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:

1. 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
2. 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?

1. The person not  an approved liquidator;
2. The person is indebted to the company or to a related company not exceeding RM25,000.00;
3. The person is an officer of the company;
4. The person is a partner, employer, or employee of an officer of the company;
5. The person a partner or employee of an officer of the company;
6. 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;
7. The person is a bankrupt/ has become a bankrupt; 
8. 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:

1. He has consented in writing prior to his appointment;
2. 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?

1. Must be a Malaysian citizen or permanent resident;
2. A member of recognized professional body under section 433(5) on the Act and hold a valid practicing certificate;
3. 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;
4. Possess sufficient working experience in liquidation practice as follows:
   1. 5 years of full-time working experience in the field of liquidation;
   2. 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.
   3. 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.
   4. Experience in other countries can also be considered. However, candidates must work for at least 1 year in liquidation in the Malaysian environment.
5. A sponsor letter from an approved liquidator who has supervised the candidate; and
6. 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:

1. Exercise the powers conferred to him under the 12th Schedule of the Act (in members/ creditors voluntary winding up);
2. Exercise the powers conferred to him under the 11th Schedule of the Act (in a voluntary winding up scenario);
3. Call for creditor’s meeting in case of insolvency;
4. Accept shares as consideration for the sale of property of company;
5. 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; 
6. Pay off the debts of the company.

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