1. Firstly, an applicant (i.e. Under Section 366 of the Companies Act 2016, the Court may order for a meeting of the company to be convened for the purposes of proposing a ‘scheme of arrangement’ (“SOA”), which is essentially a plan for how the company is going to pay off its outstanding debts.. the companyâs creditor, member, liquidator or judicial manager, where applicable) will have to file an application in Court pursuant to s.366 for leave to summon a meeting of the company between its creditors and/or members. The benefits of a restructuring process via an SOA under s.366 lies in the details. If more than 75% of the total value of the creditors (or class of creditors) or members (or class of members) present and voting agrees to the proposed SOA, and the Court approves of the same, then such an SOA shall be deemed binding on the company’s creditors, members, liquidator and contributories (where applicable), and the company itself. GUIDE TO TAKEOVERS IN MALAYSIA. COMPANIES ACT 2016. Under Section 366 of the Companies Act 2016, the Court may order for a meeting of the company to be convened for the purposes of proposing a ‘scheme of arrangement’ (“SOA”), which is essentially a plan for how the … proposed members’ scheme of arrangement to be undertaken by iwc pursuant to section 366 of the companies act, 2016 (“act”) in relation to the proposed merger of iwc with iskandar waterfront holdings sdn bhd (“iwh”), involving the exchange of iwc shares (as defined The Companies Act 2016 also makes some significant changes to Malaysia’s corporate insolvency regime, as it introduces two new insolvency processes: judicial management and voluntary administration. LAW OF MALAYSIA . The coronavirus pandemic gives rise to the major risk of companies and small businesses going insolvent. The current regime for an SOA is slightly more relaxed as compared to under the Companies Act 1965. On 31 August 2016, the Companies Act 2016 (“CA 2016”) had been gazetted to replace the Companies Act 1965 (“Old CA”) to provide greater flexibility, certainty and ease for those operating or doing business using Malaysian companies. Judicial Management 3. The Companies Act 2016 is anticipated to come into effect in late 2017. The Registered Office will be situated in Malaysia. Firstly, an applicant (i.e. In Malaysia, there are 6 key restructuring and corporate rescue options contained in the Companies Act 2016 (CA 2016). The meeting(s) have been summoned and held in accordance with its previous Order; The proposals for the SOA have been approved by the requisite majority; and. 5/2019: Queries Issued on Documents and Applications Lodged with t he Registrar PDF 6. means a transaction to acquire control, or … Save my name, email, and website in this browser for the next time I comment. Secondly, once the Court has granted the Order for the summoning of the meetings, the meetings of different classes of creditors and/or members will be held. Required fields are marked *. Tel: 603-6201 5678 / Fax: 603-6203 5678 Published: Mar 13, 2017 Updated: June 3, 2019 by Tan Poh Yee The amendments to the Companies Act 2016 exemplify the Government's efforts towards promotion of effective ways of doing business in Malaysia. Members voluntary winding up 5. Therefore, to let the company have a fighting chance at rehabilitation, the Court has additional powers under s.368(1) of the Companies Act 2016, to stop all further proceedings in any action or proceeding against the company, unless the parties suing the company get leave specifically from the Court to proceed with their particular proceeding, subject to any terms as the Court may impose. PRELIMINARY. For the first time, the CA 2016 introduced in Malaysia corporate rescue mechanisms that were common and widely used elsewhere in the common law world. Two significant developments introduced under the Companies Act 2016 relate to judicial management and corporate voluntary arrangements. Rolling the Dice: Potential Consequences of not having a Shareholdersâ Agreement, Differences between Criminal & Civil Breach of Trust, Personal Data Privacy in Malaysia: An Introduction, The Case of Barakah Offshore: Shooting Oneself in the Foot – Malaysian Litigator, Keeping it Clean: The Role of Clean Hands Doctrine in Oppression Suits, Damage to Power Lines Causing Electricity Disruption – What Are Your Remedies? In an announcement to Bursa Malaysia today, Prestariang said it is in the process of finalising the arrangement with its creditors and will make an announcement in due course. Under the Companies Act 1965 (“Old Act”), a memorandum and articles of association (“M&A”) is required for a company to be incorporated. Your email address will not be published. Where the Amongst others, the amendment includes matters pertaining to scheme of arrangements and reconstructions of companies. The Bill introduces the concepts of Judicial Management and Corporate Voluntary Arrangement. Amongst others, the amendment includes matters pertaining to scheme of arrangements and reconstructions of companies. The Court has to ensure that those parties who would be affected by the proposed compromise or arrangement will be given a proper opportunity to be present and to vote. In this article, I set out the restructuring and rescue options for businesses in Malaysia. In such situations, there are normally 3 ways it can play out: the company can be wound up, a receiver & manager can be appointed, or the company can go for a âscheme of arrangementâ for the restructuring of the companies. We have outlined the 6 key options below in this article: 1. However, the company can still propose a scheme of arrangement if it is not wound up and/or have a receiver and manager appointed. Thirdly, once the meeting(s) have approved the proposed SOA, the applicant then has to file a further application into Court for the Court to sanction the proposed SOA. For example, SOA can be used to 1 : Scheme of Arrangement. By the gazetting of the notice P.U. Companies Act 2016 : Practice Note No. At the same time, the applicant may also apply for a restraining order pursuant to s.368 of the Companies Act 2016 (discussed below). Under Section 366 of the Companies Act 2016, the Court may order for a meeting of the company to be convened for the purposes of proposing a ‘scheme of arrangement’ (“SOA”), which is essentially a plan for how the company is going to pay off its outstanding debts. Scheme of Arrangement. 2020 © THOMAS PHILIP ADVOCATES AND SOLICITORS | DISCLAIMER NOTICE | WEB DESIGN BY TOMMY NG, The proposals for the SOA have been approved by the requisite majority; and. If more than 75% of the total value of the creditors (or class of creditors) or members (or class of members) present and voting agrees to the proposed SOA, and the Court approves of the same, then such an SOA shall be deemed binding on the companyâs creditors, members, liquidator and contributories (where applicable), and the company itself. Amongst the world of distressed companies in Malaysia, the more pertinent inclusion was the … Under s.176 of the 1965 Act, a proposed SOA will have to be agreed upon by a 75% majority of the total value of the creditors (or class of creditors) or members (or class of members) and a 50% majority in the total number of them. In such situations, there are normally 3 ways it can play out: the company can be wound up, a receiver & manager can be appointed, or the company can go for a ‘scheme of arrangement’ for the restructuring of the companies. ACT 777 . It also modifies the existing law relating to schemes of arrangement. Restructuring of debt can be done via (a) a scheme of arrangement, (b) company voluntary arrangement, or (c) judicial management in accordance with the Act. The view and interest of those who have not approved the proposals at the meeting(s) received impartial consideration. A scheme of arrangement allows for the court-approved scheme to be imposed on dissenting creditors and members, provided the statutory voting majorities have been obtained. Without Prejudice Letters: When & How Can They Be Admissible In Court? Website: www.thomasphilip.com.my. The benefits of a restructuring process via an SOA under s.366 lies in the details. It introduces new concepts in relation to incorporation, capital allocation decisions secured creditors’ rights, reporting requirements, corporate governance and rescue mechanisms. The CCM is a statutory body formed under the Companies Commission of Malaysia Act 2001 which regulates companies and businesses. However, the company can still propose a scheme of arrangement if it is not wound up and/or have a receiver and manager appointed. The additional hurdle of having to obtain a 50% majority in the total number of creditors or members has since been removed by the coming into force of the Companies Act 2016. There are other avenues according to the new Companies Act 2016. Thirdly, once the meeting(s) have approved the proposed SOA, the applicant then has to file a further application into Court for the Court to sanction the proposed SOA. In Malaysia, the Companies Act 2016 offers three corporate rescue mechanisms which can be used to avail distressed companies. Prior to CA 2016, the procedure often utilised by financially distressed companies in Malaysia was the scheme of compromise or arrangement under section 176 of the former Companies Act, 1965. During this stage, the Court will direct the manner in which the meeting or meetings are to be summoned. The company must nominate, and the Court must approve, one person nominated by a majority of the creditors in the application for the restraining order to act as a director (or if that person is not already a director, to appoint that person to act as a director). 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