What happens to your shares if the company is dissolved? Can you claim back your shares? Scroll down to find out more.
What do you mean “if a company is dissolved”?
When someone says: “a company is dissolved” it essentially means this: the company cease to exist (legally) altogether. You would not able to find its name on the official register on the Companies Commission of Malaysia (CCM)/ Syarikat Suruhanjaya Malaysia (SSM) database anymore.
There are couple of ways in which this could happen:
- A company is struck out by the Registrar of Companies; and
- The company is dissolved via court order or it is already heading in that direction (i.e. already wound up by court, pending the closure of its activities),
Briefly, a company can be struck out by the registrar if:
- The company is not carrying on business/ cease to operate;
In the course of its operation it contravened the laws laid down in Companies Act;
- The company is being used for unlawful purposes or what it does disturbs the peace, welfare, security, public interest, public order, good order, or morality in Malaysia;
- The liquidator of the company mismanaged the winding-up process; or
- There are no sufficient monies (after winding up) to pay the cost of obtaining a court order to dissolve the company.
For the second one, a company is dissolved:
- 3 months (or more, depending on the court orders) after an account is prepared by the liquidator and a meeting of members is called to show that the company is fully wound up i.e. everything is done (settling debts and disposing of its properties at the best of its capabilities) in anticipation of winding up; or
- Via a court order (in which a liquidator applies to) when:
- All properties of the company have been realized/ disposed of of by the liquidator and there is nothing else he can do in that regard;
- The liquidator distributed (if any) final dividends to the creditors;
- The liquidator adjusted the rights of the contributories among themselves; and
- Made a final return (if any) to the contributories; or
- In a situation where the liquidator resigned/ released/ removed from office.
So what happens to your shares when a company is dissolved?
So what happens to your shares when a company is dissolved? Section 557 simply says that your shares are now in the control of the Registrar of Companies. Section 557 reads as follows:
“Where, after a company has been dissolved, there remains any outstanding property, movable or immovable, including things in action and whether within or outside Malaysia which at the time it was dissolved-
- was vested in the company;
- the company was entitled to it; or
- the company had a disposing power,
but which was not got in, realized upon or otherwise disposed of or dealt with by the company or its liquidator before the dissolution, the property, except called and uncalled capital, shall, for the purposes of the following sections of this Subdivision and notwithstanding any other written law to the contrary, be vested in the Registrar for all the estate and interest, legal or equitable, of the company or its liquidator at the date the company was dissolved, together with all claims, rights, and remedies which the company or its liquidator had at that time.
For the purposes of subsection (1), where any claim, right or remedy of the liquidator may, under this Act, be made, exercised or availed of only with the approval or concurrence of the Court or some other person, the Registrar may make, exercise or avail himself of that claim, right or remedy without that approval or concurrence.”
In fact, the Registrar of Companies can deal with the properties as he sees fit.
Does it mean that you cannot claim back your shares (money!!) once the company is dissolved?
No, you can still claim.
Must the court reinstate the company before you can recover your shares?
How do you claim it back?
Pursuant to Section 558(2) of the Act, anyone who is interested in the properties (in this case, their shares, can actually submit an application to the Registrar through a statutory declaration (your own statutory declaration) attested by a commissioner for oath stating reasons to substantiate the application together with an application fee of RM500.00 pursuant to Item 30(a) of the Schedule (Regulation 8) of the Companies Regulations via a covering letter to:
The Director Registration Services Division
(Asset Management Unit, Insolvency Section)
Suruhanjaya Syarikat Malaysia
Level 19, Menara SSM@Sentral No. 7
Jalan Stesen Sentral 5,
Kuala Lumpur Sentral
50623 Kuala Lumpur.
You must also substantiate your application with the relevant documents.