Restraint on proceedings
When a scheme has been proposed to Court, the Court may restrains all further proceedings in any action against the company as the summary of the hearing (Section 176(10)). If the company is in the course of liquidation, Section 176(10) is not applicable.
The court may grant a restraining order under Section 176(10) to a company for a period of not more than ninety days or such longer period as the court may allow, if:
1. it is satisfied that there is a proposal for a scheme of compromise or arrangement between the company and its creditors or any class of creditors representing at least one-half in value of all the creditors
2. the restraining order is necessary to enable the company and its creditors to formalise the scheme of compromise or arrangement for the approval of the creditors or members pursuant to Section 176(1).
3. a statement in the prescribed form as to the affairs of the company made up to a date not more than three days before the application is lodged together with the application, and
4. it approves the person nominated by a majority of the creditors in the application by the company under Section 176(10) to act as a director or, if that person is not already a director, appoints the person to act as a director (as mentioned in Section 176(10A)).
The person approved or appointed by the court to act as a director of the company under Section 176(10A) will have access to the accounting and other records (including registers) of the company. The director is also entitled to require from any officer of the company such information and explanation as the director may require for the purposes of his/her duty.
Any disposition of company property, including things in action and any acquisition of property by the company, other than those made in the ordinary course of business, made after the grant of the restraining order by the court, shall be void
Where a company disposes or acquires any property, other than in the ordinary course of its business, without leave of the court, every officer of the company who is in default shall be guilty of an offence (Section 176(10D)).
Where an order is made under Section 176(10), every company in relation to which the order is made must within seven days:
1. lodge an office copy of the order with the Registrar, and
2. publish a notice of the order in a daily newspaper circulating generally throughout Malaysia,
and every company which makes default in complying with this subsection and every officer of the company who is in default shall be guilty of an offence against the Act (Section 176(10E)).