If we would like to close a Sdn. Bhd., we need to segregate the company into two (2) categories, solvent and insolvent companies.
Solvent companies are those company having positive shareholders' fund (Share capital + retained profits) or in layman terms, company make money before and have enough money/reserve to refund to the shareholders.
Insolvent companies are those company having negative shareholders' fund (Share capital - accumulated losses) or in layman terms, company make losses previously and have no money/reserve to refund to the shareholders. Besides that, shareholders are expected to advance to the company in order to close the company.
Under S308 of the Companies Act 1965, the company may make application to the Registrar of Company to strike off the company. The strike off is the power given to the Registrar of Company to close the company.
We refer to the guidelines issued by SSM, insolvent companies which are dormant or ceased operations in prior years are allowed to apply to Registrar to strike off the company. There are other criteria stated in the guidelines i.e. the shareholders must not be corporate shareholders, all penalty due to government bodies fully settled and etc must be complied before the Registrar would consider the strike off application.
I would strongly encourage the businessman to make the application to strike off the company if the basic conditions are fulfill. As per our experience, it is unlikely that the strike off will be rejected if the conditions are fulfill. In addition, SSM has recently announce that the moratorium period to strike off the company has been extended to 31 December 2009. It is easier for SSM and the applicant to strike off the company during this moratorium period.
The most important thing that need to be noted is the cost involved to strike off a company is very nominal, application fee is only RM120 and accounting firm is charging normally around RM700 for the strike off exercise. Thus, the total cost involved is less than RM1,000.
The application process normally takes 3 - 6 months and it is faster as compare to closure of company under the winding up process.
Step up to apply to strike off the company if the company had ceased business operations and no intention to commence business in the near future. It is a cost saving measure rather than maintaining the company and expose to the penalty risk if any non compliance arises.
S308 SSM Strike Off Guidelines
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