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21 APR 2021
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12:35 PM

Company Winding Up in Malaysia – How Many Types Are There?

Post title 'Types of Company Winding Up' on a white banner overlaying an image of a business closed sign

Modes of winding up are stated under the Section 432 of Companies Act, 2016.

Basically, there are 2 types of winding up, namely voluntary winding up and compulsory winding up which is order made by the Court.

Voluntary Winding Up

In voluntary winding up, there are 2 ways:

  1. Members’ voluntary winding up (MVWU) : company is solvent, liquidator is appointed by the members at members’ meeting
  2. Creditors’ voluntary winding up (CVWU) : company is insolvent, liquidator is appointed by the creditors at the creditors’ meeting

Effects of Voluntary Winding Up

  1. A voluntary winding up shall commence at the time of passing of the resolution or the date where Interim Liquidator has been appointed.
  2. Once winding up commenced, the Company’s business shall cease unless in the opinion of Liquidator required to continue the business.
  3. Unless it is dissolved, the corporate state and power of the Company will continue.
  4. Changes in shareholding will be void unless it is made under the direction of liquidator.

A declaration of solvency is required to be made by the Directors of the Company under MVWU. In the absence of the declaration, the voluntary winding up will be CVMU.

Winding Up by Court Order

For the case of winding up by order of Court, the order can be made under a few circumstances (i.e. the Company is unable to pay its debt, Court is of the opinion that it is just and equitable to wound up the Company, the Company has carried on licensed business without being duly licensed, etc (referred to Section 465 CA, 2016).

The commencement of winding up shall be at the date of the winding up order.

For the case where the Company is deemed to be incapable of paying its debts, in CA, 2016, the threshold for the demand is as set out in the gazetted figure. However, there’s a notification issued by the Ministry at 23rd December 2020 which stated that the amount of indebtedness is set to be RM50,000.00 which have effect from 1st January 2021 to 31st March 2021 and in which the amount of RM10,000.00 set out previously has been revoked on the same day. However, there has been no notification being made until today in regards to the Prescription of Amount of Indebtedness.

Should you require advisory on the winding up of Company, reach out to us anytime.


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