receiver and manager

Company in Distress: Insolvency Issues relating to Employees

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Under Malaysia’s movement control restrictions and with COVID-19, companies are facing cash-flow issues and financial difficulties. With the employers facing such difficulties, the employees may also face salary cuts (for example, see this news report) or retrenchment. Companies may then slip closer towards financial distress and may have to pursue restructuring and insolvency options. This article sets out the insolvency issues relating to employees.

I set out the different scenarios where a company in distress may pursue a scheme of arrangement, apply for judicial management, end up placed in receivership or is compulsorily wound up. I touch on how these scenarios will affect the rights of employees. Continue reading →

Companies Amendment Act 2019 comes into force on 15 January 2020

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The Companies (Amendment) Act 2019 will now come into force on 15 January 2020. This makes the first set of amendments to the Companies Act 2016.

The enforcement date was gazetted through P.U. (B) 16/2020. On the same date of 15 January 2020, the Companies (Company Auditor and Liquidator Fees) Regulations 2020 will also come into force (see P.U. (A) 9/2020).

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Top 5 Restructuring & Insolvency Cases in Malaysia for 2019

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Earlier, I covered the top five Malaysian company law cases for 2019. To complete the series, I now feature the top five restructuring and insolvency cases in Malaysia for 2019.

In 2019, we saw further developments interpreting the insolvency-related provisions of the Companies Act 2016 (CA 2016). I have selected these case due to the interesting and novel points of law.

The cases featured below range from judicial management, schemes of arrangement and the receiver’s ability to have continued supply of utilities. Continue reading →

Seven Key Changes of the Companies Amendment Bill 2019

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The Companies Amendment Bill 2019 was tabled for First Reading before the Dewan Rakyat (i.e. the House of Representatives) on 8 July 2019.The amendment Bill was passed by the Dewan Rakyat on 10 July 2019 and by the Dewan Negara (i.e. the Senate) on 31 July 2019. [edit: The Companies (Amendment) Act 2019 has since come into force on 15 January 2020 as I have written about here.]

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 →