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19.INSOLVENCY / LIQUIDATION / WINDING UP :check: - Coggle Diagram
19.INSOLVENCY / LIQUIDATION / WINDING UP :check:
DEFINITION
ending of a co. existence
process by which the asset if the co. are collected and realized, its debt are paid , and surplus if any, are distributed among its members
METHODS OF WINDING UP
VOLUNTARY WINDING UP
MEMBERS
passing resolution by member in a general meeting
ordinary resolution
- co. is wind up when a specified purpose has been achieved or specified period has elapsed (tamat)
special resolution
- passed normally in a solvent winding up
one / majority of the directors MUST make a statutory
declaration of solvency
must be made within
5 weeks
before the passing of the resolution to wind up the co.
director must declare that:
he must made a full enquiry of the co. affairs
he also attaches statement of affairs (enumerating total asset expected to be realized , liabilities and estimated expense of winding up)
there is no ground to suspect that the co. is currently unable and is likely to be able to pay its debt in full for next 12 months
resolution must be lodged with the ROC within
7 days
of its passing
notice of resolution must also be
advertised
in the widely circulated English and Malay newspaper in Msia within
10 days after its passing
can be
converted
to creditor's voluntary winding up
Director's
criminal and civil liability
in breaching his duty when making a
wrongful declaration of solvency
CREDITORS
NO declaration of solvency
ada creditors meeting where the directors shall attend and give, deliver and present the full statement of the co. affair
co. and creditors shall each nominate a person to be the liquidator
if different person is nominated , the one nominated by the creditor shall be the liquidator
COMPULSORY WINDING UP
person who can petition for an order that the co. be wound up are
co
creditor
contributory
liquidator in a voluntary winding up
minister
ROC
Central Bank
.
grounds for winding up
co. has by special resolution resolved that it be wound up by the court
co. in default for not lodging the statutory declaration
co. does not commence its biz, within a year of its incorporation/ suspends its biz for a whole year
co. has no member
co. unable to pay its debt
shows the court that the co is
unable to pay its debt of RM 50,000
or more
petitioner / creditor has delivered that a
written notice of demand for payment of a debt
owing to him and within the ensuing 21 days , the co. has neither paid the debt nor given the security for its payment
judgement has obtained against the co. for the debt and the execution of the judgement is not satisfied. The attempt to obtain payment out of the co asset remains unsatisfied
court is satisfied after taking account of the contingent and prospective as well as immediate liabilities that the co. is unable to pay its debt
filed in the court
within 6 months
from the expiry of the notice of demand sent - after the expiry 21 days which is calculated from the date of receipt of the notice of demand
directors act in their own interest
period of activity fixed by constitution expires / on the occurrence of a certain event
court is of the opinion that it is just and equitable that the co. should wound up
where the main object of the co. has failed
where there is a deadlock in the management of co.
when there is no bona fide intention on the part of the directors to carry on biz in proper manner
where there is fraud, misconduct / oppression in the conduct and management of the co's affair
5, where the minority if unfairly treated such as where the controller of a co. try to squeeze a minority member out of a co.
where mutual trust and confidence , which was the basis on which the co. was carried on , has gone
co. held a license under the banking law and license has been revoked / surrendered
co. carried on baking biz in Msia in contravention of the provision of any banking law
co. is being used for unlawful purpose / any purpose prejudicial to / incompatible with peace, welfare, security , public order , good order, or morality in Msia
minister has made a declaration
even solvent co. may be wound up - members may want to realize its investment
DATE OF COMMENCEMENT OF WINDING UP
deemed to have commenced on one of the following dates:
date where a provisional / interim liquidator has been appointed before the resolution for a voluntary winding up is passed
when the director make a statutory declaration of the co. inability to continue its biz by reason of its liabilities is lodged with the Registrar and with the Official Receiver OR
date when resolution of voluntary winding up is passed , even if the co. is subsequently wound up by the court OR
date of the winding up ordermade by the court
WHO CAN BECOME A LIQUIDATOR
qualification of liquidator
the official receiver
appointed as provisional / interim liquidator
appointed by the court as liquidator upon winding up
approved liquidator
obtained leave / approval by the court
cannot act as liquidator (except with leave of the court)
not approved liquidator
indebted to the co. an amount exceeding RM 25,000
officer of the co. - this prohibition is N/A to a members / creditors voluntary winding up
partner , employee or employer of an officer of the co.
assigned his estate for the benefit of creditors / has made any arrangement with creditors , under any law relating to bankruptcy
he becomes a bankrupt
he is convicted of any offence involving fraud / dishonestly punishable on conviction with imprisonment of 3 months or more
ORDER OF PRIORITY OF PAYMENTS
secured creditors
prefential creditors
unsecured / general creditors
EFFECTS OF COMMENCEMENT OF WINDING UP
notification that the co. is in liquidation
2.co. ceases to carry on its biz
power of the directors ceased
contracts of employment are terminated
avoidance of dispositions of the co. property
avoidance of the transfer of shares
avoidance of uncompleted transactions
prohibition on execution being put in force against the co.
stay of actions against the co.