COMPULSORY WINDING UP
• It is also known as Winding up by Court • In compulsory winding up, a creditor asks the Court to wind up the affairs of an insolvent limited company. • It begins with the presentation of a petition in Court or in the other word, the court orders the company to be wound up upon the petition of any of the person listed in section 464(1) include creditors, liquidator, the Registrar of companies or the Official Receiver under section 217(1) of the CA 1965.
Compulsary liquidation o The two things must be shown before the court will make a winding up order on a petition:
That the petitioner had the right to present the petition
That one of the grounds set out in the Act as justifying a winding up has been made out
A person liable to contribute to the assets of the company in the events of its being wound up. Contributory
Company itself Creditor
Liquidator Who may petition for the winding up of a company? (S.464(1)) Minister Section 205 or Section 218(1)(d) Company (licensed under insurance Act 1996)
Member institution under the Malaysian Deposit Insurance Corperation Act 2005.
Registrar under section 218(l)(m) or (n)
Grounds for the Winding Up by The Court There are a few circumstances in which company may be wound up by court. (a) The company has by special resolution resolved that it be wound up by the Court (b) The company has defaulted in lodging the statutory report or in holding the statutory meeting (c) The company does not commence business within a year from its incorporation or suspends its business for a whole year (d) No member (e) The company is unable to pay its debt (f) Expiry of term (g) Just and equitable to win up the company
Grounds for the Winding Up by The Court Section 465(1) (a)
b) The company has defaulted in lodging the statutory report or in holding the statutory meeting • •
A public company is required to lodge with the ROC a statutory declaration of compliance before it is entitled to commence its business. a petition on this ground may not be presented except by a contributory or the minister
c) The company does not commence business within a year from its incorporation or suspends its business for a whole year • The one year grace period will commence from the day the company is issued with the notice of registration. • It is immaterial whether the company is a private or public company.
d. No Member Section 9 provides that the minimum number of members in a company is one. A company with no member is subject to be wound up by the court. The following person may present petition to wind up the company:a)A contributory b)The minister e. The company is unable to pay its debt Three circumstances when a company will be deemed to be unable to pay its debt:1.The creditor is owed a sum exceeding the amount prescribed by the Minister. Currently the amount is RM10,000- the creditor served notice of demand to the company to pay the debts within 21 days from the date of notice. 2.If the company failed to pay the sum, the creditor may file the petition to wind up the company within six months from the expiry date of the notice of demand 3.The court is satisfied that the company is unable to pay its debts.
f. Expiry of term The company may pass an ordinary resolution to voluntary winding up the company if:a)The company’s constitution has fixed the duration of the company and the period has expired; or b)The company’s constitution ha provided that the company is to be dissolved upon the occurrence of a certain event, and such event has occurred. Thus, if the company fails to call a general meeting to pass the ordinary resolution, any member may petition to the court, instead of requisitioning for a general meeting to be held. g. Just and equitable to win up the company