Guidelines for the application for reinstatement of the company name under section 555(1) of the Companies Act 2016 are issued under Section 20C of the Companies Commission of Malaysia (Amendment) Act 2015, which was gazetted on 5 January 2015.
PURPOSE
The purpose of these guidelines is to provide guidance on the application procedures for the reinstatement of a company name that has been struck off from the Register under Section 549 and/or Section 550 of the Companies Act 2016 (CA 2016).
INTRODUCTION
Section 549 and/or Section 550 of the CA 2016 provides legal powers to the Registrar of Companies to strike off a company's name from the Register on his own initiative or the application of a director, member, or liquidator of the company.
The criteria considered by the Registrar of Companies when making a decision to strike off a company's name from the Register of Companies in accordance with Section 549 of the CA 2016 are as follows:
the company is not carrying on business or is not in operation;
the company has contravened the provisions of the CA 2016;
the company is being used for unlawful purposes or any purposes prejudicial or detrimental to the security, welfare, public interest, peace, public order, or morality in Malaysia;
in any event, where the company is wound up, and the Registrar of Companies has reasonable cause to believe that-
there is no liquidator acting;
the affairs of the company have been fully wound up, and for a period of six months, the liquidator has neglected to deliver any statement that he is required to make; or
the affairs of the company have been fully wound up under the supervision of the court, and there are no assets or the assets available are insufficient to pay the costs of obtaining an order from the court for the dissolution of the company.
Furthermore, any company that fails to comply with the provisions of Section 68 and Section 259 of the CA 2016 (for companies established under the CA 1965 and/or CA 2016) and Section 575 and 576 of the CA 2016 (for foreign companies) is deemed to be not carrying on business or is not in operation.
The status of a company whose name has been struck off under Section 549 of the CA 2016 and/or Section 550 of the CA 2016 will change to dissolved after the notice under Section 551 of the CA 2016 is issued in the Gazette.
A person aggrieved by the dissolution of a company by the striking off of its name under Section 549 of the CA 2016 and/or Section 550 of the CA 2016 may make an application to the court for the reinstatement of the name of the company that has been dissolved to the Register of Companies.
Pursuant to Section 555(1) of the CA 2016, an application for the reinstatement of the company's name to the Register may be made at any time within seven (7) years after the name of the company was struck off.
LEGAL PROVISIONS
An application for the reinstatement of the company's name to the Register of Companies shall be made per Section 555 of the CA 2016 and Order 88 Rule 2 of the Rules of Court 2012 (RC 2012).
Section 555 of the CA 2016 and Order 88 Rule 2 of the Rules of Court 2012 are as follows:
CA 2016:
Order 88 Rule 2 of the Rules of Court 2012:-
According to Order 88 Rule 2 of the Rules of Court 2012, an application to reinstate the name of a company in the Register shall be initiated by the Plaintiff filing an Originating Summons (BM: Saman Pemula) in court.
This Originating Summons shall be supported by a Supporting Affidavit stating the reasons and evidence supporting the application. The supporting affidavit shall contain facts such as:
information on the company's directors;
information on the shareholders;
consent letter from other directors (if more than one);
the registered address of the company;
reasons for the application; and
other relevant and necessary facts.
The Plaintiff must show a copy of the Annual Statement and Financial Statement (current and outstanding) in the Supporting Affidavit as evidence to support the application.
In addition, Plaintiff also needs to exhibit other relevant evidence to support the reasons in the Supporting Affidavit. For example, if the company has current assets under the company name, the Plaintiff must provide evidence showing these assets' existence. For instance, the latest official ownership search, title deed, and bank statements.
The Companies Commission of Malaysia (SSM), through the Registrar of Companies, as the supervisory body for companies in Malaysia, shall be named as the 'Defendant' in this application.
The Registrar of Companies is responsible for giving effect to the order that the Court will give. Therefore, the Registrar of Companies will examine all applications to re-enter the company's name into the Register before informing the Court of its position, whether supporting or opposing the application.
ATTACHMENT
The following is an example of the 'Statement of Claim' for an application to reinstate a company's name in the register:
Attachment A - Originating Summons
Attachment B - Supporting Affidavit
This Guideline is provided by: the Registrar of Companies Companies Commission of Malaysia Date: January 30, 2023
To download:
Attachment A of the Guideline - Sample Originating Summons
The orders that need to be obtained from the Court should consist of the following:
A directive requires the plaintiff to submit the overdue statutory documents not submitted previously, including but not limited to the following:
the audited financial statements,
the annual return for the relevant years, and
any other related documents (if any).
An Order that the plaintiff must pay the cost of the proceedings amounting to RM2,000.00 within 30 days of the order being issued.
An instruction that the plaintiff bears the cost of the application.
Attachment B of the Guideline - Sample of Supporting Affidavit
The Supporting Affidavit must comprise the following information:
The information about:
The date of incorporation of the company and its business objectives
The names of the company's director(s) and shareholder(s) exhibited as evidence should be supported by a copy of the official search from the Companies Commission of Malaysia.
A statement should be made that the company has been actively conducting business and operations and profitable during the financial periods mentioned in the financial statements and draft financial statements.
It should be stated that the plaintiff's employee and/or agent has contacted the defendant and was informed that the company has been dissolved due to its failure to submit its financial statements and annual returns for a specific period.
A statement should be made that the plaintiff's agent, representative, and/or employee has contacted the company that provided company secretarial services (secretarial firms) to the company, and the company secretary was unable to provide any reasonable explanation for their failure to submit the statutory documents to the defendant.
It should be stated that the plaintiff has always believed that the statutory documents, i.e., the audited financial statements and annual returns for the relevant periods, have been submitted by the company secretary to the defendant in accordance with the Companies Act 1965/ CA 2016.
The affidavit should also provide reasons and evidence to support the statement that the company must be reinstated into the register; for example, the company has been actively conducting business and has recorded encouraging profits throughout, and the company has been awarded an ongoing project.
It should be stated that if the company's name is not reinstated into the register, it will cause irreparable harm that cannot be compensated by damages to the company as its economic activities cannot be expanded, which would affect the company's employees. It may also expose the company to legal action due to its inability to fulfil its contractual obligations.
A schedule of the company's employees and proof of payment of contributions to the Employees' Provident Fund (EPF), Social Security Organisation (SOCSO), and Inland Revenue Board for the relevant years should be included as exhibits.
It should be stated that the company's failure to submit its overdue audited financial statements and annual returns to the defendant can be rectified.
A statement should be made that the company has prepared the annual returns and audited financial statements that were not submitted to the defendant. These documents and the draft financial statements are ready to be submitted if the Court allows the application.
The defendant can impose a fine or compound against the company for failing to submit the overdue annual returns and audited financial statements instead of striking off the company's name from the register.
Conclusion:
It can be concluded that the scope of the Guideline is limited to applications for the reinstatement of a company's name into the register, where the name was struck off due to the company's failure to comply with the requirements of CA 2016.
The Registrar has imposed stringent conditions on such applications, which include demonstrating that the failure to lodge the relevant documents was due to the company secretary and that the company has paid all statutory contributions and taxes.
Ultimately, it is up to the Court's discretion to grant an application for reinstatement. It will consider whether the company was carrying on business or in operation at the time of striking off.