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Advanced taxation 2011 (liquidation)
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Transcript of 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)
Prepared by CHAN YEE FEI
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)
Prepared by CHAN YEE FEI
* 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
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3. Date of commenceme
nt
CHAPTER 1:Definition and related law
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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
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CHAPTER 2:Type of Liquidation
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CHAPTER 2
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Liq
uid
ati
on
Compulsory Winding-Up
(CWU)
Voluntary Winding-UP(VWU)
CHAPTER 2
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Liq
uid
ati
on
Compulsory Winding-Up
(CWU)
Voluntary Winding-UP(VWU)
CHAPTER 2
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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
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Liq
uid
ati
on
Compulsory Winding-Up
(CWU)
Voluntary Winding-UP(VWU)
CHAPTER 2
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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
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CHAPTER 3
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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
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CHAPTER 4
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Issue the notice of demand
No payment made
Present petition
File affidavit to verify the petition (within 4 days)
CHAPTER 4
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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
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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
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CHAPTER 5
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Pay me back my money!
CHAPTER 5
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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
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How to justify an authorized agent?
CHAPTER 5
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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
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Old address? New address?
CHAPTER 5
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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
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Principal? Interest? Costs?
CHAPTER 5
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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
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CHAPTER 6
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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
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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
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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
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CHAPTER 7
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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
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End of Presentation