KL Bar Committee Talk: Introduction to s 218 Winding Up Proceedings


The Seminar presented for The Kuala Lumpur  Bar Committee – by Mr Alex Chang

We have reproduced below the outline of the seminar for your easy reference.

For our articles relating to winding up and debt recovery click here.

Have a Question about your debts?

The Notes for KL Bar Committee Talk: “Introduction to s 218 Winding Up Proceedings”

1    Bankruptcy and Winding up
1.1      Is a Judgment required prior to the filing of a Companies Winding Up Petition?


2    An Introduction to Companies Winding Up Petitions
2.1      Companies incorporated under the Companies Act may be wound up.

2.2     Professor Low Chee Keong LLM (Hong Kong) Associate Professor, School of
Accountancy,   Chinese University of Hong Kong, said:

2.3      Perpetual  succession is one of the principal distinguishing characteristics of a company whereby it retains its legal persona even though its membership may change over time. Its status as a legal entity, which evolved from Salomon v Salomon & Co Ltd   and since codified    under s 16(5) of the Malaysian Companies Act 1965 (‘the Companies Act’), continues until such time as the company is liquidated or wound up.

3    The distinctions between a s 181 Petition and a s 218 Petition
3.1      181 is filed as a Petition under the RHC
3.2      Under 181 (usually associated with the  minority  oppression type of complaint)   you can get an order to buy your clients (usually the minority)  out;
3.3      s218 Petitions are used an array of different reasons, two of the most popular are the ones for unable to pay debts 218(1)(e) and 218(1)(i), the Just and Equitable ground, remember the good ole case of   Ebrahimi v Westbourne Galleries Ltd [1973] AC 360, [1972] 2 All ER 492, HL.


4    218 Petitions- Unable to pay its debts
4.1      Definition of Unable to pay its debts
4.2      Insolvency, 20 Schillings in the Pound
4.3      Contingent liabilities,  s 217
According to some judges if you do not have a judgment, you are considered as a contingent creditor.
4.3.1   Campana Distributor Sdn Bhd v Amseal Engineering Sdn Bhd [1998] 7 MLJ 677, [1998] 2 CLJ Supp 12, [1998] 2 AMR 1330 see page 47 of the handout.  A Companies Winding Up  order was granted in favour of  the petitioners who did not first obtain judgment while the respondents maintained a counter claim against the petitioners in the form of a civil suit claiming a sum 20 times the amount claimed by the petitioners.
4.3.2   See the last part of the judgment in Campana.

4.3.3   See also NCK Wire Products Sdn Bhd v Konmark Corp Sdn Bhd [2001] 6 MLJ 57  Winding Up: Bona fide dispute. See page 83 of the handout

5    Affidavit Verifying Petition
5.1      4 days rule, rule 26 Companies Winding Up Rules 1972
It is best  to file it within 4 days after filing the petition otherwise you may have to explain to  the registrar when you are getting the Registrar’s Certificate.

6    Appointment of  a Provisional Liquidator under s 231
6.1  the powers of the Provisional Liquidator
6.2      the considerations before granting the order
6.2.1   Primary consideration is the dissipation of assets

7    Advertisement of the Petition in the Newspaper, r 24 Companies Winding Up Rules 1972
7.1      twice or four times?
7.2      What did the rules say?
“…every petition shall be advertised in Form 4, 7 clear days…  before the hearing of the petition…”

8    Registrar’s Certificate, r 32 Companies Winding Up Rules 1972
8.1      By filing a Summons in Chambers; or
8.2      By a Notice of Appointment; or
8.3      By a letter of appointment; or
8.4      By not doing anything at all.

9    Affidavit In Opposition to  Petition
9.1      Rule 30, Companies Winding Up Rules 1972
9.2      Must be affirmed and served 7 days before the hearing date of the Petition.
9.3      See paragraph 13 on Campana case.

10   The Unless Order: Pay up or Wind Up
10.1     KTL Sdn Bhd v Azrahi Hotels Sdn Bhd [2003] 5 MLJ 503.
10.2     Petro-Pipe Industries (M) Sdn Bhd v FW Industries Berhad  (unreported) where Unless Order was used to wind up a Berhad.

11   Appointment of  Liquidator
11.1     the Official Receiver
11.2     the (Private) liquidator

12   Costs
12.1     How you do a Companies Winding Up Petition of RM18,000 and get a getting up of RM40,000.  See Wong See Nyam v   Lemo Sdn Bhd [1995] 3 AMR 2853

12.2     If you withdraw the Petition do you have to pay RM300 or RM500 to the Official Receiver?

13   Advocacy in the Companies Winding Up Court
13.1     Campana Distributor Sdn Bhd v Amseal Engineering Sdn Bhd [1998] 2 AMR 1330 see if you can find the part where Abdul Aziz J, now FCJ, expressed his displeasures  over the drafting of  affidavits in opposition.

13.2     See the dispute on interest  raised in the NCK Case and the comments of  T  S Nathan J.  NCK Wire Products Sdn Bhd v Konmark Corp Sdn Bhd [2001] 6 MLJ 57

13.3     KTL Sdn Bhd v Azrahi Hotels Sdn Bhd [2003] 5 MLJ 503, see how the idea of Unless Order was introduced.

13.4     Yian Sdn Bhd v Datuk Bandar Kuala Lumpur & Anor [1998] 5 MLJ 550, see how Suleiman J, retired as JCA, describe a last minute affidavit.
13.5     How do you deal with a difficult counsel?

13.6     Bundle of authorities and the opposite solicitors.
13.7     A winding up order was given even when there are other applications pending  and the applicants ask for adjournment to hear their applications first.   Judge used the words ‘lame excuse’…   FW Industries Berhad v Suitech Sdn Bhd [2008] 3 CLJ 210


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