A New Dawn for Business in Malaysia
company, where its assets are collected
and realized. In Malaysia, we have two
modes of winding up:
as a voluntary winding up for a solvent
company. The process is initiated by
the company itself, through its directors
and shareholders. This process does not
involve the court at all. The directors and
shareholders may decide that they wish
to wind up the company, sell all of the
the shareholders.
A second form of voluntary winding up
is where the company is insolvent. This is
a situation where the company is unable
to pay off all of its debts. However, this
type of process can still be initiated by
its directors and shareholders. A creditor
who is owed money by a company cannot
object to a company deciding to wind
itself up or the company deciding to close
down its business.
for the winding up of a company to be done
through the court process. This is known as
a compulsory winding up. It is because the
company is unable to pay its debts.
Previously, in Companies Act 1965,
a creditor who is owed more than RM500
could send out a demand letter to the
company to pay within 21 days pursuant
to section 218 of the Companies Act.
Now, Companies Act 2016 brings a major
change. If a company is indebted in a sum
of more than RM10,000, the creditor can
issue a letter of demand under section 466
of the Companies Act 2016.
If the company fails to pay the
amount demanded in this letter, there is
a statutory presumption that the company
is now insolvent. The creditor can now
file the court paper, known as a winding
up petition, to seek a court order to wind
up the company. The court process for
the winding up petition will require
mandatory advertisement and insertion of
a notice in the Government Gazette. If the
company disputes or objects to the sum
demanded, it is important for a company
to take steps to prevent the filing of a
winding up petition.
that the commencement of the winding up
shall be at the date of the winding up order.
The previous Companies Act 1965 stated it
should start when the petition is presented
at the court.
also makes some significant changes to
Malaysia's corporate insolvency regime
and introduces two types of Corporate
Rescue Mechanism.
Division 8 of Companies Act 2016
which consists of section 403 section
430.
Part III Division 8 of Companies Act
2016 which consists of section 395
section 402.
its directors or a creditor, to apply to
the court to place the management of
a company in the hands of a qualified
insolvency practitioner known as a
"judicial manager." But, this application
is not applicable to a company which is
a licensed institution or an operator of
a designated payment system regulated
under the laws enforced by Central Bank
of Malaysia and a company which is
subjected to Capital Markets and Services
Act 2007 (section 403).
A judicial management order directs
that the affairs, business and property
of the company shall be managed by
the judicial manager for the period in
which the order is in force, which is six
months with the possibility of a further
Solicitor of the High Court of Malaya. She is also
a member of the Malaysian Bar.
of the High Court of Malaya. She is also a
member of the Malaysian Bar.
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Kuala Lumpur, Malaysia 59000
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