An applicant must meet the statutory pre-conditions for the grant of a moratorium (otherwise known as a restraining order) under Malaysia’s scheme of arrangement even at the initial application stage. This was decided in a recent High Court decision dated 22 April 2019. The Court set aside the initial grant of the restraining order as the applicant companies had not satisfied the pre-conditions at the time of the application. I have since written the case commentary on this decision.
To my knowledge, this is also the first decision on this issue under the new section 368(2) of the Companies Act 2016 (CA 2016). There have been conflicting High Court decisions on this issue when interpreting the predecessor section 176(10A) of the Companies Act 1965 (CA 1965). The full grounds of judgment have not been issued yet.
The Court of Appeal issued its Grounds of Judgment dated 11 December 2018 in the case of Ong Kwong Yew and others v Ong Ching Chee and others. It is a cautionary tale for liquidators on the grounds for their removal as liquidator and their conduct in terms of seeking fees for work done.
The conduct of the liquidator was serious enough for the Court of Appeal to remark that the liquidator ought to be sanctioned by the Malaysian Institute of Accountants or the Director-General of Insolvency.
The High Court in the case of Mohamed Zain Yon Bin Mohamed Fuad v Jason Jonathan Lo & Ors issued its Grounds of Judgment dated 6 March 2019. The case clarifies the interpretation of the new members’ written resolution provision of the Companies Act 2016 (CA 2016). More than half the number of shareholding of the members is required to pass the members’ written resolution. It is not more than half the number of the shareholders. Further, the case also emphasised how the CA 2016 applies even to companies which still retain the Table A Articles of Association under the Companies Act 1965 (CA 1965).
Section 241 of the Companies Act 2016 (CA 2016) has come into force today on 15 March 2019 (see P.U.(B) 138/2019). This is the last provision of the CA 2016 to be brought into force. Under this section, all qualified persons who wish to act as a company secretary must register with the Registrar of Companies.
The Court of Appeal in the Wellcom Communications case has decided on certain significant issues relating to a judicial management application (see the grounds of judgment dated 13 February 2019). This is Malaysia’s first appellate decision relating to judicial management.
In summary, upon the filing of a judicial management application, an automatic moratorium applies. This will stay all legal proceedings from continuing or from being commenced against the applicant company. The Court of Appeal has held that once the judicial management application is dismissed, there cannot be a grant of any stay order to stay the dismissal of the application in order to revive the moratorium effect. Continue reading →