1. What Is Liquidation (Winding-Up)?
Liquidation is the statutory process of collecting and realising a company’s assets, paying creditors, and dissolving the entity under the Companies Act 2016. Once liquidation is complete, the company ceases to exist and its name is removed from SSM’s register.
When should you liquidate (rather than strike-off)?
- The company still has assets, liabilities, or pending disputes.
- You need a court-supervised or creditor-driven procedure for transparency.
- Group restructuring—return surplus capital to shareholders tax-efficiently.
2. Types of Liquidation in Malaysia
| Type | Solvency test | Who starts it? | Key reference |
|---|---|---|---|
| Members’ Voluntary Liquidation (MVL) | Solvent – directors swear the company can pay debts within 12 months | Members (shareholders) | s. 439–455 CA 2016 |
| Creditors’ Voluntary Liquidation (CVL) | Insolvent or no solvency declaration | Directors & creditors vote on liquidator | s. 456–460 CA 2016 |
| Compulsory (Court) Winding-Up | Usually insolvent, or other statutory grounds | Creditor, contributory or Registrar files petition | s. 465–469 CA 2016 |
MVL converts to CVL if the liquidator later finds the company cannot pay debts in full.
3. Members’ Voluntary Liquidation – Step-by-Step
-
Board meeting & Declaration of Solvency
Majority directors declare the company will pay all debts within 12 months (Form Section 443) and lodge it with SSM within 5 weeks before the members’ meeting. -
Members’ Extraordinary General Meeting (EGM)
Pass a special resolution to wind up and appoint a licensed liquidator (must be held within those 5 weeks). Lodge the resolution with SSM within 7 days. -
Notice & Gazette
Publish notice of winding-up in the Gazette and one newspapers within 14 days. -
Liquidator takes control
Realises assets, settles creditors, files six-monthly progress reports with SSM (s. 456). -
Final Meeting & Dissolution
When affairs are fully wound up, the liquidator calls a final meeting, lodges Form Section 459 (Return); the company is dissolved 3 months after the return is filed.
Typical timeline: 6–12 months for small, simple companies.
4. Creditors’ Voluntary Liquidation – Step-by-Step
| Stage | What happens | Key timing |
|---|---|---|
| Directors’ Resolution – acknowledge insolvency, call creditors’ meeting | — | |
| Creditors’ Meeting – directors table Statement of Affairs; creditors vote on liquidation & liquidator | Notice 7 days before meeting | |
| Committee of Inspection (optional) elected to supervise liquidator | Same day | |
| Liquidator’s Realisation & Distribution | Continuous | |
| Final Creditors’ Meeting & filing of liquidator’s account (s. 461) | End of process |
Timeline: 12–24 months depending on asset realisation and disputes.
5. Compulsory (Court) Winding-Up
- Statutory Demand (s. 466) – creditor serves 21-day demand > RM50,000; failure to pay presumes inability to pay debts.
- Winding-Up Petition – filed in High Court on one of 12 grounds (most common: insolvency) (s. 465).
- Court Hearing & Order – if granted, Official Receiver or a private liquidator is appointed.
- Liquidator realises assets; claims proved in court; distributions made.
Timeline: often 18-30 months (longer if litigation arises).
6. Key Documents & Costs Snapshot
| Document | Who signs / issues | MVL | CVL | Court |
|---|---|---|---|---|
| Declaration of Solvency (s. 443) | ≥ 2 directors | ✔ | — | — |
| Special Resolution to Wind-Up | Members | ✔ | ✔ | — |
| Statement of Affairs | Directors | — | ✔ | ✔ (on petition) |
| Gazette / Newspaper Notices | Liquidator | ✔ | ✔ | ✔ |
| Court Petition & Affidavits | — | — | — | ✔ |
| Cost Element | MVL (RM) | CVL (RM) | Court (RM) |
|---|---|---|---|
| SSM filing fees | ≈ 500 | ≈ 500 | N/A |
| Gazette & ads | 300–600 | 400–800 | 600–1,200 |
| Liquidator’s fee | From 8,000 (simple) | % of assets | Court-approved scale |
| Court deposit & legal fees | — | — | 15,000 + |
(Figures are 2025 market averages; actual fees vary with case complexity.)
7. Powers & Duties of the Liquidator
The liquidator collects assets, pays debts, adjudicates claims, and distributes any surplus. They can compromise debts, carry on limited business, or litigate with court/committee approval (s. 236 CA 1965 & Part X CA 2016).
Failure to cooperate with the liquidator—e.g., not delivering books—may attract fines or imprisonment.
8. After Dissolution: Liability & Restoration
- Officers remain liable for fraud or improper conduct discovered later.
- A dissolved company can be restored within 7 years by court order if assets or claims surface (s. 555).
9. Liquidation vs Strike-Off at a Glance
| Strike-Off | Liquidation | |
|---|---|---|
| Debts allowed? | No | Yes (CVL / Court) |
| Assets to distribute? | No | Yes |
| Regulator scrutiny | Low | High |
| Cost | Low (≈ RM100 + fee) | Higher |
| Timeline | 6–9 months | 6–30 months |
10. How Our Firm Can Help
As licensed company secretaries and approved liquidators, we provide:
- Free solvency assessment and advice on MVL vs CVL vs Court route
- End-to-end liquidation – board papers, statutory ads, filings, creditor liaison
- Asset realisation & tax clearance
- Transparent fee quotes, progress dashboards, and dedicated support.
Thinking of winding up? Book a confidential consultation and let our experts close the chapter smoothly.
Last Updated: 28-Apr-2025