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To close down a Malaysia Company, shareholders or directors can file the application for strike off the company to Companies Commission of Malaysia (CCM). When a company is no longer in the operating state, according to the Companies Act, the company owner has the right to close the Company.
There are two ways to close down a Malaysia Company:
1) Strike off
2) Winding up
• Voluntary winding up
• Winding up by court
Strike off of Malaysia Company
Striking-off is a process in which the Registrar’s exercises his discretionary power to strike the name of a defunct company off the register if the Registrar has reasonable cause to believe that:
• the company is not in operation or is not carrying on business
• The company has been wound up but no liquidator is acting
• the liquidator’s failed to lodge any return and the Liquidator’s Account of the wound up within the stipulated period
• the company has no asset or insufficient funds to pay the costs of obtaining an order from the Court to dissolve the company
The Striking off application could be rejected by the SSM due to the following reasons:
a. The Company has large share base (High level of paid-up capital).
b. The Company has large amount of retained profits.
c. The Company was very active in business not long ago.
d. The Company has recently disposed of a property.
e. The Company has unpaid debts / creditors / liability.
f. The Company is in the legal lawsuit.
As such, SSM will request the Company to go for voluntarily winding up / liquidation process.
Winding up of companies
Winding up is a process in which the existence of a company is brought to an end, where assets of a company are collected and realised. The proceeds collected are used to discharge the company’s debts and liabilities and the remaining balance (if any) will be is distributed among the contributors according to their entitlement.
(1) Voluntary winding up
Voluntary winding is divided into 2 categories:
(a) Members’ voluntary winding up is the liquidation of a solvent company where the directors have formed an opinion that the company will be able to pay its debts in full within the period of 12 months after the commencement of winding up as stated under section 257 of the CA 1965; and
(b) Creditors’ voluntary winding up is a liquidation of an insolvent company where the directors make a declaration stating that the company cannot, by reason of its debts and liabilities, continue its business. A meeting between the company and its creditors must be summoned within 1 month from the date of the declaration.
(2) Company winding up by Court
Winding up by Court is also known as a compulsory winding up. It begins with the presentation of a petition in Court. The petitioners include creditors, liquidator, the Registrar of companies or the Official Receiver under section 217(1) of Companies Act 1965.
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