A Quick Guide On Company Liquidators
In this article, we will briefly share the laws governing a liquidator, namely:
How are they appointed?
In a voluntary winding up scenario, via a resolution:
- By a member’s voluntary winding up where the company is solvent and the liquidator is appointed by the members at the members’ meeting; or
- By a creditors’ voluntary winding up where the company is insolvent and the liquidator is appointed by the creditors at the creditors’ meeting.
Who cannot be appointed?
- The person not an approved liquidator;
- The person is indebted to the company or to a related company not exceeding RM25,000.00;
- The person is an officer of the company;
- The person is a partner, employer, or employee of an officer of the company;
- The person a partner or employee of an officer of the company;
- The person has assigned his estate for the benefit of his creditors or has made an arrangement with his creditors under any law relating to bankruptcy;
- The person is a bankrupt/ has become a bankrupt;
- The person is convicted of an offense involving fraud or honesty punishable on conviction by imprisonment for 3 months or more.
*anyone who falls into the categories above can still be appointed if they have obtained leave from court to do so.
*point (1)-(3) is not applicable to those appointed in a members’/ creditors’ voluntary winding up scenario.
*If a person is a member of a recognized professional body, he may apply to be a liquidator and circumvent point (1), subject to the approval of the minister charged with the responsibilities for companies.
*A person cannot be appointed as a liquidator unless:
- He has consented in writing prior to his appointment;
- If he is already appointed as a liquidator before the commencement of the Companies Act.
Who is considered a legit liquidator?
A person who is in possession of a liquidator license granted by the Accountant General’s Office pursuant to the Act.
How does apply for a license?
- Must be a Malaysian citizen or permanent resident;
- A member of recognized professional body under section 433(5) on the Act and hold a valid practicing certificate;
- Not a bankrupt, not been convicted in the immediate past 5 years whether within or outside Malaysia of any offense involving fraud or dishonesty relating to the promotion, formation or management of anybody which punishable on conviction with imprisonment for 3 months or more;
- Possess sufficient working experience in liquidation practice as follows:
- 5 years of full-time working experience in the field of liquidation;
- Candidates who have left liquidation practice, but still within a 3 years period prior to the application to be approved company liquidators, are still eligible to apply.
- For candidates who have left liquidation practice for more than 3 years, they must work for at least 1 year in insolvency in the Malaysian environment.
- Experience in other countries can also be considered. However, candidates must work for at least 1 year in liquidation in the Malaysian environment.
- A sponsor letter from an approved liquidator who has supervised the candidate; and
- Must have the capacity in carrying out the duties as a liquidator.
What are some of the powers of a liquidator?
Below are some examples of the powers and duties that are available to a liquidator:
- Exercise the powers conferred to him under the 12th Schedule of the Act (in members/ creditors voluntary winding up);
- Exercise the powers conferred to him under the 11th Schedule of the Act (in a voluntary winding up scenario);
- Call for creditor’s meeting in case of insolvency;
- Accept shares as consideration for the sale of property of company;
- Summon members and creditors of the company to give a latest report (an account of the acts of the liquidator and dealings and of the conduct of the winding-up during the preceding years) after a certain years from when the winding up of a company first commenced;
- Pay off the debts of the company.
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