In summary, Malaysia’s winding up moratorium period came to an end on 31 December 2020. However, the RM50,000 minimum threshold is now maintained up to 31 March 2021.
In April 2020, I had written about the two winding up protection reliefs. The first was the temporary winding up protection for six months through the Companies (Exemption) (No. 2) Order 2020. This protection has now expired and we revert back to the usual 21-day demand period set out in the Companies Act 2016.
The second protection was the increase to RM50,000 for the debt threshold for the issuance of the statutory demand. This was also meant to expire on 31 December 2020.
By default, the debt threshold for the winding up statutory demand should have reverted back to the prescribed RM10,000 set out in January 2017. However, two things have occurred:
- The prescribed amount of RM10,000 has now been revoked through Revocation of Prescription of Amount of Indebtedness of Company P.U.(B) 711/2020 dated 23 December 2020.
- Through another notification, the Minister has temporarily set the RM50,000 debt threshold from 1 January 2021 to 31 March 2021.
In practice, the RM50,000 is still a low figure and where companies will face the threat of winding up. Companies will now have to prepare for the winding up statutory demands with the 21-day demand period. Companies and its directors have to consider the restructuring and insolvency issues that will now arise in 2021.