Winding up is a process in which the existence of a company is brought to an end, where assets of a company are collected and realised. The proceeds collected are used to discharge the company’s debts and liabilities and the remaining balance (if any) will be is distributed amongst the contributories according to their entitlement.
There are 2 modes of winding up:
Voluntary winding up (VWU); and
Compulsory i.e. Winding up by Court
The process flow for winding-up (both VWU and Compulsory) in the Companies Act 1965 (CA 1965) is retained in the Companies Act 2016 (CA 2016.) Section 619 (6) of the CA 2016 states that a company which is in the course of winding-up immediately before the commencement of the Act shall continue to be wound up under the relevant provisions in the Companies Act
1965.
*CA 2016 commenced on 31.1.2017.
Voluntary Winding Up
Voluntary winding is divided into 2 categories, namely members’ voluntary winding (MVWU) and Creditors’ voluntary winding up (CVWU):
Section 257 of the CA 1965 define members’ voluntary winding (MVWU) up as the liquidation of a solvent company where the directors have formed an opinion that the company will be able to pay its debts in full within the period of 12 months after the commencement of winding up.
Section 433 of the CA 2016 further defines (MVWU) as A winding up in the case of which a directors’ declaration under section 443 has been made; and a winding up in the case of which such a declaration has not been made is a “creditors voluntary winding up”.
Company Winding Up by Court
Winding up by Court is also known as a compulsory winding up. It begins with the presentation of a petition in Court. The petitioners include creditors, liquidator, the Registrar of companies or the Official Receiver under section 217(1) of the CA 1965 or section 464 of the CA 2016.
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Company De-registration
The Malaysian Companies Act empowers the Registrar to de-register a defunct company if he has reasonable cause to believe that the company is no longer carrying on business or in operation.
There are a few requirements to be fulfilled before Malaysia Company De-registration:
• The directors must obtain the resolution of the shareholders for the initiation of the application to strike off the name of the company from
the register on the basis that the company is not carrying on business or the company is not in operation
• The company has no assets and liabilities at the time when the application is made
• The company has no outstanding charges in the Register of Charges
• The company has no outstanding penalties or offer of compounds under the Companies Act 1965
• The company has no outstanding tax or other liabilities with any government department or agency
• The information of the company with the Registrar is up to date
• The company is not involved in any legal proceeding within or outside Malaysia
• The company has not made any return of capital to the shareholders
• The company is not a holding company or a subsidiary of another corporate body
• The company is not a “Guarantor Corporation”
• Required Documents for Malaysia Company De-registration:
• Covering Letter- stating reasons to support application
• Statement by Applicant
• Resolution of majority shareholders OR if director/s OR shareholder/s is/are untraceable, proof of attempts to trace the where about of such
directors or shareholders
• Management Accounts or Audited Financial Statements (if so requested)
• Waiver letters from creditors/tax clearance (if applicable)