46 Subject to the company’s constitution. May be removed by an ordinary resolution if the company does not have a constitution or if the constitution adopted by the company does not contain any procedures. In the event the office of a sole director or the last remaining director becomes vacant due to death, disqualification of being director or otherwise vacation of office in accordance with the constitution, the secretary is responsible to call a meeting for the purposes of appointing a new director. If any personal representative or members fail to appoint director within 6 months, the Registrar may direct to strike the company off the register. VACANCY OF A DIRECTOR i. Resignation by written notice: Section 208(2) Companies Act 2016. ii. Retirement and not re-elected: Section 205 Companies Act 2016. iii. Removal from the office or required by the company’s constitution: Section 207 Companies Act 2016. iv. Disqualification: sections 198–199, 213, 217, 218, 228 and 539 Companies Act 2016. v. Non fulfillment of share qualification. vi. Unsound mind. vii. Deceased. REMOVAL OF A DIRECTOR In the case of a Public Company a) Through an ordinary resolution and appoint another for replacement [section 206(2)] Companies Act 2016. b) Deemed to be passed if it garners more than half of the votes cast. In the case of the Private company
47 A director of a company is required to fulfil the following elements in performing his duty to the company. Duty to act bona fide in the interest of the company as a whole. Duty to act for proper purposes and not for collateral purpose. Trusteeship for company assets. No conflict of interest. THE DUTIES OF A DIRECTOR 1. Skill and diligence/ fiduciary 2. Reasonable care A director shall perform the duties of a director, including duties as a member of any committee of the directors upon which the director serves in good faith in a manner the director reasonably believe to be in or not opposed to the best interest of association and with the care of an ordinary prudent person in a like position would use under similar circumstances. 3. Statutory duties A director must disclose whether directly and indirectly any kind of interest which cause potential conflict of interest.
48 Director cannot make secret profit by using his position of the company. Directors need to perform his duties for the benefit of the company. Director is not allowed to accept appointment as a director in rival company. Director cannot use his position to misappropriate his company assets and information. A director of a company shall all times exercises his power for a proper purpose and in good faith in the interest of the company. The director shall not issue share without getting approval from a company in a General Meeting. Restricts the giving of such loan to directors which are related to a company other exempt private company. Must be a natural Person. Every company shall have one or more secretaries each of whom shall be a natural person of full age who has his principle or only place of business in Malaysia. No mandatory at the point of incorporation but director must appoint within 30 days after incorporation. Age – only a person full of age , should be at least 18 years old may be appointed to be a company secretary. Place of residence – the company must have at least one company secretary who has his only or principal place of residence in Malaysia. must not have any pending legal action against him/her under any provision of the Companies Act 2016. 4. Fiduciary duties A COMPANY SECRETARY Qualification of a Company Secretary 1. 2. 3. 4. 5.
49 He is an undisclosed bankrupt. He is convinced whether in or outside Malaysia of any offences with regard to duties as a director or He ceases to be a holder of a practicing certificate issue by Registrar. Fails to act with honesty or commits improper use while discharging his/her duties as a company secretary. Duty of Board to appoint a secretary. Prior consent must be obtained before appointment. Resignation notice in writing to Board. If none of the directors can be contacted , secretary may inform registrar of his attention to resign. If resignation to the directors , resignation takes effects after 30 days or longer period as stated in the notice. If resigning by way of notice to the registrar, resignation takes effects after 30 days the notice was lodge. The Board may removed a secretary from his office in accordance with the terms of appointments or the constitution. DISQUALIFICATION A person shall be disqualified to act as a secretary if – 1. 2. 3. 4. APPOINTMENT RESIGNATION REMOVAL
50 Five duties of a company secretary relating to annual general meeting. Must be well-versed and ensure that the company complies with the law. Obtaining internal and external agreement to all documentation for circulation to members. Preparing and issuing notices of meeting and distributing proxy form. To assist directors to prepare any member’s question and helping them create briefing materials. Ensuring proxy form are correctly processed and the voting is carried out accurately. Update any changes involving the company’s register other Duties. Duty of secretary to enter issuance and transfer of shares in the register of members Secretary shall cause the register of members to be properly kept and maintained regularly and all the particular on issuance and transfer of shares are entered into the register. THE DUTIES OF A COMPANY SECRETARY 1. 2. 3. 4. 5. 6. 7.
51 Categorize FIVE (5) types of directors and their purpose in a company. Mr Ali is unable to attend the company’s members meeting as he is in quarantine due to Covid-19. Solve his inability to attend by suggesting a method that will enable the execution of his rights in that meeting. Support your answer with relevant provision of the Companies Act 2016. QUESTION EXCERCISES 1. 2. ANSWER: QUESTION 1 i.Shadow director Purpose: Provides advice and guidance to the board which are regularly acted upon. ii.Alternate / substitute director Purpose: Person nominated by another director to attend meetings or perform duties on his/her behalf. iii.Executive director Purpose: Carry out day to day management of the company’s business. iv.Non-executive director Purpose: Determine the overall policy of the company / represents the interest of the shareholders. v.Managing director Purpose: Manage the affairs of the company. vi.Chairman of directors Purpose: Preside over the board meetings to control and supervise the conduct of the meeting, hold the casting vote and sign the minutes of the meeting.
52 QUESTION 2 i.Mr Ali may appoint a member’s proxy to attend the meeting on his behalf. ii.The proxy will have the right to participate, speak and vote on his behalf in the meeting. iii.Section 334 (1) : A member of a company shall be entitled to appoint another person as his proxy to exercise all of his rights to attend, participate, speak and vote at a meeting of members of the company. iv.Mr Ali must first sign the instrument of appointment. v.The instrument shall then be deposited at the company’s registered office / place specified in the notice of meeting. vi.Timeframe to deposit the instrument at the company: 48 hours prior to the meeting for voting purposes / 24 hours prior to the meeting for polling purposes.
05 53 Section 340 Companies Act 2016 : only a public company is required to hold an annual general meeting. Section 340 Companies Act 2016 expressly provides the businesses which shall be transacted at an AGM as follows: If the company fails to hold its AGM within the time prescribed by the CA 2016 and the ROC, the company itself and every officer of the company shall be guilty of an offence under the Act (section 340(6)). Section 340(3) Companies Act 2016provides that a public company’s first AGM must be held within 18 months after its incorporation. It need not be held in the calendar year of its incorporation or in the second calendar year of incorporation provided that the first AGM is held not more than 18 months after its incorporation. Further, section 340(2) Companies Act 2016 also provides that a company must hold its AGM within six months of the company’s financial year end. DEFINITION OF MEETING According to Sharp v Dawes (1876), a meeting is a gathering of two or more persons for a lawful purpose. A meeting generally contemplates an interchange two or more persons or required a plurality of persons. TYPES OF MEETING: 1. Annual General Meeting a. The laying of audited financial statement and the reports of the directors and auditors; b. the election of directors in place of those retiring; c. the appointment and the fixing of the fee of directors; and d. any resolution or other businesses of which notice is given in accordance with this Act or the constitution.
Quorum Minimum number of persons to constitute a legal meeting Minutes Records of proceeding including agenda discuss in a meeting Proxy A representation for member who are unable to attend a meeting Notice Communication send out to call member to a meeting Resolution Decision made through voting in a meeting Agenda A list of meeting activities .It is usually includes one or more specific items of business to be discussed 54 It is also known as a general meeting other than statutory meeting and annual general meeting that are usually convened by the board of directors (section 310(a) Companies Act 2016). Held in order to discuss urgent matter that cannot wait until the next annual general meeting to decide on the matter. When the company faces a major threat that will effect the company as a whole such as acquisition, merger and disclosing of information by a whistle blower. No penalty imposed under the act if not held. No specific duration when to hold the meeting. 2. Extraordinary Meeting REQUIREMENTS OF A VALID MEETING
55 Voting by show of hands is the easier and quicker method as each member who is personally present is entitled to one vote (section 293(1)(a)(ii) Companies Act 2016) Section 330(1) Companies Act 2016 : VOTING Section 293 (1) Companies Act 2016: (a) in the case of a company having a share capital— (i) on a vote on a written resolution, every member shall have one vote in respect of each share or stock held by him; (ii) on a vote on a resolution on a show of hands at a meeting, every member shall have one vote; or (iii) on a vote on a resolution on a poll taken at a meeting, every member shall have one vote in respect of each share or stock held by him; (b) in the case of a company not having a share capital, every member shall have one vote. METHOD OF VOTING i. Vote by show of hands “at any meeting of members, a resolution put to the vote of the meeting shall be decided on a show of hands unless before or on the declaration of the result of the show of hands, a poll is demanded …”.. Where the member has appointed a proxy, then the proxy is also entitled to vote on a show of hands provided that he is the only proxy appointed by that member (section 294(1) Companies Act 2016)
56 According to section 331(b) Companies Act 2016, a vote on poll has to be carried out if demanded by Under section 337(1) Companies Act 2016, a proxy who is authorized to vote on a matter may also step into the shoes of his appointor to demand or join in demanding a poll on that matter. Notice must be given by the company to certain every member who are entitled to attend and speak at the meetings, each director and auditor in circumstances regarding an annual general meeting. Ordinary Notice- must be given at least 14 days before a meeting. The notice calling a meeting must contain sufficient information to enable a prudent member to decide whether or not he will attend the meeting . At the very least the , the text of the resolutions sought to be passed must be set out. The failure to do so may invalidate the proceedings of the meeting. In all notices calling meeting of a company of a class of members , there must be a statement of a members right to appoint a proxy to attend and voice oh his behalf. ii. Vote by poll i. At least five members present who have voting power; ii. Member(s) with at least 10% of voting power present at the meeting; iii.Member(s) with at least 10% of paid-up shares present at the meeting. NOTICE OF MEETINGS TYPES OF NOTICE 1. 2. Special Notice of Resolution – must be given at least 28 days before a meeting.
57 QUORUM Section 328 Companies Act 2016. (1) In the case of a company having only one member, one member personally present at a meeting shall constitute a quorum. (2) In any other case, two members personally present at a meeting or by proxy shall be a quorum unless a higher number is specified in the constitution. (3) For the purpose of constituting a quorum— (a) one or more representatives appointed by a corporation shall be counted as one member; or (b) one or more proxies appointed by a person shall be counted as one member. (4) No business shall be transacted at any meeting of members unless a quorum is present at the time when the meeting proceeds to business. (5) Unless otherwise provided in the constitution, if within half an hour from the time appointed for the meeting, a quorum is not present, the meeting— (a) if convened upon the requisition of members, shall be dissolved ; or (b) in any other case, shall stand adjourned to the same day in the next week at the same time and place, or to such other day and at such other time and place as the directors may determine. RESOLUTION A resolution can be defined as a decision or an expression of opinion or intension by a meeting.
58 Ordinary Resolution is one passed by a simple majority of the votes of the members entitled to vote either voting in person or by proxy at the meeting. Section 291 Companies Act 2016. Special resolutions are passed by majority votes of not less than ¾ at a general meeting of a notice not less than twenty one days specifying the intention to propose the resolution as a special resolution has been duly given. Special resolution are required for the matter specified by the Act: e.g. alteration of Objects, alteration of Articles , the change of name, alteration of share capital etc. A member of a company entitled to attend and vote at a meeting of a company , or at a meeting of any class of members of a company, shall be entitled to appoint another person to attend, participate and speak instead of the members at the meeting. A proxy shall not be entitled to vote except on a poll. A member shall not be entitled to appoint person who is not a member as his proxy unless the person is an advocate , an approved company auditor or a person approved by the Registrar in a particular case. A member shall not be entitled to appoint more than 2 proxies to attend and vote at the same meeting. In every notice calling a meeting of a company , there shall appear with reasonable prominence a statement as to the right of the member to appoint proxies to attend and vote in stead of members. TYPES OF RESOLUTION: 1.Ordinary resolution 2. Special resolution PROXY
59 Section 329(1) Companies Act 2016 states that unless the company’s constitution provides otherwise, the chairman of the board of directors will chair the members’ meeting. The chairman job includes: To ensure that the meeting is properly run and that order is maintained. He has no right to adjourn a meeting at his pleasure. Every company are required to keep minutes of meeting as it acts as evidence of the proceeding Section 341 and Section 343 Companies Act 2016. Every company shall cause : The minutes to be signed by or by the chairman of the meeting. The books containing of the proceeding of any general meeting shall The documents must be kept for seven years (section 342(2) Companies Act 2016), and shall be made available for inspection by any member of the company (section 342(3) Companies Act 2016). CHAIRMAN AND CONDUCT OF MEETING 1. 2. MINUTES OF MEETING Minutes of all proceedings of general meetings and of meeting of its directors and its manager ( if any) to be entered in the books kept for that purpose within 14 days of the date upon which the relevant meeting was held Section 341(1)(b) Companies Act 2016. be kept by the company of the registered office of the company and shall be opened to the inspection of any member without charge.
60 Identify FIVE (5) examples of disqualifications of a company director State FIVE (5) content for a notice of a meeting. Venue. Day. Time. Agenda. Description of such meeting. If special resolution is proposed, the intention and text of the resolution. Detailed procedures of appointment of proxies. QUESTION EXCERCISES 1. 2. ANSWER: QUESTION 1 i.A bankrupt. ii.Previously involved with mismanagement of Incorporation. iii.Previously involved with fraud, bribery. iv.Previously guilty of breach of duties of director / Section 213 Companies Act 2016. v.Previously guilty of conflict of interest / Section 217 Companies Act 2016. vi.Previously guilty of improper use of company’s properties or position/ Section 218 Companies Act 2016. vii.Previously guilty of entering into an arrangement or agreement with anyone that conflicts with interest of the company / Section 228 Companies Act 2016. viii.Previously guilty of improperly kept of company’s account / Section 539 Companies Act 2016. ix.Disqualification by the court according to S. 199. QUESTION 2: 1. 2. 3. 4. 5. 6. 7.
06 61 Every company is required to have at least one auditor for each financial year. The requirement of an auditor is important for the purpose of preparing and laying of the company’s financial statements during the annual general meeting. Appointment of an Auditor by the members. Appointment of an Auditor by registrar of companies. REQUIREMENT OF AN AUDITOR PROCEDURE FOR THE APPOINTMENT OF AN AUDITOR METHODS OF APPOINTMENT OF AUDITOR (A) Private companies • For every financial year of a company, an auditor are required to be appointed: Section 267 (1) Companies Act 2016. • Any newly incorporated companies are required to appoint an auditor at least thirty days before the end of the period for the submission of the first financial statements to the Registrar by the Board : Section 267 (3)(a) Companies Act 2016. • An auditor shall be appointed by the Board to fill a casual vacancy in office of auditor : Section 267 (3)(b) Companies Act 2016. • The appointed auditor shall cases to hold office 30 days after the circulation of the financial statements to the members unless a reappointment were made on his/her position. (B) Public companies •An auditor of a public company shall be appointed for each financial year of the company: Section 271 (1) Companies Act 2016. •An auditor shall be appointed by the Board at any time before the first annual general meeting or to fill any casual vacancy in the office of the auditor: Section 271 (2) Companies Act 2016. •Any auditor appointed before the annual general meeting shall hold office until the conclusion of the first annual meeting or the next annual meeting: Section 271 (3) Companies Act 2016.
62 The person must be approved as a company auditor for the purposes of this Act. Good character and competent to perform the duties of an auditor. A valid practicing certificate from a recognized body. He is approved by the Minister of Finance that he is good character and competent to perform the duties of an auditor. Indebtedness not exceeding RM 25 000 with the company. Must be registered with the Malaysian Institute of Accountants (Accountants Act 1967). He must be independent from the company. QUALIFICATION OF AN AUDITOR 1. 2. 3. 4. 5. 6. 7. THE RIGHTS AND DUTIES OF AN AUDITOR A. COMMON LAW DUTIES I. Exercise reasonable care and skill Re Kingston Cotton Mill (1896) “It is the duty of an auditor to bring to bear on the work he has to perform that skill, care and caution which a reasonably competent, careful and cautious auditor would use. What is reasonable skill, care and caution must depend on the particular circumstances of each case.” ii. Practice auditing standards An auditor must always abide by the auditing standards practiced by any other ordinary auditor in the relevant line of work. Failure to do so may lead to negligence as it does not meet with the standard of any other reasonable competent auditor. iii. Independent in making judgement An auditor must not be connected to the company in executing his duties.
63 By giving notice in writing and delivered to the registered office of Resignation takes effects after 21 days or from the date as may be Upon resignation, the company should send a copy of the notice to the Registrar within 7 days upon receiving the notice: Section 282(1) Companies Act 2016. Notice of resignation may be accomplished with a statement of circumstances connected with his resignation. In giving notice of resignation , an auditor may also request the directors to immediately convene a general meeting to receive and consider the explanation of the circumstances connecting with his resignation. Such meeting must be convened within 28 days from the notice of the requisition. B. STATUTORY DUTIES i. Reporting to the members on the company’s annual account: Section 266 (1) Companies Act 2016. ii. Access at all reasonable times all accounting records: Section 266(4). iii. Attend any general meeting, to receive all notices & communications & be heard on matters concerning the auditors: Section 266(7) Companies Act 2016. iv. Report to the directors any breach: Section 266(8) Companies Act 2016. v. Report to the Registrar if there is a serious offence involving fraud or dishonesty: Section 266(9) Companies Act 2016. RESIGNATION OF AN AUDITOR the company: Section 281(1) Companies Act 2016. specified in the notice: Section 281(2) Companies Act 2016. Right of resigning auditor of A Public Company
64 An auditor may be removed before the expiration of his term of the The copy of the special notice to remove the auditor shall be forwarded to the auditor concerned and to the registrar. Upon receiving the notice , a right to be heard is given to the auditor The auditor concerned must also within 7 days after such representation , make a submission of the copy to the registrar. The auditor is also given a right to communicate with the company’s shareholders who has appointed him . The auditor has the right to require the company to circulate his written presentation to the shareholders and be read out in the meeting. After removal , the company shall give notice in writing of the Financial Statement. Statement of Comprehensive Income. Statement of Changes in Equity. Statement of Cash Flow. Statement of Financial Position. Notes to the accounts. Group accounts and Consolidated Account. Directors Report. Statement by directors. Statutory declaration by a director. Auditors report. THE PROCEDURE OF TERMINATION AND RESIGNATION OF A COMPANY AUDITOR office by resolution of the company at a general meeting where a special notice has been given. by making a representation in writing to the company within 7 days. removal to the registrar and if the company does not appoint another auditor , the registrar will appoint a new auditor. THE ACCOUNTS THAT ARE REQUIRED TO BE AUDITED. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. All of the above documents has to be distributed to all members.
65 happy bhd is a newly incorporated company and it requires for an appointment of an auditor. explain the qualification of an auditor of a company. lis down five (5) examples of accounts that are required to be audited by a company auditor. The person must be approved as a company auditor for the purposes of this Act. Good character and competent to perform the duties of an auditor. A valid practicing certificate from a recognized body. He is approved by the Minister of Finance that he is good character and competent to perform the duties of an auditor. Indebtedness not exceeding RM 25 000 with the company. Must be registered with the Malaysian Institute of Accountants (Accountants Act 1967). He must be independent from the company. Financial Statement. Statement of Comprehensive Income. Statement of Changes in Equity. Statement of Cash Flow. Statement of Financial Position. QUESTION EXCERCISES 1. 2. ANSWER QUESTION 1: 1. 2. 3. 4. 5. 6. 7. QUESTION 2: 1. 2. 3. 4. 5.
66 07 Winding up is known as a process of which a company is brought to an end. Since a company is a legal entity recognized under the law, any changes to the ownership or physical destruction of the building of the company will not effect its existence. The company can only end if it is removed from the company register. Section 20 (b) Companies Act 2016a company will continue to be in existence until it is removed from the register. It is a winding up by the order of the court which is initiated by a presentation of a petition by a person who is entitled to do so. This concept happens when the court order forces a company to appoint a liquidator who sells assets and distributes the proceeds to creditors. DEFINITION: TYPES OF WINDING UP: A. COMPULSORY WINDING UP: Section 432 (1)(a) Companies Act 2016 B. VOLUNTARY WINDING UP: Section 432 (1)(b) Companies Act 2016 (a) where an interim liquidator has been appointed before the resolution for voluntary winding up is passed, at the time when the declaration referred to in section 440 Companies Act 2016 is lodged with the Registrar and Section 441 (1) Companies Act 2016. (b) in any other case, at the time of the passing of the resolution for voluntary winding up, a declaration of solvency with regards to the company is required before members voluntary winding up. Such declaration requires the majority of the directors to make it in written form and formed an opinion that the company is able to pay off its debts in full within a period of not exceeding 12 months after the commencement of the winding-up.
67 The company itself: Section 464(1)(a) Companies Act 2016. Any creditor: Section 464(1)(b) Companies Act 2016. A contributory /Personal Representative/ Trustee/Director General of Insolvency : Section 464(1)(c) Companies Act 2016. The liquidator : Section 464(1)(d) Companies Act 2016. The minister of Domestic Trade and Consumer Affairs and Finance Section 464(1)(e) Companies Act 2016. The Licensed Institution: Section 464(1)(f) Companies Act 2016. The Operator of Designated Payment System: Section 464(1)(g) Companies Act 2016. The Registrar: Section 464(1)(h) Companies Act 2016. CIRCUMSTANCES FOR VOLUNTARY WINDING UP: SECTION 439 (1) COMPANIES ACT 2016 i. When the period, if any, fixed for the duration of the company by the constitution expires, or the event, if any, occurs, on the occurrence of which the constitution provide that the company is to be dissolved and the company in general meeting has passed a resolution requiring the company to be wound up voluntarily; or ii. If the company so resolve by special resolution. PERSONS WHO HAS A LOCUS STANDI IN COMPULSORY WINDING UP 1. 2. 3. 4. 5. 6. 7. 8.
68 THE GROUND FOR COMPULSORY WINDING UP UNDER Section 465 Companies Act 2016 357. (1) The Court may order the winding up if— (a) the company has by special resolution resolved that the company is to be wound up by the Court; (b) the company defaults in lodging the statutory declaration under subsection 190(3) Companies Act 2016; (c) the company does not commence business within a year from its incorporation or suspends its business for a whole year; (d) the company has no member; (e) the company is unable to pay its debts; (f) the directors have acted in the affairs of the company in the directors’ own interests rather than in the interests of the members as a whole or acted in any other manner which appears to be unfair or unjust to members; (g) when the period, if any, fixed for the duration of the company by the constitution expires or the event, if any, occurs on the occurrence of which the constitution provide that the company is to be dissolved; (h) the Court is of the opinion that it is just and equitable that the company be wound up; (i) the company has held a license under the Financial Services Act 2013 or the Islamic Financial Services Act 2013, and that the license has been revoked or surrendered; (j) the company has carried on a licensed business without being duly licensed or the company has accepted, received or taken deposits in Malaysia, in contravention of the Financial Services Act 2013 or the Islamic Financial Services Act 2013, as the case may be; (k) the company is being used for unlawful purposes or any purpose prejudicial to or incompatible with peace, welfare, security, public interest, public order, good order or morality in Malaysia; or (l) the Minister has made a declaration under section 590.
69 Directors of company may make a declaration of a solvency . The winding up proceeds as a members’ voluntarily winding up. Otherwise it will proceeds as a creditors’ winding up. The declaration of a solvency is a written declaration to the effect To be effective the declaration must comply with 3 requirements. It must be made at a directors’ meeting of the resolution for the voluntary winding up of the company and It must be lodged by the registrar before the date on which notices of the meeting called to passed the resolution for winding up are to send out. TWO TYPES OF VOLUNTARY WINDING UP i. MEMBERS’S VOLUNTARY WINDING UP The notice of meeting for the passing of the resolution for the winding up is sent to the members after the majority of directors have made a declaration of solvency. Upon passing of the resolution, the company be wound up and liquidator been appointed. The company is solvent or able to pay its debt. ii. CREDITORS’ VOLUNTARY WINDING UP The notice of passing the resolution for the winding up is sent to the creditors after the majority of the directors could not made out a written declaration of the solvency of the company or the company is insolvent. The creditors may pass a resolution of winding up and appoint a liquidator. DECLARATION OF SOLVENCY that the directors have made an inquiry into the affairs of the company and have formed the opinion that the company will be able to pay its debt in full within 12 months after the commencement of the winding- up.
70 The declaration must be accompanied by a statement of affairs of The assets of the company and the amount expected to be realized from the realization of the assets. The liabilities of the company. The estimated expenses of the winding up. To wind up the company by distributing the assets to the creditors and the balance assets if any to the members of the company. The power of the company cease and all matters are taken over by the liquidator immediately upon the commencement’s date of the company’s winding up. It is the duties of the liquidator to ensure that the company is completely dissolved. Investigate to determine the property owned by the company Take control of the company’s property ( liquidate the company property / sell to get cash ). Investigate the company’s background and accounts to make sure that no misconduct has occurred in the company. Implement the prosecution of the directors and the officers of companies who were found guilty. Take proper action for the benefit of assets and ensure that creditors and the winding contributor/investor optimum benefit. Divide the result of company’s property by creditors in applying its pro – rata basis. Return the excess revenue after debt paid in applying contributor to the creditor . the company showing : POWERS AND DUTIES OF A LIQUIDATOR
71 Priority Creditors. Secured Creditors. Preferred Shareholders. Ordinary shareholders. Mr Albus had been appointed as the liquidator of Pheonix Sdn Bhd. He has the Locus Standi to petition for a compulsory winding up. Solve FIVE (5) grounds that enables him to begin a winding up petition by the court. Categorize and elaborate further TWO (2) types of voluntary winding up. DISTRIBUTION OF FUNDS TO INDIVIDUALS DURING WINDING UP 1. 2. 3. 4. QUESTION EXCERCISES: 1. 2. ANSWER: QUESTION 1 i.The company passed a special resolution that the company is to be wound up by the court. ii.The company defaults in lodging the statutory declaration. iii.The company does not commence business within a year from the date of incorporation. iv.The business has been suspended for a whole year. v.There is no member in company.
72 QUESTION 2: 1) Members’ voluntary winding up i. Liquidation of a solvent company ii. Directors have formed an opinion that the company will be able to pay its debts in full within the period of 12 months after the commencement of winding up iii. Liquidator is appointed by the members during members meeting 2) Creditors’ voluntary winding up i. The company choses to voluntarily bring the business to an end through a resolution in the creditors meeting and company meeting. ii. Generally used if the company is insolvent. iii. Liquidator is appointed by the creditors during the creditors meeting iv. There is no declaration of solvency
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