OPERATIONS
EXIT STRATEGIES
 
To exit a business operation in Malaysia, a company needs to go through a winding-up process. The company’s assets will be gathered and used to pay all debts and the balance for the cost of winding up will be distributed among shareholders according to their interest in the company.

A company will usually wind up if its owners are declared bankrupt. A bankrupt is someone who has officially admitted that they have no money and cannot pay what they owe. The minimum outstanding debt for a person to declare bankruptcy is RM30,000. Malaysia’s bankruptcy law is based on English law and comes under the Bankruptcy Act 1967.

More details on bankruptcy can be found at Malaysia’s Department of Insolvency website.

The courts of law can also order for the winding-up of a company (compulsory winding up) when it cannot pay outstanding debts exceeding RM500. Besides this, a company can also voluntarily wind up, which is usually taken by a financially viable company that no longer wants to continue with its business operation in Malaysia for whatever reasons.
The procedure for the winding up of a Sendirian Berhad (Sdn Bhd) or private limited company comes under the Companies Act, 1965. Meanwhile, procedure for the winding up of Milikan Tunggal (sole proprietorship) and Perkongsian (partnership) companies comes under the Registration of Businesses Act, 1956.

There are two circumstances under which a company can be wound up:
 
Compulsory Winding Up
a. Present petitions of the company that is ordered to wind up (through a special resolution), creditors, contributories, official receiver, liquidator, the Minister of International Trade and Industry or Bank Negara Malaysia.
b. There will be a hearing by the court, in which the winding up order is made.
c. The liquidator will call for separate meetings for your companies and creditors to decide whether or not to appoint a Committee of Inspection to act together with the liquidator. If there is no liquidator appointed, the official receiver itself must call for separate meetings of the creditors and contributories for the purpose of determining whether or not to apply to court for appointment of a liquidator to replace the official receiver.
d. Liquidator is required to file notice of appointment on Form 70 with the Companies Commission of Malaysia (CCM) and the official receiver within fourteen days from the date of appointment.
e. Liquidator will commence its tasks, which will involve calling meetings of the Committee of Inspections, before distributing the assets of the company that is winding up in the correct legal order.
f. Liquidator will apply to the court for an order for its release and the company will be dissolved.
 
Voluntary Winding Up
Under voluntary winding up, there are two possible scenarios:
 
1. Member’s voluntary winding up:
a. The company’s board of directors will convene a meeting to make a declaration of solvency (Form 66) to be signed by every director. In a company with more than two directors, the majority of the directors must sign.
b. Form 66 must be made within 5 weeks before the resolution for the voluntary winding up is passed. The form must be lodged with CCM before the date on which the notice convening an extraordinary general meeting (EGM) for the winding up is to be proposed are sent out.
c. Together with the form, there must also be a statement of affairs in the company that is proposing for a winding up to show its assets at expected realisable value, liabilities and estimated expenses of the winding up.
d. The resolution for the voluntary winding up and the resolution for the appointment of a liquidator need to be passed at the EGM.
e. CCM’s Form 11 must be lodged within seven days from the date of passing the resolutions.
f. A liquidator will be appointed and the person needs to file the situation of his office on Form 71 within fourteen days after his appointment.
g. The liquidator will then notify his appointment to the company’s auditors, lawyers, insurers, bankers, employees, suppliers and customers.
h. The properties, bank accounts, investments of the company that is winding up will be taken over by the liquidator for distribution among shareholders.
 
2. Creditor’s voluntary winding up:Non-Financial
a. Company board of directors to decide on the date of an EGM for shareholders and creditors’ meeting, which must be held within one month from the date of statutory declaration (Form 65A)
b. Directors make a statutory declaration with Form 65A (to declare its inability to continue business and to confirm that it has called for meetings of shareholders and creditors)
c. The form needs to be lodged with the CCM.
d. Directors will appoint and approve liquidator to be the provisional liquidator.
e. During the EGM, a special resolution will be passed to wind up your company by the way of creditor’s voluntary winding up due to the company’s inability to continue business by its own liabilities. It will also nominate a liquidator for the winding up.
f. The company will have to file Form 11 with the CCM within seven days after passing of the resolution.
g. It must also publish a notice of the resolution in local newspapers within ten days after passing of the resolution.
h. During the creditors’ meeting, a director appointed by the board to attend the meeting will preside and disclose the company’s affairs and circumstances leading up to the proposed winding up.
i. The person must also present a full statement of the company’s affair together with a list of creditors and estimated amount of their claims before the meeting of creditors.
j. The meeting will then proceed to nominate a liquidator. If creditors and those attending the meeting nominate a different person to act as liquidator for the winding up, then the liquidator appointed by creditors will be the liquidator.
k. It will then appoint a Committee of Inspection consisting not more than five persons. This committee will supervise the liquidator.
l. The liquidator must lodge a Notice of Appointment and Situation of Office of Liquidator in a Creditor’s Voluntary Winding Up (Form72) with the CCM within fourteen days of his appointment.
 
References :
Malaysian Government Website , Companies Commission of Malaysia