- What are the common methods for closure of a company?
There are two ways to close a company which are striking off or winding up. Striking off a company requires you to make an application to Suruhanjaya Syarikat Malaysia (SSM) in which the company need to fulfil some criteria first. Striking off not an easy process as you will need to resolve many things which probably will require a lot of your time, because one of the important criteria of striking off a company is to ensure that there are no balances in the accounts. One of the benefits of striking off a company is that directors of a company are allowed to change their mind regarding the previous closure of their company. While, another method of closing down a company can be carried out by winding up. The winding up of a company is known as ‘liquidation’. In other words, 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. The responsibility of winding up of a company lies with the liquidator. When a liquidator has already been appointed, all the powers of directors and shareholders shall cease. The liquidator will take charge to ensure that the company is properly dissolved.
- What is the Requirement for striking off a company?
- The company must not in operation anymore at the time of applying for striking off
- Must get consent for majority of shareholder
- The company has no fixed assets, current asset and liabilities at the time when the application is made
- The company current account must be closed before application
- The company has no outstanding to CCM, Tax or other liabilities with any Government Department or Agency (including whatever penalties and compounds)
- The information of the company with CCM 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 shareholder
- The company is not a holding or subsidiary of another company
- The company is not a “Guarantor Corporation
- What are the criteria considered by power of the Registrar to strike off a company pursuant to Section 550 CA 2016?
The criteria are:
- Company status is existing
- Company fails to lodge an annual return for three or more consecutive years
- No unsatisfied charges
- No outstanding compound
- Company is not a party to legal proceedings
- No liquidator is acting
- No application has been made
- What if the Registrar receive an objection to striking off application?
If the Registrar receives any objection from any person following the notification issued under section 551(1), the Registrar will not proceed with the application to strike off a company unless the Registrar is satisfied that the objection has been withdrawn, any facts on which the objection is based are not or are no longer correct, or the objection is frivolous and vexatious.
- How long is the striking off process of a company in Malaysia?
If SSM accepts the submissions, the striking off process takes around six to 12 months. SSM is likely to accept a striking off request for a company that has been dormant during the entire period, has been inactive or has had minimal sales, or has very low paid-up share capital.
- What are the two type of winding up a company according to Companies Act 2016?
- The Court-Ordered Winding Up or compulsory winding up is where the winding up process of an insolvent company is triggered by a court on the application of one or more parties. The process of winding up the affairs of a company is carried out by the Official Receiver, currently known as the Director General of Insolvency or a liquidator. This type of winding up of a company requires the petitioner to state the grounds of winding up of a company.
- The Members’ Voluntary Liquidation (MVL) is the liquidation of a solvent company where the directors must form an opinion that the company will be able to pay its debts in full within a period of twelve (12) months after the commencement of winding up of a company.
- What are the circumstances that may direct a company to be dissolved by court order?
- The company is unable to pay debts owing to financial institutions, suppliers or any other related entities
- One or more of its directors has acted in his/her personal interest or unjustly to other directors or acted against the interest of the company and has been served a court order
- The court is convinced that it is equitable that this company should be dissolved
- The number of directors or shareholders is reduced to zero (a private limited company in Malaysia requires one or more directors/shareholders)
- No business operations have been started since the day of registration (period of one year) or business operations are suspended for one year
- Where the Constitution of the company sets an expiry date for the business