Dealing with Outstanding Movable Assets in Dissolved Companies: A General Approach
In the event that a company has been dissolved, but there are still outstanding assets which have not been dealt with, it is important to understand the legal procedures involved in managing the said assets. This article will discuss on the standard process for handling the outstanding movable assets of a dissolved company.
Pursuant to Section 557 of the Companies Act 2016 (“CA 2016”), any outstanding property will be vested in the Registrar of the Companies Commission of Malaysia (“CCM”). This property encompasses both movable and immovable assets, including things in action, whether located within or outside Malaysia, that, at the time of the company’s dissolution, were either:-
a) Vested in the company;
b) The company was entitled to it; or
c) The company had a disposing power.
Typically, when a company has been dissolved, there should not be any outstanding property left, as the company or its liquidator, depending on the situation, would have disposed of or dealt with the assets before the company’s dissolution. Additionally, the company must make a declaration to CCM confirming that there are no assets of the company still not disposed of and that the company’s liabilities have been settled with or waived.
However, in situations where a dissolved company still possesses property, especially if the company voluntarily struck itself off rather than undergoing winding-up proceedings, those interested in the property have two options:-
- First, by reinstating the company under Section 555 of the CA 2016 by filing the necessary Originating Summons before the High Court of Malaya. Once the Court grants the Order for reinstatement, the outstanding property can be dealt with accordingly.
- Second, the outstanding property can be acquired from the Registrar of CCM. This process is initiated by the interested party to first notify the dissolved company’s shareholders and directors and obtaining their written consent for the acquisition.
It is worth noting that the interested party can also be a party associated with the dissolved company, for instance a former director of the said company. The approval, together with the necessary application and supporting documents, should subsequently be submitted to the Registrar of CCM. If all requirements are met with, the outstanding property can be sold to the interested party.
Regarding the proceeds from the sale, the Registrar of CCM is entitled to 30% of the amount, as stipulated in Item 31 of the Companies Regulations 2017. The remaining 70% is allocated to cover the necessary expenses associated with the sale. If there still remains balance, this monies is then transferred to the “Jabatan Wang yang Tidak Dituntut”. If the dissolved company intends to retrieve this remaining monies, the process of reinstating the company under Section 555 as mentioned earlier must be followed.
If the party interested in the assets is the same party having interest in the proceeds, for example, the previous director/shareholder of the dissolved company, it will be advisable to choose the first option, which is reinstating the dissolved company pursuant to Section 555 of the CA 2016.
Reason being, the interested party would need to only undergo one process, that is the reinstatement of the dissolved company. Once the dissolved company is reinstated, the interested party may proceed to deal with the assets accordingly.
The second option is best for those who are interested in the assets but has no nexus with the dissolved company. They will not be entitled to the remaining monies as their purpose is just to obtain the assets for their own use.
In conclusion, while there is still a chance to deal with the outstanding movable assets after the dissolution of the company, it is important to weigh the time involved in the legal proceedings one may need to undertake and the associated expenses. Different types of property may require distinct procedures, supporting documents and legal considerations.
Perhaps, the wisest course of action is to ensure that, when one voluntarily dissolve his/her company, no assets are left behind.
By Rahayu Partnership, Malaysia
Law Firm Website: www.rahayupartnership.com