How To Closing Down/De-Register Your Enterprise Business
Understanding these reasons for closing down/de-registering an enterprise (sole proprietorship) in Malaysia enables business owners to evaluate their options and make informed decisions. It is important to consult with legal and financial professionals especially your company secretary to ensure compliance with applicable laws and regulations throughout the process. If you want to starting your business as an Sdn. Bhd. company (private limited company) or converting Enterprise to Sdn. Bhd., its offers several advantages that contribute to its long-term growth, sustainability, and success. The limited liability protection, enhanced credibility, easier access to funding, business continuity, and tax benefits make it a preferred choice for many entrepreneurs and business owners in Malaysia.
Understanding the reasons for closing down/de-registering an enterprise
If the enterprise is no longer viable or profitable, closing down the business may be the most suitable option. This could be due to various factors such as declining market demand, financial difficulties, or changes in business circumstances.
Retirement or Succession Planning
When business owners reach retirement age or wish to hand over the business to the next generation, closing down the enterprise may be part of their succession plan. It allows for a structured exit strategy and the transfer of assets and responsibilities.
Change in Business Direction
If the enterprise wants to pursue a different business model, product line, or industry, closing down the current business may be necessary to make way for the new direction. This could involve transitioning to a different legal entity or starting a new business altogether.
Legal and Compliance Issues
Non-compliance with regulatory requirements, licensing issues, or legal disputes can prompt the need to close down or de-register the enterprise. Resolving these matters may require the dissolution of the current entity.
Merger or Acquisition
In cases where the enterprise is merging with another business or being acquired by another company, closing down the existing entity may be a necessary step to facilitate the consolidation or integration process.
Enterprises may choose to close down certain divisions, branches, or subsidiaries as part of a strategic restructuring plan. This allows for resource optimization, cost reduction, and focusing on core business areas.
Personal factors such as health issues, relocation, or other life events may lead to the decision to close down the enterprise. It allows business owners to prioritize their well-being or pursue other personal goals.
A company need to meet these conditions before strike off under
Section 550 Company Act 2016
1. The company should not carrying on business or is not in operation. There are no current expenses or revenue generation streams associated with this company.
2. The majority of the shareholders have given their consent to initiate the striking-off process.
3. The company has no assets and liabilities at the time when the application is made, including the proof of closure of bank account.
4. The company has no outstanding penalties or offer of compounds under the CA 2016
5. The company has no outstanding tax or other liabilities with any Government Department or Agency such as LHDN (inland revenue board) , EPF, SOCSO.
6. The company has updated its status with SSM. ensure all information are up to date in SSM system.
7. No legal proceeding is pending against the company in any court (within or outside Malaysia).
8. There are no charges against the company in the Register of Charges.
9. The capital isn’t returned to the shareholders
10. The company is not a subsidiary of another corporate body or a holding company
11. The company is not a “Guarantor Corporation”
Business Termination Procedure
1- Fill out and submit Notice of Termination of Registered Business (Form C).
2-The Form must be signed by every business owner and partner.
3- The person in charge must submit the application in person or online using CCM e-Lodgement services on the SSM via website at www.ssm.com.my.
4- The following documents should be attached:
a) Certificate of Business Registration;
b) A photocopy of the owner's and/or partner's identification card;
c) In the event of termination due to the death of the owner or an associate partner, a photocopy of death certificate must be provided.;
d) If the court has ordered termination, provide a copy of the court order.; and
e)Documents that are relevant if the owner has declared bankruptcy.
Closing Down Enterprise
Since its incorporation, the company in Malaysia has not opened for business, and it has either stopped operating completely for at least six months. The company's management does not plan to start or continue business operations in the future. As of the date of the strike-off application, the sole proprietor has neither assets nor obligations. Also need to close all existing bank account.
Therefore, the business must pay all of its outstanding debts to creditors, collect all of its unpaid invoices, and create a up to date final set of management accounts or audited accounts that are free of both assets and liabilities and tax clearance. In accordance with the Companies Act of 1965, the corporation must also make sure that it is not the subject of any legal action, either domestically or abroad. However, the SSM will deny a strike-off request in the presence of an active judicial proceeding.
By submitting an application to the Companies Commission of Malaysia (Suruhanjaya Syarikat Malaysia) to have its name removed from the Register, a company may be deregistered in accordance with Section 308 of the Companies Act. Following the Registrar's removal of the name from the Register, if the application is accepted and the firm satisfies all requirements, the application will be authorised.
For the company in Malaysia to be eligible to apply under Section 308, it must fulfil the following requirements:
- It has not yet begun operating or stopped operating
- It has no plans to continue doing business in the future
- It doesn't own any assets or property, outstanding charges and it has no debts to creditors
- It has not been declared a guarantor corporation and is not currently in receivership
Withdrawal of Malaysian Company Strike-off Application
The Companies Act's Section 551 contains a provision that allows a strike-off application to be withdrawn in Malaysia, provided that it is done so within 30 days of the strike-off date that is indicated in the publication. By giving notice to the registrar that the strike-off application is being withdrawn and specifying the grounds for the withdrawal, one may get a withdrawal.
Once the withdrawal the strike off process application is approved by the SSM, ensure that all compliance requirements are met. This includes settling any outstanding taxes, filing necessary financial statements, and updating any relevant licenses or permits required for registered business operations. It is important to consult with professional advisors or seek legal guidance when considering the withdrawal of a strike-off application, as specific requirements and procedures may vary based on the circumstances of the company.
As a registered company, ensure ongoing compliance with all regulatory requirements, including timely submission of annual returns, financial statements, and tax filings. Stay updated on any changes in regulations or obligations that may affect the company. Compliance with all regulatory and legal obligations is crucial to maintaining a transparent and legally compliant business entity in Malaysia.
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