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Topic 6 - Winding Up CA 2016
Topic 6 - Winding Up CA 2016
2) COMPULSORY WINDING UP
APPOINTMENT OF LIQUIDATOR
UNDUE PREFERENCE
HOW
proceeds among the companys
WHY
creditors and if there is any excess, will
be given to the members.
1) VOLUNTARY
Section 4 defines members voluntary
winding up as a winding up under
(VWU) SECTION
where a declaration has been made and
lodged under Section 443.
At the meeting of directors, they have formed an opinion that the company will be able to pay its debts in full
within period not exceeding 12 months after the commencement of the winding up.
A statement of affairs of the company must be attached to the declaration containing the following particulars:
The assets of the company and the total of amount expected to be realised;
The liabilities of the company; and
The estimated expenses of winding up
After the declaration above has been made, the company must then lodge with the ROC before the notice of
general meeting are sent to the members informing the intention (to wind up the company).
VOLUNTARY and lay before the meeting the statement of assets and
liabilities of the company. (Sec 447(1).
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Is not an approved liquidator
Is indebted to the company not
exceeding RM 25,000
WHO IS ALLOWED Is an
officer/partner/employer/employ
TO BE APPOINTED ee of the company
Becomes bankrupt
AS LIQUIDATOR? Assigns his assets for the
benefit for his creditors or
SECTION 433(A)- (H) makes arrangement with this
creditors
Is convicted of an offence
involving fraud or dishonesty
To take possession of the companys assets
FUNCTIONS OF A
demand of the creditors)
To work out what debts are payable by the company and any
LIQUIDATOR
valid claims that exist against the company
DUTIES OF A
the company
LIQUIDATOR
Collecting and administering the companys assets
(CWU) SECTION
up.
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It is a winding up order of the court which is
initiated by the presentation of a petition by a
person who is entitled to do so.
DEFINITION OF i.
petition:
WINDING UP
ii. That one of the grounds set out in the Act as
justifying a winding up has been made out.
COMPULSORY
statutory meeting under section 190 (3);
(c) The company does not commence
COMPANY IS
21 days after the demand to pay
the sum; (RM10,000- PU (B) 58)**
Execution or other process issued
UNABLE TO PAY on a judgment, decree or order of
any court in favour of a creditor of
The question of a persons standing as a creditor usually arises when the company
disputes the existence of the debt. The question of disputed debts also arises in the
context of determining whether a company is deemed to be unable to pay its debt or
whether it has failed to meet a statutory demand made pursuant to section 218 (2)(a).
i. A person liable as a member or past member to contribute to the assets of the company in the event of winding up; and
This definition of a contributory, in the case of a company limited by shares, includes a persons who at the commencement of the
winding up, held either fully paid or partly paid shares, even though strictly speaking, only a holder of partly paid shares is
liable to contribute an amount on the winding up. Not only the contributories must hold the shares, their name must also
appear in the register of membership.
Section 435 (2)Past members may also be liable to contribute to the assets of a company if they were members within one year
of the commencement of winding up and the present members are unable to satisfy the full extent of their liabilities. Exceptions to
this rule are set out in Section 435(2). E.g past member ceased to be a member for one or more years before the
commencement of the winding up [(a) till (e)]
A deceased contributorys personal representative is by virtue of Section 437 also liable to contribute to the assets of the
company on a winding up. Accordingly, the personal representative is also included within the definition of contributory even
though not registered as a member.
Where the main object of the company has failed Re
German Date Coffee
JUST AND EQUITABLE Where members have justifiable lost confidence in the
management Loch & Anor v John Blackwood Ltd
GROUNDS/CIRCUMSTANCE Where there is no bona fide intention on the part of the
S FOR A COMPANY TO BE controllers to mange the company in proper manner
Among the legal consequences of an order by the court for compulsory winding up are:
i. The effective dismissal of all directors, officers and employees of the company;
ii. A stay of any execution of a judgment against the company and of any legal
proceeding in which it is either plaintiff or defendant;
The transaction must have taken place 6 months prior to the commencement of winding up proceeding.
a) the transaction is any transfer, mortgage, delivery of goods, payment, execution of other act
relating to property made or done by or against the company;
b) where the company is unable to pay its debts, as the debts become due, from its own money,
(insolvent) at the time of the transaction
c) where the transaction is made in favour of any creditor or any person in trust for any creditors;
d) the transaction took place within 6 months from the date of the presentation of the winding up
petition and a winding up order is made.
STAY AND TERMINATION OF WINDING
UP
STAY OF
TERMINATION
PROCEEDING
SECTION SECTION
492 493
WHY? WHY?
.
SCHEME OF ARRANGEMENT (SOA)
A statutory mechanism to carry out a formal
compromise to bind all dissenting participants
CORPORATE (creditors).