Glossary.
Pursuant to Companies Act 2016 Section 372, “Any person who is an approved liquidator referred to in section 433 shall be qualified to be appointed as receiver or receiver and manager.”. Section 385 state that an approved liquidator may be appointed as receiver or receiver and manager if an application is made to the court in the event that the company is wound up by court order.
Section 374 of the Companies Act 2016 states that the power to appoint could be made under:
a. Any instrument that confers on a debenture holder or charge holder;
b. Any instrument that creates a charge in respect of property and undertaking of a company confers on the charge holder; or
c. By the Court.
CREDITORS’ VOLUNTARY WINDING-UP
The creditors’ voluntary winding-up is initiated by the directors and approved by shareholders and creditors of the company. An Extraordinary General Meeting (“EGM”) of shareholders and a creditors’ meeting be convened to resolve that the company be wound up within five (5) weeks from the lodgement of Declaration of Inability to Continue Business. The provisional liquidator is appointed at the board of directors’ meeting for the purpose of overseeing the affairs of the company thereafter until the holding of the EGM and the creditors’ meeting.
Where there is a difference between the company’s and the creditors’ nominee(s), the creditors’ choice of liquidator(s) will prevail over that of the Board of Directors’ and members’ nomination.
MEMBERS’ VOLUNTARY WINDING-UP
Members’ voluntary winding-up is initiated by the company’s directors and approved by the shareholders due to business environment, dormant status of the company and/or corporate restructuring involving a group of companies. Prior to initiating a members’ voluntary liquidation, it is imperative that the requirements of Section 443 of the Companies Act 2016 are complied with whereby the directors of the company are required to confirm the solvency position of the company and is able to pay all its debt in full within twelve (12) months from the commencement of liquidation.
The 6th Schedule [Section 383] of the Companies Act 2016 outlined the power of the Receiver or Receiver and Manager.
The power of an appointed liquidator in a company winding-up by court is outlined in the Companies Act 2016 under Schedule 12 (Secs. 472 & 486) and Schedule 11 for voluntary winding-up.
The professional fees chargeable for court liquidation is guided under Table C of Companies (Winding-up) Rules 1972:
A. Where the Official receiver acts as interim Liquidator only:
i. RM1.00 for each member, creditor or debtor
ii. On the value of the company’s assets as estimated in the statement of affairs
a. 1% on the first RM100,000 or fraction thereof;
b. ½% above RM100,000.
B. Where the Official Receiver is liquidator:
i. RM1.00 for each member, creditor or debtor
ii. Upon the total net assets realized:
a. 6% on the first RM50,000 or fraction thereof;
b. 5% on the first RM50,000 or fraction thereof;
c. 4% above RM100,000.
C. Upon the amount available for distribution to Creditors or contributories and each time a distribution is made:
i. 4% on the first RM50,000;
ii. 3% on the next RM50,000;
iii. 2% above RM100,000.
The professional fees structure for court liquidation, creditors’ voluntary winding-up, members’ voluntary winding-up and receivership can be based on the estimates of the time expected to incurred and resources to facilitate the execution of the role appointed and complexity of the engagement. The fees structure will be revised on a regular basis to commensurate with the level of work involved.
In additional to this, there will be ancillary expenses like legal fees, insurance premium, security personnel, utilities and rates, taxes like corporate tax and goods and services tax, consultants professional fees for example tax, audit and property surveyor, and any other expenses incurred that will facilitate the appointed officer to carry out the duties and responsibilities.
