It is not surprising to hear that a business may not live up to its name after its incorporation. Hence, striking the Company off is one of the options available under Company Act 2016 for the dissolution of a Company.

What are the types of dissolution available for Malaysian registered Company?

According to the Company Act 2016, there are two ways to dissolve a Company:

  • Strike Off – Section 550
  • Winding Up – Section 433

What are the criteria to Strike Off a Malaysian registered Company?

Based on Section 550 of Company Act 2016, the criteria for a Malaysian Company to apply for strike off with the Companies Commission of Malaysia (SSM) are:

  • The Company has not commenced business since its incorporation date OR the Company has not carried out business or ceased business operation for more than 12 months
  • The Company has no intention to commence or carry out business or operation in the future

  • The Company has no assets and liabilities including outstanding charges in the Register of Charges
  • The Company has insufficient fund to pay for wind up process
  • The Company has no outstanding penalties or offer of compounds under Company Act 2016
  • The Company has no outstanding tax or other liabilities and is not indebted to any government agencies in Malaysia
  • The Company has not made any return of capital to the shareholders
  • The Company is not involved in any legal proceeding within or outside Malaysia
  • The Company is not a holding Company or a subsidiary to another corporate body
  • The Company is not a guarantor corporation

If the Company has met the conditions laid out above, then it is able to proceed with the strike off application process which will be submitted by the appointed Company Secretary.

When is a Company considered to proceed with winding up?

According to the Company Act 2016, winding up is basically a process in which the existence of the Company will be ended, and assets of the Company are collected and realised. Once done, the proceeds collected will be used to discharge the Company’s accumulated debts and liabilities and the remaining balance (if any) will be distributed amongst the shareholders according to their entitlement.

There are two types of winding up:

  • Voluntary winding up (VWU)
  • Compulsory winding up by Court

Voluntary winding up (VWU)

There are 2 categories under VWU:

  • Section 257 – Members voluntary winding up (MVWU)
    This scenario is when the members voluntary wind up the 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 commencement of winding up.

  • Section 433 – Creditor’s voluntary winding up (CVWU)
    This scenario is common when the Company is unable to pay its debts when they are due for payments.

Company winding up by Court

Winding up by Court is also known as compulsory winding up. It normally initiated when there is a presentation of petition within Court. The petitioner includes:

  • Creditors
  • Liquidators
  • The Registrar or Companies
  • Official receiver

Procedure to strike off a Malaysian registered Company

According to Section 550, the appointed Company Secretary must prepare the documents below for all directors and shareholders to sign off:

  • Section 550 – Application to strike off letter with fee of MYR 100

  • Cover letter – Director to state reason why strike off application is made

  • Declaration form – to be signed by director
  • Resolution – to be signed by all shareholders
  • Latest management account – balance sheet and profit loss statement to be certified by directors in each page
  • Waiver letters from directors and creditors – to be completely signed by all parties involved
  • Tax clearance (if applicable)
  • Company print out – latest Company profile to be purchased by Company Secretary

In the case where the Company is unable to trace all shareholders, then the application must also furnish proof that attempts have been made to trace the whereabouts of the shareholders by writing to him at the residential address or tried to contact him via email or mobile.

Once all documents are completed and signed off, then the Company Secretary may proceed with the submission to SSM over the counter. The processing time for a Company to be fully strike off is between 6 to 12 months.

Procedure to voluntary wind up the Company by members

According to Section 257, the members of the Company may initiate voluntary wind up by:

  • Having the Company Secretary prepare a resolution of winding up that has to be signed by all members and board directors in an annual general meeting (AGM) or extraordinary general meeting (EGM) to declare that the Company has sufficient fund to cover the accumulated debts for over 12 months after commencing winding up process
  • Once resolution is signed and approved, Company Secretary must then prepare the Declaration of Solvency – Section 443 which must be signed by the board of directors. This document is to be lodged with SSM
  • Once done, the appointed liquidator will take over the Company’s operations where operation will cease and only cater for the wind-up process
  • The proceeds retrieved by selling off assets will be distributed to the creditors and shareholders (if any balance remain)

Procedure to voluntary wind up the Company by creditors

According to Section 433, to initiate the voluntary wind-up process by creditors, the documents below must be prepared:

  • Members to propose a resolution to wind up the Company once discussed the situation with board of directors
  • Notice of meeting (creditors meeting) to be sent out to the creditors at least 7 days prior and confirmation to attend by majority of attendees
  • A copy of winding up notice and resolution to be advertised in newspaper outlet available in Malaysia (in Bahasa Malaysia and English language is a must) for the next 10 days from the date of the passed resolution
  • For the agenda of creditors meeting, appointing a liquidator and inspection team must be included for the majority to vote
  • Once done, the appointed liquidator will take over the Company’s operations where operation will cease and only cater for the wind-up process
  • The proceeds retrieved by selling off assets will be distributed to the creditors and shareholders (if any balance remain)

Procedure if Company is winded up by Court order

For a compulsory wind-up situation:

  • A notice of demand – Section 465 is issued to confirm that a Company is unable to pay off its debts and the stakeholders are to prepare winding-up petition and supporting legal documents
  • The stakeholders must take note of when the court calls out for hearing to grant the wind-up order
  • If granted, then the court is to appoint a Director General of Insolvency (DGI) or liquidator on behalf of the Company to take over the Company’s operations where operation will cease and only cater for the wind-up process
  • The proceeds retrieved by selling off assets will be distributed to the creditors and shareholders (if any balance remain)

Scenario where strike off is initiated by the Registrar

There is a situation where Section 560 takes place when a strike off is initiated by the Registrar at his motion. Such situation is when a Company is deemed to not carry its business operations for more than 12 months, a letter will be sent out to inquire if the Company wishes to strike off or not.

If no answer is received within the next 30 days (after date of letter sent), then a second letter will be sent. In the event where if there is still no response, a notice will be issued in the Official Gazette to (or intend to) strike off the Company name.

Once confirmed there is no reply to the second letter and the Company remained dormant for such a time, Section 560 will take place in two steps:

  • Notice to be published in the Official Gazette that the Company will be dissolved in 3 months’ time (if no clause shown against it). This notice will be sent out to other government agencies such as Income Tax authorities (LHDN) as well as the appointed Company Secretary

  • Issue a notice to a Company under liquidation if he is satisfied that liquidator is not acting, or the affairs of the company are completely wound up and returns required to be filed by liquidator is not filed for six months. On the expiry of 3 months, the registrar can strike the name of the register and issue a notice in the Official Gazette to that effect.

What will happen once the Registrar approved the strike off / wind-up application?

Once the Company is deemed struck off by the Registrar, then the Company will dissolve and cease to exist. Hence, it no longer able to conduct any form of business or transactions using the Company account.

However, if the directors, officers or members of such Company were sued or penalised for misconduct or breaches of law, then such situations will remain accountable by the individual even though the Company has been successfully struck off.

Strike off VS. Wind Up

The purpose of both strike offs and winding up a Company is to attain the same goal, which is to dissolve the existence of one Company. However, if a Company is able to meet the requirement to strike off, it is highly advisable for the business owner to proceed accordingly. This is because the process to strike off a Company is more straight forward, and less cost involved compared to winding up.

However, if a Company is unable to meet the requirement, then the next option available is to wind up the Company. This option can be lengthy most of the time and it cost more than strike off application.

Need help with dissolving or other corporate secretarial duties? Reach out to us and see how we can help!

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FAQs

Can Business Entities other than Sdn Bhd Companies be struck off or wound up?2021-06-07T20:10:53+08:00

Sole proprietorships and partnerships are not closed down in the same way as are Sdn Bhd companies. Thus, they are neither struck off nor wound up in the conventional manner. 

Can a Company which has been wound up be revived?2020-04-27T16:13:43+08:00

Just as is the case with companies which have been struck off, it is not possible for a company which has been wound up to be revived. Thus, company owners who plan to return to opening a company must begin the process of incorporating a new company. 

Can a Company which has been struck off be revived?2020-04-27T16:13:05+08:00

Once a company has been struck off, it will have been removed from existence. Therefore, there is no way in which it could be revived. Company owners who are interested in running a company once again will have to incorporate a new company. 

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