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| Legal Subjects > Litigation > Civil Matters > Winding-Up | |||||
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WHAT IS WINDING UP ?Winding up is also known as "liquidation". Where a company cannot pay its debt as and when it falls due, a company is insolvent. Winding up means where under the companies law, an insolvent company in order to discharge its liabilities, the control of the company's affairs will be undertaken by a form of external administration under a person called a "liquidator" who will prepare for the company's dissolution. The Company Act 1965 Section 218(2) states that a company shall be deemed insolvent if a creditor to whom a company owes more than RM$500.00 and such sum is due for payment, serves a written notice is given or to secure or compound such sum to the satisfaction of the creditor. A company that is insolvent will cease business and go into liquidation after being wound up by the Court. The company will be struck-off from the register of companies and the assets of the company will be liquidated or sold off. The proceeds of sales will be distributed according to law.
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