How to Winding Up Your Debtors
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What is compulsory winding-up?
Compulsory winding-up in Malaysia will be pursuant to section
218 of the Act. It is a legal process by which the Official
Receiver, now known as the Director General of Insolvency or a
liquidator is appointed by order of the court to 'wind up' the
affairs of a limited company, Sdn Bhd or a Berhad.
At the end of the process, after a winding up order is granted the
company ceases to exist. Winding up does not mean that the
creditors of the company will necessarily get paid. The purpose
of winding up a company is to ensure that all the company's
affairs have been dealt with properly.
Under suitable circumstances, a winding up order may be
'stayed'.
This involves:
For the amounts available to the unsecured creditors:
ensuring all the Federal Taxes, amounts owing to EPF and
SOCSO are paid
ensuring 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;
settling any legal disputes, the liquidator may have to take legal
advice to do that;
selling any assets by Public Tender, Public Auction or Private
Treaty;
collecting in money owed to the company, the liquidator may
have to take legal actions to do that; and
distributing any funds to creditors (which is called a dividend)
and returning share capital to the shareholders (any surplus
after repayment of all debts and share capital can be distributed
to members, that is, shareholders).
When these things have been done the Official Receiver, now
known as the Director General of Insolvency or liquidator
applies to have the company removed from the register at
Companies Commission of Malaysia and dissolved, which
means the company ceases to exist.
Compulsory winding-up in Malaysia will be pursuant to section
218 of the Act. It is a legal process by which the Official
Receiver, now known as the Director General of Insolvency or a
liquidator is appointed by order of the court to 'wind up' the
affairs of a limited company, Sdn Bhd or a Berhad.
At the end of the process, after a winding up order is granted the
company ceases to exist. Winding up does not mean that the
creditors of the company will necessarily get paid. The purpose
of winding up a company is to ensure that all the company's
affairs have been dealt with properly.
Under suitable circumstances, a winding up order may be
'stayed'.
This involves:
For the amounts available to the unsecured creditors:
ensuring all the Federal Taxes, amounts owing to EPF and
SOCSO are paid
ensuring 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;
settling any legal disputes, the liquidator may have to take legal
advice to do that;
selling any assets by Public Tender, Public Auction or Private
Treaty;
collecting in money owed to the company, the liquidator may
have to take legal actions to do that; and
distributing any funds to creditors (which is called a dividend)
and returning share capital to the shareholders (any surplus
after repayment of all debts and share capital can be distributed
to members, that is, shareholders).
When these things have been done the Official Receiver, now
known as the Director General of Insolvency or liquidator
applies to have the company removed from the register at
Companies Commission of Malaysia and dissolved, which
means the company ceases to exist.
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