Question 2

Explain the difference between a members’ voluntary winding up and a creditors’

voluntary winding up.

Members’ Voluntary Winding Up Creditors’ Voluntary Winding Up

Directors decide to close and terminate their Company is insolvent and the
business in spite of the fact that the liquidator is appointed by the creditor.
company is solvent. (S.432(2)(a) CA 2016] [S.432(2)(b) CA 2016]
Members of the company to appoint a Creditors Meeting to convene at a time and
liquidator. (S.432(2)(a) CA 2016] place agreed upon by majority attendees and
to decide on:

Appointment of Liquidator; and

Appointment of Committee of Inspection (if
necessary)
[S.432(2)(b) CA 2016]
Written Declaration of Solvency to be Give written notice by post to all creditors
prepared and executed at a Board of for a Creditors Meeting at least seven (7)
Directors meeting. days before date the meeting and winding-
Declaration of Solvency to be lodged with up notice to be advertised in a widely
SSM. circulated newspaper in Malaysia in both
[S.444 CA 2016] the national
language and In English. [S.449 CA 2016]
Liquidator takes over all affairs of the Liquidator takes over all affairs of the
company and proceed with winding-up. company and proceed with winding-up.
No provision for stay of legal proceedings Commencement of creditor's voluntary
against company. winding up would stay legal proceedings
against the company.
Transfer of shares after winding up is void. Corporate status will subsist and continue
Company shall cease to carry on business. until company is dissolved. Company shall
Powers of directors will cease. cease to carry on business. Transfer of
shares
after winding up is void.