Process of winding up
The procedure by which a company’s existence is terminated is called “liquidation” or “winding up”. These terms are interchangeable but for the discussion in this unit, “winding up” is used. The process of winding may be as follows:
1. The passing of a resolution, or the making of an order by the court, that the company be wound up.
2. The appointment of a liquidator.
3. The converting, by the liquidator, of the company’s assets into cash, the calling in of any uncalled capital and the payment of the company’s creditors in order of priority.
4. The distribution to members of any surplus after payment of all creditors.
5. The dissolution of the company.
The major purposes of winding up are for the collection and realisation of company assets, and out of the proceeds of such realisation are used to first, pay creditors in a fixed order of priority and second, adjusting the rights of members among themselves.
The winding-up order of the court or resolution of the company puts the company into a winding up state, but it may be a long time before its final dissolution. During this time the company remains a legal entity.
If a winding-up proceeding is commenced against a listed company, or any of its subsidiaries or major associated companies, the listed company must make an immediate announcement pertaining to such proceedings to Bursa Securities (para 9.19 Bursa Malaysia Securities Listing Requirements).
According to Pt C of Appendix 9A (para 9.19(19)) the following information must be included in the announcement:
1. The date of presentation of the winding-up petition and the same was served on the listed company, its subsidiary or major associated company;
2. The particulars of the claim under the petition, including the amount claimed and the interest rate;
3. The details of default or circumstances which led to the filing of the petition against the listed company, its subsidiary or major associated company;
4. The total cost of investment in a subsidiary or major associated company, where the winding-up is commenced against a subsidiary or major associated company;
5. The financial and operational impact of the proceedings on the group;
6. The expected losses arising from the proceedings, if any; and
7. steps taken or proposed to be taken by the listed company in respect of the winding-up proceedings.