When a company is no longer active or needed, continuing to maintain it can lead to unnecessary costs and compliance obligations. Instead of going through a formal winding-up process, eligible companies may consider applying for striking off from the register. This is a simpler and more cost-effective alternative provided under the Companies Act 2016 and the Guidelines issued by the Companies Commission of Malaysia.
Why Strike Off a Company?
There are several common reasons a company may consider striking off:
• Dormant or ceased business operations – The company is no longer trading or active.
• No intention to continue business – The shareholders or directors have no plans to revive or use the company.
• Corporate restructuring – To streamline a group structure by eliminating inactive or unnecessary subsidiaries.
• Cost-saving – To avoid the recurring costs of maintaining a company such as audit fees, filing charges and secretarial expenses).
• Clean exit – For companies with no liabilities or assets, striking off provides an administrative alternative to winding up.
Who Can Apply?
Pursuant to Section 549(a) of the Companies Act 2016 (“CA 2016”), the Registrar of Companies has the discretion to strike off a company’s name from the register if there is reasonable cause to believe that the company is not carrying on business or is not in operation.
Aside from the Registrar, Section 550 of the CA 2016 permits the company director, shareholder or liquidator to apply to the Companies Commission of Malaysia (“SSM”) to request the Registrar to exercise his discretion, subject to fulfilling certain requirements.
What Companies do not qualify?
The striking off process is not applicable to companies that fall within any of the following categories:-
• Companies that are still active in operation
• Guarantor corporations
• Holding companies
• Companies involved in legal proceedings
• Companies with outstanding liabilities, including unpaid taxes, loans, or penalties
• Companies that have not filed annual returns or financial statements
• Companies under investigation or enforcement action
What are the requirements?
1. Shareholders’ Resolution
A resolution approving the striking off application on the basis that the company is not carrying on business or not in operation must be passed by the shareholders. Such resolution passed must be enclosed to the striking off application to reflect the consent of the majority shareholders.
If the requisite majority cannot be obtained due to shareholder(s) who is untraceable, the application may still be submitted to SSM provided that attempts have been made to trace the whereabouts of the shareholder(s). The attempts must be made by way of registered post and proof of attempts must also be attached to the application.
2. The company has no assets and liabilities at the time when the application is made
The latest management accounts must show zero assets and liabilities. If the last audited financial statements lodged with the Registrar reflect otherwise, supporting documents must be provided to prove disposal or settlement.
For companies that never commenced operations, the applicant must make the following declaration to confirm that:-
(i) there has been no transaction since incorporation; and (ii) no bank account has been opened, or if opened, it has since been closed.
3. No outstanding charges
There must be no outstanding charges registered with the Registrar.
4. No outstanding penalties or compounds
The company must ensure that all such liabilities are fully settled.
5. No outstanding tax or other liabilities with any Government Department or Agency
Where a company has commenced operation, it must settle all outstanding tax and obtain a tax clearance prior to the filling of the application for striking off.
6. Updated company information with the Registrar
The particulars of director(s) of the company must be the same as that in the Registrar’s records. If there are any differences or changes in respect of the information of the directors of the company, the company must first ensure that the Registrar’s records are updated before an application for striking off is made.
7. No ongoing legal proceeding within or outside Malaysia
8. No return of capital
If a company still has its capital, the company should proceed with the voluntary winding up process instead of filing an application to strike off, to formally cease its existence.
Application Procedure
The applicant must complete a declaration in Schedule B of the Practice Directive 1/2017 (Appendix 1) and ensure that the checklists under Appendix 2 are complied with, together with a payment of RM100 fee to the Registrar. The application can be lodged at any of the SSM offices.
Subsequent to the lodgement of the application, the Registrar may serve a notice on the company or the liquidator, stating that if no objection is received within thirty days from the date of the notice, a notification to the public will be published on the intended striking off.
Can the application be objected?
Yes, any person may lodge with SSM a notice to object the striking off on the grounds that:-
(a) The company is still carrying on business or there is other reason for it to continue in existence
(b) The company is a party to legal proceedings;
(c) The company is in receivership or liquidation; or both;
(d) The person is a creditor or a member or a person who has an undischarged claim against the company;
(e) The person believes that there exists, and intends to pursue, a right of action on behalf of the company; or
(f) For any other reason, it would not be just and equitable to remove the company from the register.
What happens then?
If no objection is received or if the Registrar is satisfied that the objection is baseless and all conditions are met, the Registrar may proceed to strike the company off the register. Upon the publication of the name of the company on the Federal Gazette, the company shall henceforth be dissolved.
Once struck off, the company is deemed to be dissolved and no longer exists as a legal entity.
Can the struck off company be reinstated?
Yes. Under Section 555 of the CA 2016, any aggrieved person may apply to the court to reinstate a company that has been struck off from the register. This application must be made within seven (7) years from the date of the company’s dissolution.
The court will consider the circumstances of the striking off and whether it is just and equitable to restore the company. If the court is satisfied that the company was carrying on business or in operation at the time of being struck off, or that reinstatement is otherwise just, it may order the company’s name to be reinstated.
Upon reinstatement, the company is deemed to have continued in existence as if its name had never been struck off, with legal continuity restored retrospectively. [Case reference: Starza Corporation Sdn Bhd v KDTC Sdn Bhd & Ors [2024] MLJU 3203]
Important Considerations Before Applying for Striking Off
Before submitting an application to strike off a company from the register, the following matters must be properly attended to:
• Ensure that all outstanding liabilities, including statutory filings, tax obligations, and any debts owed to creditors, have been fully settled.
• All corporate bank accounts should be closed, and any business licences, permits, or registrations held by the company should be properly cancelled. Relevant regulatory bodies should also be notified accordingly.
• The company must not be involved in any pending litigation, investigation, or dispute (whether civil, criminal, or regulatory in nature).
• Upon being struck off, the company ceases to exist as a legal entity. It cannot initiate or defend legal proceedings unless it is subsequently restored to the register in accordance with Section 555 of the CA 2016.
Conclusion
Striking off under Sections 549(a) and 550 CA 2016 is a useful tool for companies that are no longer active and wish to exit in a clean and efficient manner. It avoids the time and cost of formal winding up but must be approached carefully to ensure all statutory requirements are met.
It is crucial to note that the deregistration of a company does not extinguish the personal liabilities of its directors, officers, or shareholders. Any pre-existing obligations, misconduct, or breaches of law committed prior to the striking off remain enforceable as if the company had never been dissolved.
Closing Down A Dormant Company The Easy Way – Consider Striking Off
When a company is no longer active or needed, continuing to maintain it can lead to unnecessary costs and compliance obligations. Instead of going through a formal winding-up process, eligible companies may consider applying for striking off from the register. This is a simpler and more cost-effective alternative provided under the Companies Act 2016 and the Guidelines issued by the Companies Commission of Malaysia.
Why Strike Off a Company?
There are several common reasons a company may consider striking off:
Who Can Apply?
Pursuant to Section 549(a) of the Companies Act 2016 (“CA 2016”), the Registrar of Companies has the discretion to strike off a company’s name from the register if there is reasonable cause to believe that the company is not carrying on business or is not in operation.
Aside from the Registrar, Section 550 of the CA 2016 permits the company director, shareholder or liquidator to apply to the Companies Commission of Malaysia (“SSM”) to request the Registrar to exercise his discretion, subject to fulfilling certain requirements.
What Companies do not qualify?
The striking off process is not applicable to companies that fall within any of the following categories:-
What are the requirements?
A resolution approving the striking off application on the basis that the company is not carrying on business or not in operation must be passed by the shareholders. Such resolution passed must be enclosed to the striking off application to reflect the consent of the majority shareholders.
If the requisite majority cannot be obtained due to shareholder(s) who is untraceable, the application may still be submitted to SSM provided that attempts have been made to trace the whereabouts of the shareholder(s). The attempts must be made by way of registered post and proof of attempts must also be attached to the application.
The latest management accounts must show zero assets and liabilities. If the last audited financial statements lodged with the Registrar reflect otherwise, supporting documents must be provided to prove disposal or settlement.
For companies that never commenced operations, the applicant must make the following declaration to confirm that:-
(i) there has been no transaction since incorporation; and
(ii) no bank account has been opened, or if opened, it has since been closed.
There must be no outstanding charges registered with the Registrar.
The company must ensure that all such liabilities are fully settled.
Where a company has commenced operation, it must settle all outstanding tax and obtain a tax clearance prior to the filling of the application for striking off.
The particulars of director(s) of the company must be the same as that in the Registrar’s records. If there are any differences or changes in respect of the information of the directors of the company, the company must first ensure that the Registrar’s records are updated before an application for striking off is made.
If a company still has its capital, the company should proceed with the voluntary winding up process instead of filing an application to strike off, to formally cease its existence.
Application Procedure
The applicant must complete a declaration in Schedule B of the Practice Directive 1/2017 (Appendix 1) and ensure that the checklists under Appendix 2 are complied with, together with a payment of RM100 fee to the Registrar. The application can be lodged at any of the SSM offices.
Subsequent to the lodgement of the application, the Registrar may serve a notice on the company or the liquidator, stating that if no objection is received within thirty days from the date of the notice, a notification to the public will be published on the intended striking off.
Can the application be objected?
Yes, any person may lodge with SSM a notice to object the striking off on the grounds that:-
What happens then?
If no objection is received or if the Registrar is satisfied that the objection is baseless and all conditions are met, the Registrar may proceed to strike the company off the register. Upon the publication of the name of the company on the Federal Gazette, the company shall henceforth be dissolved.
Once struck off, the company is deemed to be dissolved and no longer exists as a legal entity.
Can the struck off company be reinstated?
Yes. Under Section 555 of the CA 2016, any aggrieved person may apply to the court to reinstate a company that has been struck off from the register. This application must be made within seven (7) years from the date of the company’s dissolution.
The court will consider the circumstances of the striking off and whether it is just and equitable to restore the company. If the court is satisfied that the company was carrying on business or in operation at the time of being struck off, or that reinstatement is otherwise just, it may order the company’s name to be reinstated.
Upon reinstatement, the company is deemed to have continued in existence as if its name had never been struck off, with legal continuity restored retrospectively. [Case reference: Starza Corporation Sdn Bhd v KDTC Sdn Bhd & Ors [2024] MLJU 3203]
Important Considerations Before Applying for Striking Off
Before submitting an application to strike off a company from the register, the following matters must be properly attended to:
Conclusion
Striking off under Sections 549(a) and 550 CA 2016 is a useful tool for companies that are no longer active and wish to exit in a clean and efficient manner. It avoids the time and cost of formal winding up but must be approached carefully to ensure all statutory requirements are met.
It is crucial to note that the deregistration of a company does not extinguish the personal liabilities of its directors, officers, or shareholders. Any pre-existing obligations, misconduct, or breaches of law committed prior to the striking off remain enforceable as if the company had never been dissolved.
About the authors
Chan Jia Ying
Partner
Dispute Resolution
Harold & Lam Partnership
[email protected]
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