How to Wind Up Your Debtor In Malaysia

Compulsory winding-up in Malaysia is carried out pursuant to section 218 of the Companies Act 1965.  It is a legal process which the Official Receiver, now known as the Director General of Insolvency or a liquidator (hereinafter the “Liquidator”) is appointed by an order of the court to ‘wind up’ the affairs of a limited company, Sdn Bhd or a Berhad.

Winding up does not mean that the creditors of the company will be paid in full…  (To see how the Pay Up or Wind Up concept works).

The tasks of the Liquidator is to:

• ensure that all the Federal Taxes, amounts owing to EPF and SOCSO are paid;
• ensure that all company contracts (including employee contracts) are completed, transferred or otherwise brought to an end;
• carry on the business with a view of eventually ceasing the company’s business;
• settle any legal disputes, the liquidator may have to take legal advice to do that;
• sell any assets by Public Tender, Public Auction or Private Treaty;
• collect the money owed to the company, the liquidator may have to take legal actions to do that; and
• distribute any funds available to creditors (which is called a dividend) and returning share capital to the shareholders (if there is any surplus after payment of all debts).

When these tasks have been completed by the  Liquidator, the   Liquidator will apply to have the company removed from the register at the Companies Commission of Malaysia and  the company will be dissolved, thereafter the company cease to exist.