Winding Up.

S211 CA: two modes of winding up:

i)

Voluntary winding up by:

a) Members
b) Creditors
By the court.

i)

Members Voluntary Winding Up

S254 CA: a company may be wound up voluntarily
i)

When the period, if any, fixed for the duration of the company by the
memorandum & articles (M & A), or the event, if any, occurs, on the occurrence
of which the M & A provide that the company is to be dissolved and the company
in GM has passed resolution to voluntary winding up.
If the company so resolves by special resolution.

ii)
S257 CA:

i) Directors should lodge a declaration of solvency using Form 66. The company will
be able to pay its debts in full within a period not exceeding 12 months after the
commencement of the winding up.
ii) The declaration must be supported by a Statement of Affairs of the company
showing, in the prescribed form:
a) Assets of the company & the proceeds expected from their realization.
b) Liabilities of the company
c) Estimated expenses of winding up.
iii) A director who makes a declaration without having reasonable grounds for the
opinion shall be imprisonment for 3 years or RM10, 000 fine or both.
iv) One special resolution is passed and members can appoint the liquidator and should
fill up Form 71 (Notice of Appointment of Liquidator) and lodge to CCM.
v) Once the special resolution is passed and liquidator appointed, the company secretary
will ceased his duty. But company secretary may act as liquidator for members
winding up as there is no requirement under companies act that the liquidator must be
an approved liquidator for winding up.

vi) If the liquidator believes that the company will not pay its debts in full within stated
time, he/she must immediately call a meeting of creditors.
vii) At the meeting, creditors will consider a statement of assets & liabilities & may
appoint another person as a liquidator.

Creditors Voluntary Winding Up

Creditors winding up can only take place where the directors are unable to file a Declaration
of Solvency due to the fact that the co is insolvent In board meeting, director had to lodge
Form 65A Statutory Declaration. A special resolution is passed in EGM and company had to
lodge Form 11 (resolution). The management of the company is shared by the members and
the creditors but the creditors have control as they appoint the liquidator [S259 (2-3)] and
lodge Form 72A (notice of appointment of liquidator) to CCM and decide on the composition
of the committee of inspection.

Winding Up by the Court

S260 CA: Rules for calling & conduct the meeting of creditors:
i)
ii)

It must be at a time & place convenient to the majority of creditors.

It must be advertised in a local newspaper.

The directors must arrange for the preparation of statement of affairs.

One director & the secretary must attend that meeting to explain the companys affair &
reasons for its present condition.
S217 CA: Petition by the company creditors, contributories, receiver, liquidator, minister,
Bank Negara.
S218 (1) CA: Circumstances in which company may be wound up by court:
i)
ii)

The company has by special resolution resolved that it be wound up by the Court.
Default is made by the company, in lodging the statutory report or in holding the

iii)

statutory meeting.
The company does not commence business within a year from its incorporation or
suspends its business for a whole year.

iv)

The number of members is reduced in the case of a company (other than a

company the whole of the issued shares in which are held by a holding co) below

v)
vi)

two.
The company is unable to pay its debts.
The directors have acted in the affairs of the company in their own interests rather

vii)

than in the interests of the members as a whole.

An inspector appointed under Part IX has reported that he is of opinion:
- That the company cannot pay its debts & should be wound up.
- That it is in the interests of the public, s/holders and creditors that the company
should be wound up.

viii)

When the period, if any, fixed for the duration of the company by the M & A
expires, or the event, if any, occurs on the occurrence of which the M & A provide

ix)
x)

that the company is to be dissolved.

The court is of opinion that it is just & equitable that the company be wound up.
The company has held a license under the Banking & Financial Institution Acts or

xi)

the Islamic Banking Act, and that license has been revoked or surrendered.
The company has carried on Islamic banking business, licensed business or
scheduled business or it has accepted, received or taken deposits in

Malaysia,

in contravention of the Islamic Banking Act and BAFIA.

General procedures for winding up are similar although the modes of winding up may differ.
A special resolution is passed or Court makes an order for the co to be wound up. A liquidator
is appointed by the members and/or creditors or by Court to oversee the entire process of
liquidation. The companys assets and affairs generally pass into the hands of the liquidator.
The liquidator converts the assets into cash, calls in any uncalled capital and pays the
creditors in order of priority. Any surplus is distributed to the members of the company; The
company is dissolved.