The High Court in Re Rentak Arena Development Sdn Bhd (In Liquidation); Ex Parte Spanland Sdn Bhd and Another Case [2020] MLJU 2133 (see the grounds of judgment dated 18 November 2020) provided useful guidance on factors considered when there are competing nominees to be appointed as liquidator of a company.
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. Continue reading
We end the year by looking back at the most-read articles on The Malaysian Lawyer in the year 2020. Thank you to the readers for all the support and for dropping by this site of ours.
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Featured below are our five most-read articles in 2020. Perhaps consistent with the challenging times of 2020, four out of the five articles deal with some form of closing down or retrenchment Continue reading
The High Court in the Sulaiman & Taye decision (see the grounds of judgment dated 8 July 2020 of Ong Chee Kwan JC) deals with very significant issues in relation to fraudulent trading. Fraudulent trading is where directors of a company have to bear personal liability for the debts of a company in winding up. This is because the directors carried on the business of the company with the intent to defraud its creditors. In particular, whether the delinquent directors bearing personal liability then has to pay directly to the aggrieved applicant or to pay into the wound up company’s assets for the general benefit of all the creditors. Continue reading
The Federal Court in its grounds of judgment dated 21 May 2020 Dubon Berhad (in liquidation) v Wisma Cosway Management Corporation held that fees due to a management corporation or a joint management body under the Strata Management Act is not a secured debt. Such fees are a pure unsecured debt within the insolvency regime. This will bring clarity for a liquidator of a company which is an owner of a strata property.
This is a guest post by Gerard Tang and Tan Hei Zel. It is one of the 3 articles selected to be published on TML following our open call for submissions. We would like to thank everyone who sent in their articles. We hope to see more quality legal writing published, which will hopefully lead to vibrant discussions and thought leadership in the Malaysian legal industry.
The Companies (Exemption) (No. 2) Order 2020 (“Order”) has provided temporary reprieve from winding-up proceedings. The Order, issued by the Minister of Domestic Trade and Consumer Affairs (“Minister”), has extended the time frame to respond to a statutory demand up to six months. However, this article explains how the Order is potentially ultra vires and flawed.
The Order exempts all companies from section 466(1)(a) of the Companies Act 2016 (“Act”). Section 466(1)(a) provides for a statutory presumption of insolvency of a company where:
(a) the company is indebted in a sum exceeding the amount prescribed by the Minister;
(b) a notice of demand for the debt is served on the company; and
(c) the company fails to pay the debt within 21 days after service of the notice.
The exemption is applicable to notices served between 23 April 2020 and 31 December 2020. This exemption is subject to the condition that a company shall pay its debt within 6 months after service of the notice (“Condition”). This is a timely measure to tide businesses over during the economic downturn and a creative use of the exemption provision in the Act. However, we argue that the Order is potentially ultra vires and flawed. Continue reading
