Winding-Up a Company in 2021
by Lavinia Kumaraendran & Avinash Kamalanathan ~ 4 January 2021
Lavinia Kumaraendran (Partner)
Tel: 603-6201 5678 / Fax: 603-6203 5678
Avinash Kamalanathan (Associate)
Tel: 603-6201 5678 / Fax: 603-62035678
Back in April 2020, measures were announced by the Companies Commission of Malaysia (SSM) to ensure that companies were given the requisite protection to deal with the implantation of the Conditional Movement Control Order and the COVID-19 pandemic. These measures were put in place until the end of 2020. The pertinent measures which will be the focus of this article are the following:
a. SSM increasing the definition of a company’s ‘inability to pay its debts’ from RM 10,000 to RM 50,000; and
b. The timeline for responding to statutory notices of demand was increased to 6 months from the original 21-day stipulation.
(The firm previously wrote on this area and said article can be found here.)
Given the turn of the new year, this protection of the 6-month timeline has since lapsed and the governing provisions now dictate that we revert to the 21-day timeline as reflected in the Companies Act 2016.
However, the definition of the ‘inability to pay its debts’ has remained at RM50,000, albeit temporarily, and has not reverted to the prior figure of RM10,000. This is due to the Revocation of Prescription of Amount of Indebtedness of Company P.U.(B) 711/2020 on 23 December 2020. This was fortified by the Minister issuing a notice that the RM50,000 threshold will remain in force until the 31st of March 2021.
Whilst the extension of the RM 50,000 is a welcome move from the Government, reverting to the 21-day timeline will place a lot of financial pressure on companies. Companies may now have to consider different restructuring avenues to ensure that they can continue with their business and consider the filing of Injunctions to stave off the plethora of impending Winding-Up Petitions.