Businessmen interested in company liquidation in Malaysia can discuss all the legal aspects with our local representatives. The process of liquidation is necessary when the company can no longer pay its debts or has no profits. The liquidation can be ordered by the Court, or it can be a creditor’s voluntary liquidation instead of the member’s voluntary liquidation. The process itself will be carried out by an authorized liquidator, but it is advisable to receive the legal assistance of our lawyers in Malaysia, as our attorneys can offer specific details on the steps of winding up a company in Malaysia.
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Reasons to liquidate a business in Malaysia
The local legislation provides a number of reasons for which a Malaysian company can be shut down. Some of the most important reasons are the following:
- the company did not have any business operations in Malaysia after its incorporation or has ceased all business activities in the country;
- the management considers there are no reasons to start any business activities, or the management no longer shares mutual business goals;
- the company does not have funds to sustain its activity.
Interested in closing a company in Malaysia? You can explore this infographic first:
Corporate Liquidation Law in Malaysia
The Companies Commission of Malaysia is the main regulatory body for the liquidation process; the institution applies the legislation available under the Companies Act 1965, which states that a Registrar can remove a company from its registration documents if the company is not carrying on any operations. The Registrar can appeal to this measure when the documents registered by the company reveal the financial situation of the company; at the same time, the Registrar can also shut down a company if the directors/shareholders have applied in this sense.
In order to commence the liquidation procedure, an investor should provide specific information, as prescribed by the Guidelines established for the insolvency of a Malaysian company, under the provisions of the Companies Act.
Voluntary company liquidation in Malaysia
Investors who are interested in voluntary company liquidation in Malaysia should know that this process can be divided into two different types: the one initiated by the company members and the one initiated by the company’s creditors.
When the company’s members initiate the procedure, the directors are required to convene and determine that the company will have the necessary means to pay all of its due debts within a 12-month time limit after the winding-up process is commenced. This process is to take place as per the Companies Act, Section 257. Legal assistance from one of our attorneys in Malaysia is recommended when winding up companies. The steps listed below are the main ones in case of voluntary company liquidation in Malaysia:
- Special Resolution – a special Resolution to wind up the company must be passed during a General Meeting of the company shareholders.
- Filing the resolution – this special shareholder’s decision must be filed with the Registrar of Companies within seven days after it was issued.
- Declaration of Solvency – must be prepared by the company directors within five weeks after the special resolution was filed.
- The actual winding-up process – issuing notifications informing that the company is in liquidation and appointing a liquidator.
These are just general descriptions of the steps that need to be taken once the company owners have decided to cease the business activities. The procedure may differ according to the type of company and its debts and obligations at the time of the liquidation, and several other factors. The Malaysian Department of Insolvency is responsible for administering bankruptcy cases. Its activities include, among others, determining the debt and distributing the assets among the creditors. One of our lawyers in Malaysia can provide investors with more details about this government agency.
Our lawyers invite you to watch the following video on the company liquidation process in Malaysia:
Compulsory company liquidation in Malaysia
The mandatory winding up of a company is also known as winding up by the Court. This process starts with drawing up and presenting a petition in Court. The parties that may present the petition are the creditors, the liquidator, or the Registrar of Companies, as well as the Official Receiver (under Section 217 of the 1965 Companies Act or Section 464 of the 2016 Companies Act).
In most cases, compulsory winding up takes place when the company is no longer able to pay its debts, and a voluntary one, by its directors, has not taken place. In addition to the creditors who can file a petition for this to take place, the Minister of Domestic Trade and Consumer Affairs, the Minister of Finance, and Bank Negara Malaysia can also file a petition for the court to wind up.
Post voluntary winding up meeting in Malaysia
At this stage of winding up a company in Malaysia, the appointed liquidator must make a full report about the process itself, how it took place, and how the debts were extinguished. Reporting can be done in front of company shareholders during a meeting. Moreover, the company’s creditors can also participate in this meeting, and it is even mandatory. The liquidator will present a detailed account report, with explanations regarding the financial status of the company to be closed. Here are the next steps:
- the liquidator will notify the Malaysian Registrar of Companies and submit various documents, including the above-mentioned report;
- the official closure of the company takes place after 3 months from the date of notification of this institution.
We advise you to talk to our Malaysian lawyers and find out more about closing a company in Malaysia. The process can be quite complex, especially if you do not know the legislation in detail, and that is why we recommend legal assistance for winding up a company in Malaysia.
How to wind up a sole proprietorship in Malaysia
A sole proprietorship in Malaysia can be closed for various reasons. Some entrepreneurs consider that they cannot cope with the expenses and debts, while others may decide to move on to another business destination. In any case, if you are at the time of closing a sole proprietorship in Malaysia, it is good to keep in mind the formalities and procedures imposed:
- the decision to wind up a sole trader in Malaysia must be submitted to the local municipal council;
- 14 days are given to submit a Notification of Business Disclosure to the Companies Commission of Malaysia (SSM);
- all business contracts must be concluded before the cessation of activities;
- the sole trader must have all debts paid before the liquidation process begins;
- if there are outstanding debts, these must be collected;
- a sole trader in Malaysia cannot be closed until the taxes to the Employees Provident Fund are paid;
- the money left after paying off debts and paying suppliers can be transferred to personal funds;
- the bank must also be notified of a sole trader’s liquidation in Malaysia.
These are some of the most important steps to follow when winding up a sole proprietorship in Malaysia. Regardless of the type of entity/business you want to close, you can rely on the assistance offered by our company formation specialists in Malaysia.
Dissolving a partnership in Malaysia
Winding up a partnership in Malaysia is done by taking into account the following aspects mentioned by the Partnership Act 1961 itself:
- the agreement that was created at the time of establishing the partnership in Malaysia is taken into account. This document contains clear information on how the partnership can be dissolved;
- in the event of bankruptcy, the partnership can be dissolved;
- the debts will be paid before the cessation of activities as a partnership;
- in the case where a partnership in Malaysia was created for a single purpose and with a fixed term, it can be dissolved according to the expiry term;
- a partnership in Malaysia can also be dissolved in the court of law if it is proven that one of the members becomes incapable of continuing with business affairs or is involved in unlawful dealings;
- if the partnership is losing money instead of making profits, it can be dissolved.
Company liquidation statistics in Malaysia
Here is information and statistics about company liquidation in Malaysia:
- Around 4.7% of companies operating in mining & quarrying in Malaysia were closed in 2024.
- In 2024, around 28,924 enterprises in Malaysia closed their activities.
In addition to the services offered for winding up a company in Malaysia, our local specialists can also help you with other information or guidance. For example, we can assist you with immigration to Malaysia. Th Moreover, those already established can apply for citizenship in Malaysia. In the case of those who have companies, our corporate lawyer in Malaysia can offer legal consultancy in terms of business and more. If you need further information on the liquidation process of a Malaysian company, please contact our law firm in Malaysia for legal representation on this matter.