On 1 April 2024, the Companies Commission of Malaysia issued the Guidelines for the Adjudication of Proof of Debts under section 369B of the Companies Act 2016 (“the Guidelines”). The Guidelines are designed to provide clear procedures for adjudicating proof of debt (“POD”) under the new section 369B, following the amendments to the Companies Act 2016 (the “Act”) by way of the Companies (Amendment) Act 2024 which came into operation on 1 April 2024. The Guidelines outline the objectives guiding the adjudication process in meetings ordered by the Court for approving compromises or arrangements with creditors and members under section 366 of the Act.
 
Prior to the amendment, the Act lacked provisions regulating the admission or rejection of creditors’ claims made in the form of PODs for purposes of voting or for distribution of payments under a compromise or arrangement.
 
Role of Chairperson
 
The role of the chairperson is pivotal. Section 369B(5) of the Act confers on the scheme chairperson a statutory duty to adjudicate all PODs. The chairperson, as specified in section 366, may be an insolvency practitioner appointed under section 367(3) of the Act or, if no insolvency practitioner has been appointed, a person elected by the majority in value of the creditors or class of creditors or members or class of members.¹ The adjudication of PODs is crucial to safeguard creditors’ rights to participate in the meeting.
 
POD
 
Pursuant to section 369B(1), where the Court orders a scheme meeting under section 366(1), a POD form (“PODF”) must accompany all notices sent to the creditors convening the meeting. These notices must specify how creditors are to submit their PODFs to the company and the timeframe within which they must do so.²
 
The Guidelines require creditors to deposit their PODFs at the specified address with details and supporting information of the debts claimed in the PODF (refer to Annexure 1 of the Guidelines) within the period stated in the notice.³ This includes particulars of the creditor claiming the debt, particulars of the debt claimed, existence of security held by the creditor (if any) and its brief description and value.⁴ Each creditor bears the costs of preparing and filing its PODF.⁵ The Guidelines empower the chairperson to request additional information or documents to be produced in such manner as he deems fit to substantiate the creditor’s POD at any time.⁶
 
Creditors who do not file their PODs in the manner and within the timeframe stated in the notice summoning the meeting will not be allowed to vote, whether in person or by proxy, at the meeting.⁷ Nonetheless, the Court may, on an application made by the company or a creditor, extend the period stated in the notice summoning the meeting within which a POD is to be filed.⁸
 
List of creditors
 
The Guidelines provide that the chairperson must, within seven days after the expiry of the period for filing a POD under section 369B(1)(b) of the Act, send a creditors’ list to every creditor who has filed a POD with the company for the purpose of voting in the meeting.⁹ The list of creditors must set out the name of every creditor and include the following particulars in respect of each creditor: 

Adjudication of proof of debt
 
Section 369B(5) of the Act mandates the chairperson to adjudicate all PODs filed under section 369B. The Guidelines require the adjudication process to be completed, and the written results to be sent to all eligible creditors who have filed PODs at least 28 days before the meeting for the purposes of voting at such meeting.¹¹ The results of the adjudication must list every creditor who has filed a POD for the purposes of voting at the meeting and state the amount claimed under the POD and the amount (if any) of the POD admitted, and the amount (if any) rejected, by the chairperson.¹²
 
If the company or any eligible creditor who has filed a POD for the purposes of voting at the meeting objects to the results of the adjudication of any POD by the chairperson (“the opposing party”), the opposing party may refer the dispute to an independent assessor for adjudication, not later than 14 days before the meeting in accordance with the procedures set out in paragraphs 21 and 22 of the Guidelines.¹³
 
Objections
 
Pursuant to section 369B(8) of the Act, any creditor who has filed a POD may object to one or more of the following: 

Inspection of proof of debt
 
Any creditor who has filed a POD is entitled under section 369B(6) of the Act to inspect all or any part of a POD filed by any creditor, unless it contains information that is subjected to any obligation as to secrecy, or to any other restriction upon the disclosure of information, imposed by any written law, rule of law, contract or rule of professional conduct, or by any person or authority under any written law. The Guidelines prohibit a creditor from submitting more than one request to inspect the same POD.¹⁴
 
If a creditor (“requesting creditor”) wishes to inspect the POD filed by another creditor (“affected creditor”) for the purposes of voting at the same meeting, the following procedures must be complied with: 

The manner and procedures for inspecting a POD shall be determined by the chairperson.¹⁹
 
Independent assessor
 
Any dispute between (a) the chairperson and the company; (b) the chairperson and one or more creditors in relation to the rejection of a POD; or (c) two or more creditors in relation to the inspection or admission of a POD, may be adjudicated by an independent assessor.²⁰
 
The independent assessor may be appointed by the agreement of all parties to the dispute. However, if there is no such agreement, any party to the dispute or the company (whether or not it is a party to the dispute) may apply to the Court for the appointment of an independent assessor.²¹
 
Where the independent assessor is appointed by the agreement of all the parties to the dispute, his remuneration is to be fixed by the agreement of the parties. In the event that the independent assessor is appointed by the Court, his remuneration is to be fixed by the Court.²² The independent assessor’s remuneration shall be borne by the party requesting his appointment, unless the Court orders otherwise.²³
 
Upon the appointment of an independent assessor, the chairperson shall as soon as practicable provide the relevant POD and any relevant documents to the independent assessor for a decision.²⁴ The independent assessor is to make a decision on the dispute within seven days after being provided with the relevant POD. The decision, together with the reasons for the decision, shall be sent to the chairperson, the company and any creditor who is a party to the dispute within the said period of seven days.²⁵
 
Notice of disagreement
 
If the company, the chairperson or a creditor disagrees with the decision of the independent assessor, such party may file a notice of disagreement (refer to Annexure 2 of the Guidelines) to the Court, stating the reasons for its disagreement regarding that decision not less than seven days before the hearing of the company’s application for approval of the scheme under section 366(4) of the Act.²⁶ The person filing the notice of disagreement shall send a copy of the notice filed to the company (unless the notice is filed by the company) and any creditor who has filed a proof of debt with the company (upon request).²⁷
 
The Court shall take into account any notice of disagreement filed in deciding whether or not to grant its approval of the scheme under section 366(4).²⁸
 
Updated list of creditors
 
Prior to the meeting being held, the chairperson of the meeting shall provide an updated creditors’ list to all eligible creditors whose PODs have been admitted for the purposes of voting at the meeting and who is present, whether in person or by proxy, at the venue of the meeting.²⁹ The updated creditors’ list shall be in writing and given to the creditors either in hard copy, in electronic form, or partly in hard copy and partly in electronic form.³⁰
 
The updated creditors’ list shall include the following: 

Sending of notices and other documents
 
The Guidelines provide that that all written notices or requests or other information in writing required or authorised to be sent or given by any person (“the sender”) to the other person (“the recipient”) may be sent or given in the following manner: 

Comments
 
The Guidelines provide helpful guidance to stakeholders, such as the company, the chairperson and the creditors, on the procedures to be followed in order to establish the right of creditors to attend and vote at a creditors’ meeting to approve a compromise or an arrangement. The Guidelines also provide guidance on the procedures to be followed to resolve disagreements that may arise in relation to the PODFs that have been filed for such purpose.
 
While guidance has been provided, we anticipate that a body of case law will arise to further clarify and supplement some aspects of the new section 369B and the Guidelines.
 
Article by Sharon Chong Tze Ying (Partner) of the  Restructuring and Insolvency Practice of Skrine.
 
 

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