It can be difficult for some companies in Malaysia to meet the requirements for voluntary deregistration. Winding up of a company in Malaysia is a process where company assets are liquidated, outstanding matters re-finalized and it ceases to exist as a company or it is the process of bringing an end to a company. All the assets of the company are sold off and the amount of these assets then used to pay off the company’s debts. In case if the amount of the assets is greater than debts then the remaining amount is returned to the shareholders of the company. Here I am going to share with you brief overview of winding up of a company in Malaysia.
Generally, we refer to the term Liquidation or winding up when to refer to the process of winding up of a company. But on the other hand in Malaysia and in few other countries such as Singapore and UK these are the correct term to be used. In Malaysia the term ‘bankruptcy’ is for individuals and the term bankrupt is used for the single individual.
Aims of Malaysia Company Winding Up
It is really useful for you to look bank and understand the aims of winding up of a company in Malaysia. The process of winding up of a company allows the assets of the company to be distributed back to the shareholders after paying off all the debts of the company. When winding up an insolvent company in Malaysia there is three main aims of the winding up procedure.
- It allows a fair and orderly distribution of the company’s assets among the creditors. The fair distribution of company’s assets also includes public interests.
- Winding up of an insolvent company is beneficial for both business owner and community. As it is not beneficial for the business community and it will continue to trade and incur even more debts.
- Winding up of a company allows an appropriately qualified person to investigate the affairs of the company.
Methods of Malaysia Company Winding Up
In Malaysia there are certain methods which are used to winding up of a company, these methods are as follows.
Voluntary Winding Up
This is the first form of winding up in which company itself starts the winding up. This process is initiated by the company itself, through the shareholders and directors, in deciding that the company should be wound up. Voluntary winding up doesn’t involve Malaysian court at all.
A company could be in well-running condition and also rich in terms of assets. The shareholders and board of directors of the company may decide that they wish to wind up the company. This method is also called members voluntary liquidation or creditor’s voluntary liquidation.
Compulsory Winding Up
In Malaysia, it is a very common method of winding up of a company. In this form of Malaysia Company winding up company is unable to pay its debts. A creditor can send out the demand letter to the company who is owed more than RM 500. If the company is failed to pay the debt of this person within 21 days then there is a statutory presumption that the company is now insolvent. In compulsory winding up process board of directors and shareholders can’t take apart. The court process winding up or compulsory winding up will require mandatory advertisement as well as inserting of a notice in the government Gazette.