The court emphasizes that the legal burden is on the applicant to demonstrate sufficient grounds for a stay of winding up proceedings, considering the financial solvency and interests of creditors.

Introduction

[1] This is an application by a shareholder of a wound up company to stay the court's winding up order under s 243(1) of the Companies Act 1965 ( CA ). The effect of a stay order in s 243(1) is far reaching. In Vijayalakshmi Devi Nadchatiram v. Jegadevan Nadchatiram & Ors, at p 204, [1995] 1 MLJ 830, NH Chan JCA in delivering the court of Appeal's judgment, explained that the effect of a stay of a winding up order under s 243(1) is "a total discontinuance or termination of the winding up proceedings".

[2] This judgment will discuss what is required for a shareholder of a company [the CA employs the term "contributory" (as defined in s 4(1) )] to satisfy the winding up court to grant a "permanent" stay of the winding up order under s 243(1) and how the court should exercise its discretion in respect of such an application.

Background

[3] On 19 December 2013, the petitioner company (petitioner) filed a winding up petition in this court to wind up the respondent company (respondent) on the ground that the respondent owed a sum of RM85,111.01 as at 15 November 2013 by virtue of a monetary judgment obtained by the petitioner against the respondent in the Shah Alam Magistrate's court on 10 September 2013 (petitioner's judgment sum) and the respondent had failed to pay the petitioner's judgment sum.

[4] On 19 February 2014, this court wound up the respondent and appointed the Official Receiver (OR) as the liquidator of the respondent (Winding Up Order).

This Application

[5] On 30 October 2014, Encik Nordin bin Ahmad (applicant) filed a notice of motion (motion) in court encl no 15 (this application) for the following order:

(a) the respondent be granted leave to stay the entire Winding Up Order under s 243(1) CA (first prayer);

(b) as an alternative to First Prayer, the respondent be granted leave to stay the entire Winding Up Order for a limited period of time as ordered by this court under s 243(1) CA (second prayer);

(c) the stay order be lodged with the Companies Commission of Malaysia (SSM) (third prayer);

(d) costs of this application be borne by the respondent; and

(e) any other relief or order as this court deems just, fit and appropriate.

[6] In support of this application, the applicant affirmed an affidavit (applicant's affidavit) which stated, among others, as follows:

(a) the applicant is the majority shareholder of the respondent. According to a copy of the search of SSM's record dated 8 October 2013 (SSM search report):

(i) the respondent has an issued share capital of 1 million shares with the nominal value of RM1 per share. Out of the 1 million shares in the respondent, 310,000 shares had been paid up in cash while the balance of 690,000 shares had been issued as "paid up otherwise than in cash";

(ii) the applicant holds 900,000 of the total issued shares of the respondent;

(iii) the applicant is a Director of the respondent;

(iv) the applicant has "unsatisfied" charges by the following financial institutions:

(1) a charge registered on 14 September 2001 in favour of, at that time, Bumiputra Commerce Bank Bhd for the amount of RM40,000;

(2) a charge registered on 8 December 2011 in favour of Public Islamic Bank Bhd (PIBB) for the amount of RM2,118,780; and

(3) an "open charge" registered on 19 December 2011 in favour of PIBB; and

(v) the respondent only filed its financial statements for the financial year ending 30 September 2010 (respondent's 2010 Financial Statements);

(b) the respondent did not receive any notice of the petitioner's claim for the petitioner's judgment sum until the respondent had been informed by the respondent's bank regarding