There are 4 ways a Sendirian Berhad company can be closed or terminated. They are by,
- Shareholders’ winding up,
- Creditors winding up,
- Court winding up, and
- Striking off the company’s name from the Register.
The result however will be the same. Either way, the company will cease to exist thereafter. It’s not advisable to just abandon your company and pretend that it doesn’t exist because it will continue to exist if not wound up, with all its annual requirements it must fulfil as usual. This can result in you and your Company Secretary being fined and blacklisted by the Companies Commission for non-compliance.
- SHAREHOLDERS’ WINDING UP
Where the company is solvent, the shareholders can wind up the company simply by passing a special resolution to wind it up. The procedure is as follows;
- 1stly, the Directors must make a written declaration in FORM 66 stating that they have made an enquiry and believe that the company is solvent and are able to fully pay its debt within 1 year after the winding up process. The penalty for making this declaration without having reasonable ground is either 3 years imprisonment or RM10,000 fine or both. This means that a company can only be wound up by its shareholders if it is solvent.
- 2ndly, this declaration must then be lodged with the Companies Commission stating that it is solvent and has resolved to wind up by a special resolution.
- 3rdly, after that the Secretary will decide the date of the general meeting to pass the special resolution. After that the meeting will be held and the special resolution passed,
- 4thly, the company must then lodge a copy of that resolution in FORM 11 to the Registrar within 7 days, and advertise the notice of that resolution in any Malaysian newspaper within 10 days.
- 5thly, a liquidator to realise the company’s assets, pay off creditors and return surplus assets to shareholders will then be appointed by the shareholders themselves, and he need not be an approved liquidator. They can be the shareholders themselves, directors or the Secretary. But if it turns out later that the company is unable to fully pay its creditors, the liquidator must call all the company’s creditors for a meeting and lay before them its statement of assets and liabilities. The creditors can also appoint its own liquidator to wind up the company.
- 6thly, within 14 days after his appointment, the liquidator must lodge FORM 71 with the Companies Commission and the Official Receiver informing his appointment and his office address.
- 7thly, he will then notify his appointment to the company’s solicitor, auditor, insurer, banker, employees, suppliers and customers.
- 8thly, after that he will take over all the company’s properties, bank accounts, investments and others and transfer them to his name as liquidator. The liquidation process will begin thereafter where all assets will be sold, debts paid and any surplus returned to the shareholders.
- CREDITORS’ WINDING UP
Where the company is insolvent and cannot continue its business, Creditors’ winding up can be initiated to close the company. The procedure is as follows;
- 1stly, the Directors must convene a board meeting and make a statutory declaration in FORM 65A stating that the company, because of its liabilities, cannot continue its business, and a creditors’ meeting have been summoned within one month. The Board must also appoint an approved liquidator as provisional liquidator. He must lodge a notice of his appointment and office address in FORM 72 to the Registrar. The date of the EGM and creditor’s meeting must be determined too. If the company is listed on Bursa Malaysia, an immediate announcement after trading hours must be authorised to be made to the Bursa. Thereafter the Notice for the EGM and creditors’ meeting will be sent out to the members.
- 2ndly, the EGM will be convened on the stated date while the creditors’ meeting on the same day or the next day. The special resolution will be passed therein to wind up the company and an approved liquidator will be nominated to conduct the winding up.
- 3rdly, a notice of the resolution in FORM 11 must be lodged to the Companies Commission within 7 days, and within 10 days, a notice in any Malaysian newspaper.
- 4thly after that creditors’ meeting will be held where the company secretary will disclose its affairs and the circumstances leading up to the winding up. The list of all the creditors as well as the amount each are owed will be laid. A liquidator and inspection committee will be appointed by the creditors, and within 14 day they must lodge FORM 72 with the Companies Commission informing his appointment and address.
- 5thly, the liquidator will then notify the auditor, banker, solicitor, insurer, suppliers, customers and its staffs of his appointment.
- 6thly, he will then take control of the company’s assets and transfer them to his name as liquidator, close the company’s account and open a new one in his name. After that all assets will be sold, investments liquidated, creditors paid and any surplus returned to the shareholders.
- WINDING UP BY THE COURT
This is where a person who has a standing to sue, files a petition to the Court to wind up the company and the Court thereafter makes an order to that effect. If the court allows the petition and orders the company to be wound up, the petitioner must lodge a notice of the court order to the Registrar. The persons who can apply for the petition are;
- The company,
- A creditor,
- A contributory or the representative of a deceased contributory or the trustee in bankruptcy or the Official Assignee of the estate of a bankrupt contributory,
- A liquidator appointed in a voluntary winding up,
- The Minister pursuant to sections 205 or 218(1)(d) of the Companies Act,
- The Central Bank in cases involving banks and finance companies,
- The Registrar under section 218(1)(m) or (n) of the Companies Act or
- The Malaysia Deposit Insurance Corporation in cases involving member institution.
And the grounds for winding up are;
- Pursuant to a special resolution,
- Failure of a public company to lodge statutory report,
- Failure to commence business within 1 year,
- When membership of the company falls below two,
- Inability of the company to pay its debts above RM500,
- When directors are acting in their own interest,
- When the appointed inspector is of the opinion that the company is unable to pay its debts or that it is in the interest of the public, shareholders or creditors,
- When the company is required to wind up as stated in its Memorandum and Articles of Associations,
- When the Court is of the opinion that the Company should be wound up,
- Its banking, Islamic banking or insurance license has been revoked or surrendered,
- Contravention of the BAFIA or IBA or the Insurance Act or
- The company is being used for unlawful purposes or any purpose prejudicial to national security, public interest or morality.
- DISSOLUTION OF A SENDIRIAN BERHAD COMPANY BY STRIKING OFF THE NAME OFF THE REGISTER
If your company is no longer operating, the Registrar is empowered under s. 308 of the Companies Act to strike its name from the Register if it has reasonable cause to believe that the company has ceased to operate. It will then be considered dissolved upon the publication of the striking off notice in the Gazette.
In practice, the Registrar almost never exercise its power under s.308, but instead would let companies themselves do the initiative. So if you do not intend to use you company to do business, it is highly advisable that you do not just abandon it and hope that over time the Registrar will take the initiative to strike the name off because it almost never do that. This can result in you incurring a huge fine.
The company itself can also apply under the same section to have its name struck off the Register.The procedure is contained in the ROC Striking Off Guidelines and no fee is charged for this application. The Registrar, if it is satisfied that the company has fulfilled all the requirements, strike the name off the Register. It’s considered dissolved once the striking off notice has been filed in the Gazette. To apply under s. 308, the company must fulfil the following conditions;
- It has not commenced business or has stopped its operation,
- It has no intention of doing business in the future,
- Has no property or assets,
- Has no liabilities to creditors,
- Is not a guarantor corporation and
- Has not been placed under receivership.
The procedure is as follows;
- 1stly, the shareholders must file a resolution consenting to have the company’s name struck off, and
- 2ndly, an application letter is then lodged to the Registrar requesting it to strike the name off the Register together with
- The latest balance sheet, and
- A statutory declaration made by the director or secretary stating that;
- He is the director or the secretary of the company,
- The company has not commenced business since incorporation or has ceased operation,
- It does not intend to do business in the future,
- It has no property or assets,
- It has no liabilities with any creditors,
- It has not returned any capital to its shareholders,
- Whether it has sufficient fund to settle its liquidation cost,
- Whether it is a subsidiary to any holding company,
- Is not a guarantor company and
- All its records can be inspected at its registered office.