Thinking of closing your company in Malaysia? Whether your business has become dormant, your shareholders want to exit, or you're simply restructuring, knowing how to shut down your company the right way matters.
In this guide, we'll walk you through the members' voluntary winding up process – a structured, legally recognised method to close a solvent company in Malaysia.
What is Members' Voluntary Winding Up?
A members' voluntary winding up is a legal process to dissolve a solvent company – that is, a company that can pay its debts in full within 12 months from the moment it is wound up. It is initiated by the company's shareholders and directors when they no longer wish to continue the business.
Unlike winding up due to insolvency, this method allows the company to exit in an orderly and transparent way, ensuring creditors are paid, and remaining assets are distributed to shareholders.
Quick Visual Overview
Before we dive into the step-by-step guide, here's a snapshot of the process from start to finish:
When is This the Right Option?
Some common scenarios where members' voluntary winding up is appropriate:
- Your company is dormant or no longer trading.
- The business purpose has been fulfilled or is no longer viable.
- You're restructuring your group of companies.
- Founders/shareholders wish to retire or exit the business.
Step-by-Step: Members' Voluntary Winding Up Process in Malaysia
Step 1: Directors' Declaration of Solvency
The process begins with a board resolution where the directors declare that the company can repay its debts in full within 12 months. A majority of directors must sign a statutory declaration of solvency, including a Statement of Affairs listing the company's assets, liabilities, and estimated winding-up costs.
Step 2: Submit Declaration with SSM
This declaration must be submitted to the Companies Commission of Malaysia (SSM) before the shareholders are notified of a meeting to pass the special resolution.
Step 3: Notice of Special Resolution
You must send a notice to the shareholders at least 21 days in advance.
Step 4: Shareholders' Meeting and Special Resolution
Within 5 weeks from signing the declaration of solvency, the shareholders must hold a meeting and pass a special resolution to wind up the company. This requires at least 75% approval of the votes cast. At this meeting, a liquidator is also appointed to take over the process.
Step 5: Lodge Resolution with SSM
Within 7 days of the resolution, a copy must be lodged with the SSM.
Step 6: Advertise the Resolution
The resolution must be advertised in two widely circulated newspapers – one in Bahasa Malaysia and one in English – within 10 days from passing the special resolution.
Step 7: Notify Authorities of the Liquidator's Appointment
Within 14 days from the shareholders' meeting, the Notice of Appointment and address of the liquidator must be notified to both the SSM and the Director General of Insolvency. This formalises the start of the liquidation.
Step 8: Liquidator Carries Out Duties
The liquidator is responsible for settling all debts, collecting and selling assets, handling tax matters, and distributing the remaining funds to shareholders. This includes ensuring all employee entitlements – such as unpaid salary, leave, EPF, and SOCSO contributions – are fully paid before any final distribution is made. It is standard practice (though not mandatory) to obtain tax clearance from the Inland Revenue Board before final distribution.
Step 9: Final Accounts and Dissolution
Once the affairs are fully wound up, the liquidator prepares a final account and convenes a final meeting of members. A return is lodged with the SSM and Director General of Insolvency. The company is deemed dissolved three months after the filing.
Closing a company is a serious legal process.
Our team regularly supports Malaysian and foreign shareholders through the members' voluntary winding up process. Early legal advice can ensure efficiency and reduce risk. If you're considering this step, professional advice can help ensure a smooth, compliant exit.
Frequently Asked Questions
Q1: Do I need to appoint a lawyer for members' voluntary winding up?
While not legally required, professional advice is highly recommended. The process involves statutory declarations, filings with authorities, and strict timelines. An experienced lawyer can help ensure compliance, minimise risk, and avoid delays that could expose directors to liability.
Q2: How long does the process take?
The initial legal and shareholder steps can typically be completed within 4–6 weeks. However, the entire process – including the liquidation of assets, tax matters, and final dissolution – usually takes at least six months. If the company holds significant assets, plan for a longer timeline.
Q3: Can the process continue if creditors appear?
The process is only suitable for solvent companies. If it becomes clear that the company cannot pay its debts in full within 12 months, or if significant creditor objections arise, the process may need to be converted into a creditors' voluntary winding up – which follows a different legal route and involves creditor meetings.
Q4: Is tax clearance required before closing the company?
It is not a strict legal requirement under the Companies Act, but in practice, liquidators will obtain tax clearance from the Inland Revenue Board before distributing assets. This protects against future tax claims and is often expected during final account reviews.
Q5: Can a foreign-owned company use this process?
Yes. As long as the company is incorporated in Malaysia and remains solvent, it can be wound up voluntarily by its members. There are no additional restrictions for foreign shareholding under the Companies Act 2016 in this context.
Q6: Do I need to close the company's bank account immediately?
No. The bank account should remain open during the liquidation process to handle collections, payments, and asset distribution. The liquidator will close the account at the appropriate stage – typically after all liabilities are discharged and surplus funds are returned to shareholders.
Q7: Can I cancel the process once it has started?
It is possible, but not straightforward. Once the special resolution has been passed and a liquidator appointed, reversing the process requires a court order and the cooperation of the liquidator. This is why companies should conduct careful planning before beginning the process.
Q8: How much does members' voluntary winding up typically cost?
Costs vary depending on the company's size, assets, and level of professional assistance needed. At a minimum, expect statutory filing fees and advertising expenses (e.g. newspaper notices, SSM lodgements). If engaging a lawyer or corporate secretarial service, fees typically start from several thousand ringgit. Liquidator fees will depend on the scope and duration of work.
Q9: Do I need to inform employees about the winding up?
Yes. Even though the company is solvent, employees should be informed as early as possible, and their entitlements – e.g. unpaid salary, leave, EPF, SOCSO contributions – must be settled before dissolution. The liquidator will ensure this is done in accordance with Malaysian employment law.
Q10: Will I still be liable after the company is dissolved?
Once the company is legally dissolved, it ceases to exist and cannot sue or be sued. However, directors and officers may still be liable for offences committed prior to winding up – such as false declarations, unpaid taxes, or breaches of fiduciary duty. Ensuring proper compliance throughout the process is the best protection.
The original article was published on Aqran Vijandran's website at [link].
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
