Effect of Winding Up

Creditors

Winding up or liquidation is a process by which

company assets are collected, its debt paid
and the surplus if any, distributed among its
members.

Company
Company Employees

Until the process completed the

remains in existence as a legal entity.

Receivers

WINDING
UP

Court of Opinion Just & Equitable

Deadlock

Unachieved company object

Types of Winding Up
Sec 211 Mode of winding up either by:

Compulsory Winding Up
Order by Court

Contravention in understanding
Compulsory Winding Up

Creditors VWU

Example
Sec 217 (1) (b) - creditors petition to Court
Sec 218 (1) (e) - Unable to pay debt
Sec 218 (2) (a) - Special resolution resolved by the
Court
Tested
Sec 218 (1) (f) - Director acted for own interest
Sec 218 (1) (i) - Court of opinion just & equitable

company

Voluntary Winding Up
Members voluntary Winding Up
Directors voluntary Winding Up

Fraud & misconduct

Sec 217 - List of Person can apply Court

order for compulsory winding up
Sec 218 (a) > (n) Ground of winding up
Sec 218 (e) - Unable to pay debt
Sec 218 (2) - fail to comply statutory demand
Sec 218 (2) (a) RM 500 indebted

Meaning

Sec 254 (1)(b) - Pass special

resolution
- Declaration of Insolvency
Sec 260 - Summon creditors for
meeting
Sec 260 - Meeting at same day @ next
day
Sec 260 - Creditors may nominate
liquidator
Sec 256 Stop biz
Sec 257 - Declaration of insolvency will
be
find out while the directors
prepare the declarations

Members VWU
Sec 254 - when the period expired
Sec 254 (1) (a) - Particular object in
MoA @ AoA was lapse.
Sec 254 (1) (a) - Pass ordinary resolution
Sec 257 (1) - Declaration of solvency
Sec 257 (1) - Director prepare
declaration
Sec 254 (1) (b) - Pass special resolution
- Insolvent thus creditors VWU
Sec 258 - Member appoint liquidator
Sec 255 (6) - Commencement of winding
up upon passed of
resolution.

Creditors
Voluntary Winding Up

Winding Up
Winding up or liquidation is a
process by which company
assets are collected, its debt
paid and the surplus if any,
distributed among its members.

1. Special resolution that there is

no solvency means companys
in insolvency.

Until the process completed the

company remains in existence as
a legal entity.

3. Creditor appoint liquidator if not

satisfied with appointment
made by member @ company.

Members
Voluntary Winding Up
1. Declaration
directors.

of

solvency

by

2. Special resolution by members

in the companys General
Meeting.

Winding Up
1. Insolvent due
demands.

to

statutory

2. Application made by
creditor @ company.

the

2. Members call creditor meeting.

2. Secured creditors under Sec.

292
3. Winding up expenses

3. Court may appoint provisional

liquidator.

4. Unsecured creditors

4. Trace.

5. Members

4. Stop business except what is

necessary.

5. Court appoint liquidator

official receiver.

5. Director lose their power

6. Liquidator fulfil duties (fixed all

floating assets, list, realise,
pay)

6. Liquidator fulfil duties (fixed all

floating assets, list, realise,
pay)

1. Preferential creditor under Sec.

191

6. Note if there is fixed & floating

charge, priority will be given to
fixed charge UNLESS floating
charge was created earlier and
provide
restrictive
clause
(negative pledge).

7. Deregistration

7. Deregistration
Compulsory
Winding Up
[Other Grounds]

3. Members appoint liquidator

4. Stop business except what is
necessary.

1. Ground under Sec. 218

5. Director lose their power

2. Application made to the Court.

6. Liquidator fulfil duties (fixed all

floating assets, list, realise,
pay)

3. Court
appoint
liquidator.

provisional

4. Court order.

7. Deregistration

Compulsory

Priority Of
Company Assets

Court Of Opinion Just &

Equitable
1)

Deadlock

2)

Fraud & misconduct

3)

Unachieved
object

4)

Understanding
contravention

company