RELIEFS FOR COMPANIES

Pursuant to P.U.(A) 123/2020 [Companies (Exemption) (No.2) Order 2020] gazetted on 23-04-2020 by the Minister of Domestic Trade & Consumer Affairs duly exercising his power in accordance with Section 615 of the Companies Act 2016 ["Act"].

For the period between 23-04-2020 and 31-12-2020, P.U.(A) 123/2020 exempts ALL COMPANIES from the provision of Section 466(1)(a) of the Act [Section 466 of the Act defines "Inability to Pay Debts"] which reads as follows:-

"...the company is indebted in a sum not exceeding the amount as may be prescribed by the Minister and a creditor by assignment or otherwise has served a notice of demand, by himself or his agent, requiring the company to pay the sum due by leaving the notice at the registered office of the company, and the company has for twenty-one (21) days after the service of the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the creditor..."

Therefore, prior to P.U.(A) 123/2020, after the expiry of twenty-one (21) days from the date the demand is served on the debtor, if the debtor fails, neglects, and/or omits to respond, the creditor can file a winding-up petition against the debtor under Section 466 of the Act.

However, with the introduction of P.U.(A) 123/2020, any company shall be deemed to be unable to pay its debts in accordance with Section 466(1)(a) of the Act if the company neglects any notice of demand by any creditor to pay its debt or to secure its debt to the satisfaction of the creditor within a period of SIX (6) MONTHS after the notice of demand is served on the debtor. Failure of the debtor to respond within that period allows the creditor to file a petition for winding up the company.

Another way of putting it, the initial time period of twenty-one (21) days has been lengthened to six (6) months.

The definition of a company's "inability to pay" has also been increased exceeding RM50,000-00 from RM10,000-00.

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