What is the procedure for voluntary winding up? Who can apply for voluntary winding up? What is difference between voluntary winding up of a company by members and by creditors? Factor differentiating a member's voluntary winding up and a creditor's voluntary winding up. Insolvency and directors' duties in Malaysia.
Circumstances in which company may be wound up voluntarily
A company may be wound up voluntarily if the company so resolves by special resolution.
A company shall—
(a) within seven days after the passing of a resolution for voluntarily winding up lodge a printed copy of the resolution with the Registrar; and
(b) within ten days after the passing of the resolution give notice of the resolution in a newspaper circulating generally throughout Malaysia.
Where the directors of a company have made a statutory declaration in the prescribed form which has been lodged with the Registrar and with the Official Receiver—
(a) that the company cannot by reason of its liabilities continue its business; and
(b) that meetings of the company and of its creditors have been summoned for a date within one month of the date of the declaration,
the directors shall forthwith appoint an approved liquidator to be the provisional liquidator.
A provisional liquidator shall have and may exercise all the functions and powers of a liquidator in a creditors' winding up subject to such limitations and restrictions as may be prescribed by the rules.
The appointment of a provisional liquidator shall continue for one month from the date of his appointment or for such further period as the Official Receiver may allow in any particular case or until the appointment of a liquidator (whichever first occurs).
Notice of the appointment of a provisional liquidator together with a copy of the declaration lodged with the Registrar shall be advertised within fourteen days of the appointment of the provisional liquidator in some newspaper circulating generally throughout Malaysia.
A provisional liquidator shall be entitled to receive such salary or remuneration by way of percentage or otherwise as is prescribed.
Date of commencement of winding up
A voluntary winding up shall commence—
(a) where a provisional liquidator has been appointed before the resolution for voluntary winding up was passed, at the time when the declaration was lodged with the Registrar; and
(b) in any other case, at the time of the passing of the resolution for voluntary winding up.
Effect of voluntary winding up
The company shall from the commencement of the winding up cease to carry on its business, except so far as is in the opinion of the liquidator required for the beneficial winding up, but the corporate state and corporate powers of the company shall notwithstanding anything to the contrary in its articles, continue until it is dissolved.
Any transfer of shares, not being a transfer made to or with the sanction of the liquidator, and any alteration in the status of the members made after the commencement of the winding up, shall be void.
Meeting of creditors
The company shall cause a meeting of the creditors of the company to be summoned for the day, or the day next following the day, on which there is to be held the meeting at which the resolution for voluntary winding up is to be proposed, and shall cause the notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company.
The company shall convene the meeting at a time and place convenient to the majority in value of the creditors and shall—
(a) give to the creditors at least seven clear days' notice by post of the meeting; and
(b) send to each creditor with the notice a statement showing the names of all creditors and the amounts of their claims.
The company shall cause notice of the meeting of the creditors to be advertised at least seven days before the date of the meeting in a newspaper circulating generally throughout Malaysia.
The directors of the company shall—
(a) cause a full statement of the company's affairs showing in respect of assets the method and manner in which the valuation of the assets was arrived at, together with a list of the creditors and the estimated amount of their claims to be laid before the meeting of creditors; and (b) appoint one of their number to attend the meeting.
The director so appointed and the secretary shall attend the meeting and disclose to the meeting the company's affairs and the circumstances leading up to the proposed winding up.
The creditors may appoint one of their number or the director appointed to preside at the meeting.
The company shall and the creditors may at their respective meetings nominate a person to be liquidator for the purpose of winding up the affairs and distributing the assets of the company, and if the creditors and the company nominate different persons the person nominated by the creditors shall be liquidator, and if no person is nominated by the creditors the person nominated by the company shall be liquidator.
Where different persons are nominated any director, member or creditor may, within seven days after the date on which the nomination was made by the creditors, apply to the Court for an order directing that the person nominated as liquidator by the company shall be liquidator instead of or jointly with the person nominated by the creditors.
The committee of inspection, or if there is no such committee the creditors, may fix the remuneration to be paid to the liquidator.
On the appointment of a liquidator all the powers of the directors shall cease, except so far as the committee of inspection, or if there is no such committee the creditors, approve the continuance.
Committee of inspection
The creditors at any meeting may, if they think fit, appoint a committee of inspection consisting of not more than five persons, whether creditors or not and if such a committee is appointed the company may, either at the meeting at which the resolution for voluntary winding up is passed or at any time subsequently in general meeting, appoint such number of persons but not more than five as it thinks fit to act as members of the committee.
The creditors may, if they think fit, resolve that all or any of the persons so appointed by the company ought not to be members of the committee of inspection and, if the creditors so resolve, the persons mentioned in the resolution shall not, unless the Court otherwise directs, be qualified to act as members of the committee, and on any application to the Court the Court may, if it thinks fit, appoint other persons to act as such members in place of the persons mentioned in the resolution.
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