What are the differences between Creditors’ Voluntary Winding-Up and Members’ Voluntary Winding-Up?
From the commencement of the voluntary winding up, the company shall cease to carry on its business. Nevertheless, the corporate powers of the company shall continue until it is dissolved. The company’s shareholders cannot transfer the company shares without liquidator’s sanction. Filing needs to be submitted to Accounting and Corporate Regulatory Authority and the liquidation commences at the time of passing of the resolution.
CREDITORS’ VOLUNTARY WINDING-UP
The creditors’ voluntary winding-up is initiated by the directors and approved by shareholders and creditors of the company. An Extraordinary General Meeting (“EGM”) of shareholders and a creditors’ meeting be convened to resolve that the company be wound up within five (5) weeks from the lodgement of Declaration of Inability to Continue Business. The provisional liquidator is appointed at the board of directors’ meeting for the purpose of overseeing the affairs of the company thereafter until the holding of the EGM and the creditors’ meeting.
Where there is a difference between the company’s and the creditors’ nominee(s), the creditors’ choice of liquidator(s) will prevail over that of the Board of Directors’ and members’ nomination.
MEMBERS’ VOLUNTARY WINDING-UP
Members’ voluntary winding-up is initiated by the company’s directors and approved by the shareholders due to business environment, dormant status of the company and/or corporate restructuring involving a group of companies. Pursuant to Section 293(1) of the Companies Act, the directors are required to file a declaration of solvency to state that the company is able to pay its debt in full within twelve (12) months after the commencement of the winding up. A committee of inspection comprising of shareholders and directors of the company to provide oversight of the liquidation proceedings and serve as joint bank signatories to settle all outstanding debt owed by the company.