Seven Key Changes of the Companies Amendment Bill 2019

The Companies Amendment Bill 2019 has been issued and appears to have been tabled for First Reading before the Dewan Rakyat on 8 July 2019. The amendment Bill has also been passed by the Dewan Rakyat on 10 July 2019. The amendment Bill will make amendments to the Companies Act 2016 (CA 2016). I have since updated this article to take into account the Parliamentary debate of the amendment Bill.

I highlight seven of the more significant amendments. There will be welcome clarification of the effect of section 66 on the execution of what sort of documents, as well as the redemption of preference shares out of capital. But I can see issues relating to the appointment of receivers or receivers and managers after liquidation. There is a severe dilution of the ability to apply for judicial management.

#1: Section 66 to Only to Apply to Specific Types of Documents

I had earlier written about the possible uncertainty of validity of signed documents under section 66 of the CA 2016. Would all documents executed on behalf of the company require at least one director to sign that document? Under the CA 2016, the term document meant a document referred to under the Evidence Act. Continue reading

Case Update: Court of Appeal on Staying the Dismissal of Judicial Management Application

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

Corporate Rescue in Malaysia: Relevant Documents for Corporate Voluntary Arrangement and Judicial Management

For those involved in the restructuring and insolvency field, I thought it would be useful to set out all the relevant provisions, subsidiary legislation and documents for the corporate rescue mechanism in Malaysia. Corporate rescue under the Companies Act 2016 is corporate voluntary arrangement and judicial management.

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Judicial Management Case Study – The Rise and Fall of Photon Bhd

The Malaysia Insolvency Conference 2018 will be held this Thursday 22 November 2018. I am organising the case study session where it will feature a hypothetical judicial management case study. It is still not too late to sign up for the conference.

There is a strong lineup of speakers: The Honourable Judicial Commissioner Puan Wong Chee Lin, Melisa Tai of Adnan Sundra & Low, and Koo Yin Soon of Shearn Delamore & Co. The two speakers will take on the role of opposing counsel for and against a judicial management application. The Judicial Commissioner will then hear arguments, pose questions and then decide on the application. The counsel have already prepared their skeletal submissions and filed it before the Judicial Commissioner.

As a sneak preview, here are the background facts for this case study of the fictional Photon Bhd and how the company applies for judicial management. Will the judicial management application succeed? Will Photon Bhd rise again? Continue reading

Case Update: The First Judicial Management Decision in Malaysia

Summary

The High Court case of Re Leadmont Development Sdn Bhd [2018] MLJU 1320; [2018] 1 LNS 1420 is the first decision on judicial management in Malaysia.

Judicial management orders were granted ex parte for two related companies, Leadmont Development Sdn Bhd (“Leadmont”) and its subsidiary Sierra Delima Sdn Bhd (“Sierra Delima”). The judicial management orders were to facilitate the rehabilitation of these two companies. The companies wanted to successfully complete their project, the Selayang StarCity Project. A secured creditor of the companies, Infra Segi Sdn Bhd (“Infra Segi”), intervened after the grant of the judicial management orders to set aside the orders.

Image: http://www.selayangstarcity.com.my/

The decision is important for setting out the background and statutory framework of the judicial management provisions in Malaysia. It spells out the test for the grant of a judicial management order. The Court ultimately exercised its inherent jurisdiction to set aside the earlier judicial management orders. Continue reading