winding up

3 Pitfalls that Directors May Face in Winding Up

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In my earlier post, I had set out a summary of the winding up law in Malaysia. Now, I touch on the three possible pitfalls and liabilities which directors may face if their company is wound up.  The list is by no means exhaustive but I will only deal with three topics:

  1. The impact on the director’s credit rating.
  2. The need to cooperate with the liquidator.
  3. The possibility of being personally liable for the debts of the wound up company.

Tightrope Walker

As an introduction, the term ‘director’ means any person who holds the position of director by whatever name called. A question I am sometimes asked, especially by the director in trouble, is whether the law will differentiate between an “ordinary” director, and a managing director or executive director. For the purposes of the potential risks and liabilities, the law will not differentiate between any of such directors. All directors can potentially face the same level of liability. Continue reading →

Closing Down a Company: Winding Up Law in Malaysia

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[This post has since been updated as at 14 January 2020 to take into account the current law under the Companies Act 2016.]

The winding up of a company is the process of bringing an end to a company. The company’s assets are sold off and then used to pay off the company’s debts. Any excess proceeds are then returned to the shareholders of the company.

Here, I will give a brief overview of winding up law in Malaysia. We will start with getting our terminology right.

Mind Your Language: Winding Up, Not Bankruptcy

In getting our terminology right, we should refer to the term ‘winding up’ or even ‘liquidation’ when referring to this process of winding up a company. In Malaysia (and a few other jurisdictions like Singapore, the UK and Australia), these are the correct terms to be used. In contrast, in Malaysia at least, the term ‘bankruptcy’ is for individuals and where an individual may be adjudged bankrupt. Continue reading →

How to Slay a Dragon – Shareholder Remedies in Malaysia

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Within the corporate sphere, there is an ever-present tension between majority rule, where the majority shareholders are allowed to dominate the decision-making process, and that of protection of minority shareholders. Where majority rule is abused and is wielded in the majority’s self-interest rather than the interest of the company, then the minority shareholder may be able to seek court intervention for relief.

I have always found this area of company law fascinating and I will be writing more on this in future. This article will serve as a primer on some of the forms of shareholder remedies, especially in a Malaysian context.

slay_me Continue reading →