In my earlier post, I had highlighted the proposed audit exemption for dormant companies and small companies under the Companies Act 2016. This would be carried out through a Practice Directive on Audit Exemption. The Companies Commission of Malaysia (SSM) invited feedback on this proposed move.
SSM has now published the feedback it has received and has extended the deadline for feedback until 28 February 2017. From the feedback, there appears to be mixed views. In general, there is support for allowing dormant companies to no longer require an auditor. However, there are differing views on whether to allow audit exemption for small companies. A majority of the responses objected to such an exemption. Continue reading →
Abandoned housing projects still occur in Malaysia. From 2009 to 2016, it was reported that there were 225 abandoned housing projects affecting more than 40,000 house buyers. In the worst case scenario, the housing developer may go bust and will get wound up. A liquidator is then appointed over the company.
In such a scenario, the liquidator may play a crucial role in reviving the abandoned housing project. The liquidator may be able to obtain funding from a white knight investor, or with help from the relevant ministry, the Ministry of Urban Wellbeing, Housing and Local Government.
However, the liquidator may face a conflict between two competing roles. Firstly, a liquidator undertakes duties and obligations under the Companies Act 1965 (and also under the new Companies Act 2016 when it comes into force). The liquidator’s role is to sell off the assets of the wound up company and distribute the monies to the creditors. Secondly, in an abandoned housing development, the liquidator may attempt to revive the project and to effectively carry on the duties of a housing developer, raise funds, and to collect money.
A recent Court of Appeal decision may cast some doubt on permitting a liquidator to revive an abandoned housing project.