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These guidelines are provided for the responses of Incorp E-training, Questionnaire, and Request for Advice furnished during the E-training on 17th April 2020.
By virtue of Section 433 of the Companies Act 2016, the following persons can be appointed to act as a Liquidator of a winding-up company:-
(a) Official Receiver (Director General of Insolvency);
(b) Approved Liquidator (a member from Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants who is holding a Liquidator License);
(c) Officer of the company (only apply to a Members’ Voluntary Winding Up & Creditors’ Voluntary Winding Up); and Any person with the leave of the Court
The following are the impacts of winding up a company:-
(a) Cessation of company’s business but its corporate state and corporate power shall remain until it is dissolved;
(b) Termination of contracts of employment;
(c) Avoidance of disposition of company’s assets;
(d) Avoidance of transfer of shares;
(e) Avoidance of uncompleted execution; and
(f) The Directors’ powers to control the company cease. The Liquidator will take charge of the distribution of assets and take control of the matters of the company. Pursuant to Section 199(1) of the Companies Act 2016, a Director of an insolvent company is not automatically disqualified from managing another company unless the Registrar applies to the Court for an order disqualifying the Director from holding office as a Director of a company or being concerned with or taking part in the management of a company, whether directly or indirectly. To obtain such an order, the Registrar will have to show at least one of the following:-
(a) Within the last five years, the Director has been holding office as Director of two or more companies that went into liquidation by reason of insolvency and the Directors’ conduct as a Director contributed wholly or partly to the liquidation;
(b) The Director has contravened his duties as a Director; or
(c) The Director has habitually contravened the Companies Act 2016. Pursuant thereto, the Registrar shall have the power to remove the Director’s name who has been disqualified under Section 199 of the Companies Act 2016 from the register.
According to Guidelines on Application to Strike Off The Name of a Company Under Section 550 of The Companies Act 2016 published by SSM, where a company has commenced operation, it must settle all outstanding tax and obtain a tax clearance prior to the filing of the application for Striking Off. However, according to our past experience, it may not be necessary to get a tax clearance letter for a dormant company prior to application as the Inland Revenue Board only recognizes closure of the company upon publication of the struck-off name in the Gazette. For a company closed down by Members’ Voluntary Winding Up, it is necessary to obtain a tax clearance letter to enable the liquidator to fully wind up the affairs of the company and to call for the final meeting.
Striking Off – at least 6 months from the date of submission of Striking Off application to SSM. Members’ Voluntary Winding up – at least one year from the date of commencement of Winding Up.
When a Director/Shareholder is declared bankrupt, the Director-General of Insolvency shall be the receiver, manager, administrator, and trustee of all properties of the Director/Shareholder and shall represent the Director/Shareholder for all the purposes of the winding-up. The company need not do anything as the Liquidator will take charge of the distribution of assets and take control of the matters and affairs of the company.
No. The process for the dissolution of a Limited Liability Partnership is different from the company. A Limited
Liability Partnership (“LLP”) may be dissolved:-
(a) by way of Court order;
(b) voluntary winding up; or
(c) striking off by Registrar.
The common mode of dissolving an LLP will be applying for voluntary winding up provided that:-
(a) it ceased to operate;
(b) all debts and liabilities have been discharged;
(c) application is preceded by way of notice to all partners and published in a national newspaper of the intention to winding up; and
(d) no objection from the Inland Revenue Board, creditor, and partner.
The Registrar will declare the LLP is dissolved if no objection is received after thirty (30) days from the date of the application. Thereafter, subject to the LLP agreement, the LLP is entitled to distribute its surplus assets (if any) among its partners according to their respective rights and interests. Once the surplus asset has been distributed, the compliance officer is required to notify the Registrar within fourteen (14) days from the date of which the distribution has been completed. The declaration of dissolution is considered effective upon submission of the notification to the Registrar.
A LLP can be wound up by Court under the same circumstances a company can be wound up by court as provided under the Companies Act 1965 (Now Companies Act 2016). The Limited Liability Partnership Act 2012 (“LLP Act 2012”) provides that the relevant provisions of the Companies Act 1965 related to winding up by Court will be applicable to LLP.
A LLP will be struck off the register if the Registrar has reason to believe that:-
There is no guideline issued for application to strike-off LLP under LLP Act 2012. Hence, we trust that no application is allowed under the LLP Act 2012.
The company can still apply for striking off provided that the Shareholder and/or Director agree to waive the amount due and a copy of the written consent duly executed by the Shareholder and/or Director needed to be submitted to SSM together with the Strike Off application form.
In a Members’ Voluntary Winding Up, the company is solvent, i.e. able to pay its debts in full to all the creditors whereas, in a Creditors’ Voluntary Winding Up, the company is insolvent, i.e. unable to pay its debts to all the creditors. Our Winding-Up Fees is applicable to Members’ Voluntary Winding Up only which is RM10,000 to RM20,000 depending on the complexity.
Powers of Directors and/or Shareholders shall cease once a Liquidator is appointed. The Liquidator manages the affairs of the company until it is fully wound up. So, if the owner runs away, the liquidation process still goes on.
One of the criteria for Strike Off is no assets and no liabilities. All liabilities should preferably be settled before applying for Strike Off. Should there be unpaid bills after the Strike Off, the Directors/Shareholders may need to settle the bills themselves otherwise the company may be forced to be reinstated to face the legal proceedings if any. This is a costly and time-consuming process.
No. The Director will not automatically be backlisted unless the Registrar applies to the Court for an order disqualifying the Director from holding office as a Director of a company and upon receipt of the Court order, the Registrar removes the Director’s name from the register.
Since Section 199(1) of the Companies Act 2016 only applied to the liquidation of an insolvent company or companies that went into liquidation by reason of insolvency, it is submitted that Section 199(1) of the Companies Act 2016 does not apply in the case of a Members’ Voluntary Winding Up. Hence, a Director will not get blacklisted in the case of a Members’ Voluntary Winding Up.
Once a Director is declared bankrupt, the Director cannot continue to be a Director of any company or take part in the management of any company except with the permission of the Official Receiver or with the leave of the Court.
In the case of a sole Director, in the event the office of a sole Director is vacated due to undischarged bankrupt, the Secretary shall, as soon as practicable, call a meeting of the next of kin, other personal representatives or a meeting of the members, as the case may be, to appoint a new Director.
If a company has more than one Director, the undischarged bankrupt shall just vacate his office.
When a shareholder is declared bankrupt, it will not affect the company as the Shareholder and the company is two separate legal entities. All the properties of the Shareholder shall be automatically vested on the Director-General of Insolvency. Hence, the shareholders’ shares in the company will also vest with the Director-General of Insolvency. The Director-General of Insolvency shall be the receiver, manager, administrator, and trustee of all properties of the Shareholder.
We only provide Winding Up Services for Members’ Voluntary Winding Up in which one of the Directors of the Company is acting as Liquidator. Hence, no fee is payable to the Liquidator and our fees here will be treated as the estimated expenses of Winding Up.
For Voluntary Winding Up by Members, an officer of the Company is appointed to act as the Liquidator whereas in Voluntary Winding Up by Creditors, an officer of the Company can be appointed to act as the Liquidator provided that consent from the majority of the Creditors are obtained. In the case of a Compulsory Winding Up by the Court, the Court may appoint an Approved Liquidator or the Official Receiver to take charge.
A Company Secretary is able to act as a Liquidator in Members’ Voluntary Winding-Up and Creditors’ Voluntary Winding Up (subject to creditors’ approval in Creditors’ Voluntary Winding Up). However, in practice, it is advisable that the Company Secretary possess a Liquidator Licence granted by the Accountant General’s Office pursuant to Section 433(3) of the Companies Act 2016.
Section 433(3) and (4) of the Companies Act 2016 provide that any person who is a member of a recognized professional body may apply to the Minister of Finance in order to be approved as a liquidator. The Minister of Finance may approve such person as a liquidator if he is satisfied with the experience and capacity of the person.
There was a prescription notice P.U. (B) 123/2018 gazetted to state that the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants are the only two recognized professional bodies under Section 433 of the Companies Act 2016.
There is no conflict of interest if the Auditor of the company is acting as the Liquidator provided that the Auditor has obtained a Liquidator License. Not anyone can be appointed to act as Liquidator in a Members’ Voluntary Winding Up. Besides the Approved Liquidator, only the officer of the Company can act as one.
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