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 Companies?
According to the Company Act 2016, there are two ways to dissolve a Company:
What are the criteria to Strike Off a Malaysian registered Company with SSM?
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:
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 can Company proceed with winding up in Malaysia?
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)
There are 2 categories under VWU:
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:
Procedure to strike off a Malaysian Company with SSM
According to Section 550, the appointed Company Secretary must prepare the documents below for all directors and shareholders to sign off:
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:
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:
Procedure if Company is winded up by Court order in Malaysia
For a compulsory wind-up situation:
Scenario where company strike off in Malaysia 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:
What will happen once the Registrar approved the strike off / wind-up application in Malaysia?
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.
What is the difference between Strike off & 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.
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.
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.
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.