A company can be wound up for failing to pay debts even if it claims solvency, following statutory demands served at registered addresses as per the Companies Act.

[1] This Winding Up Petition is presented upon the failure/refusal of the Respondent Company to comply with the notice of demand dated 21 August 2017 issued to the Respondent Company. The debt demanded therein has been allowed in the action by the Petitioner in Georgetown Civil Suit No:52-195-03/2013 ("the said Civil Suit") against the Respondent Company.

[2] A summary judgment of RM183,332.24 together with cost of RM3,000.00 and interest was entered against the Respondent Company on 17 March 2014. An appeal was filed by the Respondent Company to the Court of Appeal against the summary judgment resulting in the appeal being dismissed with no further appeal being lodged.

[3] Thus, the debt upon which this Winding-up Petition is presented is indisputable.

Cause Papers

[4] The cause papers filed for encl 1 are as follows:

• a) the Petition dated 15 November 2017;

• b) the Petitioner's Affidavit Verifying Petition affirmed on 16 November 2017;

• c) the Respondent's Affidavit Opposing Petition affirmed on 31 July 2018;

• d) the Petitioner's Affidavit in Reply affirmed on 11 August 2018;

• e) the Respondent's Affidavit in Reply (2) affirmed on 3 September 2018; and

• f) the Petitioner's Affidavit in Reply 2 affirmed on 22 September 2018;

Law On Winding Up

[5] Section 464 Companies Act 2016 states:

"(1) A company, whether or not it is being wound up voluntarily, may be wound up under an order of the Court on the petition of any one or more of the following:

(a) the company;

(b) any creditor, including a contingent or prospective creditor, of the company;"

(....)

[6] Section 465 of the Companies Act 2016 pertains to circumstances in which Company may be wound up by Court:

(1)The Court may order the winding up if:

(a) the company has by special resolution resolved that the company is to be wound up by the Court;

(b) the company defaults in lodging the statutory declaration under subsection 190(3);

(c) the company does not commence business within a year from its incorporation or suspends its business for a whole year;

(d) the company has no member;

(e) the company is unable to pay its debts;

(....)

[7] Section 466 Companies Act 2016 deals with the definition of "inability to pay debts":

(1) A company shall be deemed to be unable to pay its debts if-(a) the company is indebted in a sum 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 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;

[8] Prescription of Amount of Indebtedness of Company PU(B) 58/2017 and in this case the amount is exceeded:

"In exercise of the powers conferred by para 466(1)(a) of the Companies Act 2016 [Act 777], the Minister prescribes that the amount of indebtedness of a company for the purposes of that paragraph shall be an amount exceeding ten thousand ringgit with effect from 31 January 2017."

[9] Presumption of inability to pay debts arise upon failure of the Respondent Company to pay the debts demanded in the statutory notice of demand is stated in Malaysia Air Charter Co Sdn Bhd v. Petronas Dagangan Sdn Bhd , 2000 MarsdenLR 1440 :

The presumption under s 218(2)(a) that the company was unable to pay its debts and hence insolvent arose once it is established that:

(i) a sum exceeding RM500 was due;

(ii) a demand had been made in the manner provided by s 218(2)(a); and

(iii) the debtor company neglected to pay the amount demanded within three weeks