Every Beginning has an Ending
It’s always sad to see the business that you’ve put your soul and heart into it come to an end.
However, every start has an ending. This might be one difficult and emotional decision, but it is also crucial to understand the steps you will need to take to close down your business successfully.
If you’re unsure about the process, don’t worry as we will be providing a step-by-step guide on how to close down your business or company successfully in Malaysia.
Why Close Down a Business?
There are a huge amount of reasons why a businessman would want to choose to close down their business. These reasons may include financial difficulties, unforeseen changes in the industry to even personal reasons such as retirements and health issues. Regardless the reasons, it is important to know the options you have when you want to close down your business or company.
Closing Down Proprietorship or Partnership Business
Closing down a business is an easy and straightforward process. You will just need to fill in this Form C and submit it to the SSM.
However, do take note that a business (Sole Proprietorship and Partnership) is not a separate legal entity from its owner, so it is best to consult your tax agent to close your tax file permanently.
Closing Down a Company
Unlike closing down a business, closing down a company is slightly more complicated compared to closing down a company.
There are mainly two types of options to close down your company in Malaysia
1. Strike Off / De-registration
Strike-off or de-registration is a company being removed from the registrar if the company is believed to not be carrying out any activities of business operation. This situation normally happens when a company is considered dormant and has no further intentions to do business.Winding up (Compulsory or Voluntary)
2. Winding Up
Winding up is basically the process of dissolving a company. Winding up includes the termination of a company’s business operation and selling off all the assets to pay off the creditors according to the priorities.
Compulsory Winding Up
Compulsory Voluntary or sometimes known as winding up by court. This option is typically used when a company is unable to pay its debts as they fall due. It is considered a lengthy and expensive process that can take up to several months to complete.
Voluntary Winding Up
Voluntary Winding up is basically the process of dissolving a company initiated by either:
Member’s Voluntary Winding Up (MVWU)
Creditor’s Voluntary Winding Up (CVWU)
In a members' voluntary winding up, the directors will be tasked to make a declaration of solvency. The directors will be required to declare that the company will have sufficient ability to pay its debts fully within 12 months after the commencement of winding up.
On the other hand, a creditor’s voluntary winding up happens when a company cannot meet its liabilities and will have to conduct a meeting with its creditors to come out with a solution or proposal for a voluntary winding up of the company.
Steps to Closing Down a Company in Malaysia
Closing down a business or company in Malaysia involves several key steps, including:
1. Board Resolution
The first step is to hold a board meeting and pass a resolution to close down the business or company. The resolution should specify the reason for the closure and appoint a liquidator if necessary.
2. Informing Creditors and Other Stakeholders
Once the board resolution is passed, the company must inform its creditors and other stakeholders of the closure. This includes customers, suppliers, employees, and any government agencies that the company is registered with.
3. Publication of Notice
The company must publish a notice of the closure in a local newspaper and the Government Gazette to inform the public.
4. Appointment of Liquidator
If the company is insolvent or unable to pay its debts, a liquidator must be appointed to manage the closure process. The liquidator will be responsible for selling the company's assets and distributing the proceeds to its creditors.
5. Settling Debts and Liabilities
The company must settle all outstanding debts and liabilities before it can be officially closed down.
6. Filing of Documents
The company must file the necessary documents with the Companies Commission of Malaysia (SSM) to inform them of the closure.
Every Ending has a New Beginning
Every business’s journey will come to an end, eventually. While it may be sad to walk separate ways from something that you have poured your heart and soul into, it is important to remember that every ending marks a new beginning.
By following the steps outlined in this guide, you can ensure that the closure is conducted in a legal and professional manner.
Ultimately, closing down your business or company is an opportunity to reflect and learn from your journey and experiences. And with everything you’ve learnt along the way, it will pave the way for new opportunities and adventures in the future.
