Advanced taxation 2011 (liquidation)


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Liquidation in Malaysia

Presented by Undergraduate (Faculty of Business and Accountancy) in University of Malaya

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Advanced taxation 2011 (liquidation)

  1. 1. Faculty of Business and Accountancy<br />CTEA 3432 Advanced Taxation<br />Title: LIQUIDATION<br />Prepared by:<br />Chan Yee Fei<br />CEA 070025<br />16 February 2011<br />
  2. 2. LIQUIDATION<br />Prepared by CHAN YEE FEI<br />
  3. 3. Compulsory Winding-Up (2007 – Nov 2010)<br />Source: Malaysia Department of Insolvency<br />Prepared by CHAN YEE FEI<br />
  4. 4. Compulsory Winding-Up (Nov 2010)<br />* Total 334 days (From 1 Jan until 30 Nov 2010)<br />1536 registered cases <br />(Until Nov 2010)<br />4.5988* companies per day<br />Prepared by CHAN YEE FEI<br />
  5. 5. OUTLINE<br />5. Charges from Liquidation<br />Definition and related law<br />6. Defenced from Liquidation<br />3. Date of commencement<br />4. Process of Liquidation<br />2. Type of Liquidation<br />7. Effects of Liquidation on Directors <br />Prepared by CHAN YEE FEI<br />
  6. 6. CHAPTER 1:<br />Definition and related law<br />Prepared by CHAN YEE FEI<br />
  7. 7. CHAPTER 1<br />Definition of LIQUIDATION<br />A method whereby the corporate structure of the company is dismantled and its property administered for the benefit of the creditors and members.<br />Law governing LIQUIDATION exercise<br />Companies Winding-Up Rules 1972<br />Companies Act 1965<br />Bankruptcy Act 1967<br />Sales Tax Act 1972<br />Service Tax Act 1975<br />Prepared by CHAN YEE FEI<br />
  8. 8. CHAPTER 2:<br />Type of Liquidation<br />Prepared by CHAN YEE FEI<br />
  9. 9. CHAPTER 2<br />Prepared by CHAN YEE FEI<br />
  10. 10. CHAPTER 2<br />Prepared by CHAN YEE FEI<br />
  11. 11. CHAPTER 2<br />Section 218(1) of CA 1965<br />Insolvent company which is triggered by a court order on the application.<br />Example of applications: ___________________________________<br />It required the petitioner.<br />Section 218 of CA 1965<br />Solvent company which is triggered by a court order on the application.<br />Example of situations: ______________________________________<br />Prepared by CHAN YEE FEI<br />
  12. 12. CHAPTER 2<br />Prepared by CHAN YEE FEI<br />
  13. 13. CHAPTER 2<br />Members’ Voluntary Liduidation (MVL)<br />Section 257 of CA 1965<br />Liquidation of a solvent company.<br />Director’s opinion.<br />Company is able to pay debts within 12 months after the commencement.<br />Creditors’ Voluntary Liduidation (CVL)<br />Section 255 of CA 1965<br />Liquidation of an insolvent company.<br />Directors make declaration.<br />Company do what?<br />Meet their creditors<br />Lodge to Registrar and Official Receiver (OR)<br />Prepared by CHAN YEE FEI<br />
  14. 14. CHAPTER 3:<br />Date of commencement<br />Prepared by CHAN YEE FEI<br />
  15. 15. CHAPTER 3<br />CWU<br />Section 219 (2) of CA 1965<br />Filling the petition <br />VWU<br />Section 255 (6) of CA 1965<br />Lodgement of declaration;<br />Passing the resolution.<br />Prepared by CHAN YEE FEI<br />
  16. 16. CHAPTER 4:<br />Process of Liquidation<br />Prepared by CHAN YEE FEI<br />
  17. 17. CHAPTER 4<br />Prepared by CHAN YEE FEI<br />
  18. 18. CHAPTER 4<br />Prepared by CHAN YEE FEI<br />
  19. 19. CHAPTER 4<br />Prepared by CHAN YEE FEI<br />
  20. 20. CHAPTER 5:<br />Charges on Liquidation<br />Prepared by CHAN YEE FEI<br />
  21. 21. CHAPTER 5<br />Pay me back my money!<br />Prepared by CHAN YEE FEI<br />
  22. 22. CHAPTER 5<br />Section 218 (1)(e) of CA 1965<br />Section 218 (2) of CA 1965<br />Malayan Plant (Pte) Ltd v Moscow Narodny Bank Ltd<br />Court may make an order to winding-up a company when it is unable to pay its debts.<br />Substantial wealth which cannot be realized immediately.<br />Debt ≥ RM500.<br />Period ≥ 3 weeks (21days) of the service of the notice<br />Prepared by CHAN YEE FEI<br />
  23. 23. CHAPTER 5<br />How to justify an authorized agent?<br />Prepared by CHAN YEE FEI<br />
  24. 24. CHAPTER 5<br />Section 218 of CA 1965<br />Sri Hartamas Development SdnBhdv MBF Finance Bhd<br />Notice of demand leave it at the registered office under his hand/hand of his agent lawfully authorized.<br />Seal of the company is not required.<br />Solicitor who signed the notice issued was duly appointed agent with authority.<br />Section 350 of CA 1965<br />WengWah Construction Co SdnBhdvYikFoong Development SdnBhd<br />Actual physical delivery by postman was an effective service.<br />Service can be done by registered post.<br />Prepared by CHAN YEE FEI<br />
  25. 25. CHAPTER 5<br />Old address? New address?<br />Prepared by CHAN YEE FEI<br />
  26. 26. CHAPTER 5<br />r 194C(WU)R 1972<br />Valid<br />It was not served to the current registered address of debtor company is due to the negligence of Registrar of Companies in not updating the record.<br />Old address cannot be intended as a shield company<br />Prepared by CHAN YEE FEI<br />
  27. 27. CHAPTER 5<br />Principal? Interest? Costs?<br />Prepared by CHAN YEE FEI<br />
  28. 28. CHAPTER 5<br />SungeiRinchingSdnBhdv Sri KeluargaSdnBhd<br />Valid<br />Sum and interest could be easily be ascertained<br />Prepared by CHAN YEE FEI<br />
  29. 29. CHAPTER 6:<br />Defenced from Liquidation<br />Prepared by CHAN YEE FEI<br />
  30. 30. CHAPTER 6<br />Lim TokChiow & Anor v Dian Tong Credit & Development SdnBhd<br />Invalid<br />It is merely in pending during the court, affidavit must be made in some course<br />Cannot be verify where there are no existent at the time it was sworn<br />Prepared by CHAN YEE FEI<br />
  31. 31. CHAPTER 6<br />r 24 of the Rules<br />Re NKM Holdings SdnBhd<br />Invalid<br />Total 4 times in 2 local newspaper and 1 time at government gazette before 7 days from the date of hearing<br />Purpose: to inform other creditord may have a stake in the affairs of the company<br />Prepared by CHAN YEE FEI<br />
  32. 32. CHAPTER 6<br />r 194(1)of the Rules<br />Court may cure any formal defects or irregularities unless there is substantial injustice caused which cannot be remedied by an order of court.<br />E.g:<br />Hong Leong Finance Bhd v Delta Derive (M) SdnBhd<br />Ann Joo Metal SdnBhd v Pembenaan MY ChahayaSdnBhd<br />Prepared by CHAN YEE FEI<br />
  33. 33. CHAPTER 7:<br />Effects of Liquidation on Directors <br />Prepared by CHAN YEE FEI<br />
  34. 34. CHAPTER 7<br />Section 256(2)<br />Section 256(1)<br />Section 226(3)<br />The power of the directors<br />The company<br />Any transfer of shares<br />Legal action by directors against company<br />Prepared by CHAN YEE FEI<br />
  35. 35. End<br />End of Presentation<br />Prepared by CHAN YEE FEI<br />