Advanced taxation 2011 (liquidation)

CTEA 3432 Advanced Taxation

Prepared by:

Faculty of Business and Accountancy

Chan Yee Fei CEA 070025

Title: LIQUIDATION

16 February 2011

LIQUIDATION

Prepared by CHAN YEE FEI

Compulsory Winding-Up (2007 – Nov 2010)


Source: Malaysia Department of Insolvency

2007 2008 2009 404830

200

400

600

800

1000

1200

1400

1600

12661384

15911536

171 205 242

1258

Registered caseDissolved case

Compulsory Winding-Up (Nov 2010)


* Total 334 days (From 1 Jan until 30 Nov 2010)

1536 registered cases (Until Nov 2010)

4.5988* companies per day

OUTLINE

6. Defenced from

Liquidation

1. Definition and

related law

4. Process of Liquidation

2. Type of Liquidation

5. Charges from

Liquidation

7. Effects of Liquidation on

Directors


3. Date of commenceme

nt

CHAPTER 1:Definition and related law


CHAPTER 1

A method whereby the corporate structure of the company is dismantled and its property administered for the benefit of the creditors and members.

Definition of LIQUIDATION

Law governing LIQUIDATION exercise

1. Companies Winding-Up Rules 1972

2. Companies Act 1965

3. Bankruptcy Act 1967

4. Sales Tax Act 1972

5. Service Tax Act 1975


CHAPTER 2:Type of Liquidation


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CHAPTER 2


Liq

uid

ati

on

Compulsory Winding-Up

(CWU)

Voluntary Winding-UP(VWU)

CHAPTER 2


Compulsory Winding-Up (CWU)

Section 218(1) of CA 19651. Insolvent company which is triggered by a court order on

the application.2. Example of applications:

___________________________________3. It required the petitioner.Section 218 of CA 19651. Solvent company which is triggered by a court order on

the application.2. Example of situations:

______________________________________

CHAPTER 2


Liq

uid

ati

on

Compulsory Winding-Up

(CWU)

Voluntary Winding-UP(VWU)

CHAPTER 2


Voluntary Winding-UP (VWU)

Members’ Voluntary Liduidation (MVL)1. Section 257 of CA 19652. Liquidation of a solvent company.3. Director’s opinion.4. Company is able to pay debts within 12 months after the

commencement.

Creditors’ Voluntary Liduidation (CVL)1. Section 255 of CA 19652. Liquidation of an insolvent company.3. Directors make declaration.4. Company do what?

1. Meet their creditors2. Lodge to Registrar and Official Receiver (OR)

CHAPTER 3:Date of commencement


CHAPTER 3


CWU

VWU

Section 255 (6) of CA 19651. Lodgement of declaration;2. Passing the resolution.

Section 219 (2) of CA 19651. Filling the petition

CHAPTER 4:Process of Liquidation


CHAPTER 4


Issue the notice of demand

No payment made

Present petition

File affidavit to verify the petition (within 4 days)

CHAPTER 4


Service the petition and affidavit of petition

Advertize the petition (Gazette and local daily)

Obtain certificate of compliance

Debtor’s objection (7 days)

CHAPTER 4


Petitioner may reply within 3 days

Any one wish to appear on day of hearingDocuments must reach petitioner before

12pm

Court may dismiss or grant the petition

Notice of winding-up must be gazetted and advertized

Notice of appointment must inform the liquidator within 14 days

CHAPTER 5:Charges on Liquidation


CHAPTER 5


Pay me back my money!

CHAPTER 5


Section 218 (1)(e) of CA 1965Section 218 (2) of CA 1965Malayan Plant (Pte) Ltd v Moscow Narodny Bank Ltd

1. Court may make an order to winding-up a company when it is unable to pay its debts.

2. Substantial wealth which cannot be realized immediately.3. Debt ≥ RM500.4. Period ≥ 3 weeks (21days) of the service of the notice

Q1. What is the minimum amount the debtor can present the petition?

CHAPTER 5


How to justify an authorized agent?

CHAPTER 5


Section 218 of CA 1965Sri Hartamas Development Sdn Bhd v MBF Finance Bhd

1. Notice of demand leave it at the registered office under his hand/hand of his agent lawfully authorized.

2. Seal of the company is not required.3. Solicitor who signed the notice issued was duly appointed

agent with authority.

Q2. Whether need seal of company to appoint an A&S?

Section 350 of CA 1965Weng Wah Construction Co Sdn Bhd v Yik Foong Development Sdn Bhd

1. Actual physical delivery by postman was an effective service.

2. Service can be done by registered post.

CHAPTER 5


Old address? New address?

CHAPTER 5


r 194C(WU)R 19721. Valid2. 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.

3. Old address cannot be intended as a shield company

Q3. Whether the notice send to the old address of debtor is valid?

CHAPTER 5


Principal? Interest? Costs?

CHAPTER 5


Sungei Rinching Sdn Bhd v Sri Keluarga Sdn Bhd

1. Valid2. Sum and interest could be easily be ascertained

Q4. Whether the statutory notice (with interest and cost) is valid?

CHAPTER 6:Defenced from Liquidation


CHAPTER 6


Lim Tok Chiow & Anor v Dian Tong Credit & Development Sdn Bhd

1. Invalid2. It is merely in pending during the court, affidavit must be

made in some course3. Cannot be verify where there are no existent at the time it

was sworn

Q2. Whether affidavit verify petition early than presentation of the petition is valid?

CHAPTER 6


r 24 of the RulesRe NKM Holdings Sdn Bhd

1. Invalid2. Total 4 times in 2 local newspaper and 1 time at government

gazette before 7 days from the date of hearing3. Purpose: to inform other creditord may have a stake in the

affairs of the company

Q3. Whether petitioner less advertize is valid to wind-up a company?

CHAPTER 6


r 194(1) of the Rules

1. Court may cure any formal defects or irregularities unless there is substantial injustice caused which cannot be remedied by an order of court.

2. E.g:1. Hong Leong Finance Bhd v Delta Derive (M) Sdn Bhd2. Ann Joo Metal Sdn Bhd v Pembenaan MY Chahaya Sdn

Bhd

Q4. Whether substantial injustice cased by the defect can be remedied by the court?

CHAPTER 7:Effects of Liquidation on Directors


CHAPTER 7


The power of the directorsSection 258(2)

Section 256(2)

The companySection 256(1)

Any transfer of shares

Section 226(3) Legal action by directors against company

End


End of Presentation

Advanced taxation 2011 (liquidation)

Education

Transcript of Advanced taxation 2011 (liquidation)