the matter within 7 days.


If found guilty, the bribe-giver may be punished by up to seven years' imprisonment or a fine (or both).


Corporate liability


Inspired by the UK Bribery Act, the Amended PCA expressly prohibits bribery by commercial organisations. "Commercial organisation" includes bodies/partnerships incorporated/formed in India as well as foreign entities carrying out part of their business there.


Section 9 provides that a commercial organisation will be punished where:


  • any person associated with the organisation
  • promises/gives any undue advantage
  • to a public servant
  • with the intention of obtaining or retaining business or a business advantage for the commercial organisation.


A person is "associated with" a commercial organisation if he/she performs services for or on its behalf.


While this certainly includes employees, it may also include agents, subsidiaries and third parties.


In line with the UK Bribery Act, it is a defence for a commercial organisation to show that it had adequate compliance procedures in place to prevent persons associated with it from bribing public servants. The central government will issue guidelines to help illustrate "adequate compliance procedures", as well as the parameters and methodology for setting corporate fines.


Liability of directors and managers


Where an offence under section 9 is committed by a commercial organisation with the consent or connivance of a director, manager, secretary or other officer, section 10 establishes liability of those individuals too. As such, liability of senior management, as well as line managers, is caught, provided they have given their approval or have been implicated in the bribery.


Gifts and entertainment


There are no de minimis thresholds under the Amended PCA and it deletes a presumption under the old Act that "trivial gifts" to public servants were acceptable. This is a grey area as subordinate service rules issued by the state and central government to public servants permit the acceptance of small gifts and hospitality (although the thresholds are very low).


In light of the above, businesses operating in India should ensure that they have clear and transparent approval procedures in place to ensure that non-monetary benefits offered to public servants do not fall foul of the Amended PCA. It is likely that thresholds should be modest and approval procedures rigorous.


Liability for public sector bribery only


Whilst the amendments increase the potential liability for companies and their associates for giving or offering bribes, it is important to note that the revisions continue to apply only to the bribery of public servants. There is no prohibition on bribery within the private sector. However, it is worth remembering that the definition of public official under Indian law is broad and has been ruled by the Supreme Court to including private banking executives.




Since enforcement under the PCA has to date focused on individuals, the Amended PCA represents an important new tool for India's domestic enforcement authorities in their fight against corruption. It remains to be seen how these provisions are deployed, in particular whether we see India's law enforcement authorities shifting their focus quickly to supply side bribery and the conduct of corporates. In recent years, Thailand, Indonesia and Malaysia have all enacted legislation to help their domestic authorities prosecute companies for bribery. However, we are yet to see prosecutions of companies under these provisions. Regardless, amidst a culture of corporate gift-giving and hospitality in the region, the advent of corporate bribery offences shines a spotlight on companies' compliance policies.


herbert smith Freehills


For further information, please contact:


Kyle Wombolt, Partner, Herbert Smith Freehills