The Prevention of Corruption Act (the "PCA") is the primary Indian law that addresses corruption in government agencies and public sector businesses in India. Earlier this year, the PCA was significantly amended by the Indian parliament (the "Amended Act"). The key amendments are summarized below.

Criminalizing Bribe-Giving

Previously, only bribe-takers were directly dealt with under the PCA. Bribe-givers could only be "indirectly" prosecuted through the PCA's abetment provisions.

It is now an offence, under the Amended Act, to give or offer an "undue advantage" to another person, with the intention to "induce" or "reward" a public servant to improperly perform a public duty. Under the Amended Act, a mere promise, coupled with the requisite intention, is sufficient to constitute an offence of bribe-giving. The bribetaker need not accept the "undue advantage" offered.

Notably, "undue advantage" is not limited to monetary bribes. Even gifts may constitute bribery under the Amended Act. This is similar to the United States' Foreign Corrupt Practices Act, where a bribe of any value constitutes corruption so long as the bribe-giver had a corrupt intention.

A convicted bribe-giver faces fines and/or an imprisonment term of up to 7 years. This is the same maximum punishment as for bribe-takers.

The criminalization of bribe-giving aligns India with the United Nations Convention Against Corruption (UNCAC), as well as the anti-corruption laws of jurisdictions such as the United States, the United Kingdom, and other Asian jurisdictions such as Singapore, Hong Kong, and Malaysia.

Curtailment of Immunity for Bribe-Givers

The immunity that was previously provided to bribe-givers under the PCA has also been curtailed under the Amended Act.

Bribe-givers are no longer fully protected, even if they reported a public servant's acceptance of the bribe or became a witness for the prosecution. Instead, the Amended Act limits immunity protection to bribe-givers who are "victims" of coercive-bribery, i.e, where the bribe-giver is "forced" to give bribes. To qualify for immunity, the coerced bribe-giver must report to the relevant authorities within 7 days of giving the bribe.

Third Party Intermediaries

Under the Amended Act, it is "immaterial" whether the bribe was given or promised directly, or through a third party.

The Amended Act therefore makes clear that individuals and companies are accountable for bribes given or offered by third parties to Indian public servants on their behalf.

Many companies in India work with multiple suppliers, vendors, contractors, and agents. The Amended Act therefore increases the pressure on companies to ensure that they establish a robust due diligence program for the local business partners and vendors that they work with in India.

Corporate Criminal Liability

The Amended Act also creates a distinct offence for corrupt conduct by "commercial organisations". "Commercial organisations", as defined under the Amended Act, include companies or partnerships incorporated or formed outside India, but carrying on business in India.

Section 9 of the Amended Act states that a "commercial organisation" may be held criminally liable if an "associated person" gives or promises to give any undue advantage to a public servant with the intention to:

  1. Obtain or retain business for such commercial organisation; or 
  2. Obtain or retain an advantage in the conduct of business for such commercial organisation.

An "associated person", under the Amended Act, is someone who "performs services for or on behalf of the commercial organisation." Although the determination of whether or not an individual is an "associated person" is "by reference to all the relevant circumstances", employees are "presumed" under the Amended Act to be "associated persons".

The broad definition of "associated persons" under the Amended Act mirrors similar language in the UK Bribery Act. Malaysia also recently introduced a similarly-worded provision for corporate liability in relation to corruption conduct (for more, please see our client update). In this regard, directors, partners, and even contractors performing services for or on behalf of commercial organisations are said to be "associated persons" under applicable UK and Malaysian laws. While not expressly stated in the Amended Act, it is likely that corrupt conduct by such parties will similarly expose a company to criminal liability in India.

The "Adequate Procedures" Defence

The Amended Act, similar to the UK Bribery Act, allows companies to assert a legal defence where "adequate procedures" are in place to prevent "associated person(s)" from undertaking corrupt conduct.

However, "adequate procedures" is not defined under the Amended Act. The Indian Government has also yet to issue prescribed guidelines for what would constitute "adequate procedures" under the Amended Act. Nevertheless, there is a plethora of guidance regarding the adequacy of compliance programs, that are issued by government agencies (such as the United States Department of Justice, Securities Exchange Commission, and the UK Ministry of Justice) and international bodies (such as the OECD).

Personal Criminal Liability for Corporate Officers

The Amended Act imposes personal liability on corporate officers found to have "consented or acted in connivance of the commercial organisation's corrupt conduct." Corporate officers include directors, managers, and company secretaries.

Convicted individuals may be punished with a fine and/or imprisonment between 3-7 years.


These amendments to India's PCA have raised the stakes for companies, including multinational corporations, that operate in India, in relation to corrupt activity by their corporate officers, employees or even third parties that they work or contract with.

While time will tell as to the nature and degree of enforcement by the Indian authorities regarding these recently enacted provisions, companies that operate in India may wish to take prudent steps to examine the adequacy of their compliance programs in the country, as well as monitor the vendors, distributors, and other third parties that they work with.

Our thanks to trainee Ahmed Razzaq for helping with this Client Alert.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.