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Registrar of Companies updates Guideline for Application to Reinstate Name of Company that has been Struck Off

10 February 2023

Subdivision 1 of Division 4 of Part IV (sections 549 to 555) of the Companies Act 2016 (‘CA 2016’), inter alia, confers: 
  1. power on the Registrar of Companies (‘Registrar’) to strike the name of a company off the register1 (‘the register’) on the grounds set out in section 549;2 and 

  2. a right on a person aggrieved by the Registrar’s decision to strike off the company’s name to apply to the High Court under section 555(1) for an order to reinstate the name of the company into the register.3   
Among the grounds on which the Registrar may strike a company off the register is where “the company is not carrying on business or is not in operation” (section 549(a), CA 2016).
 
On 30 January 2023, the Registrar issued an updated Guideline on Application to Reinstate the Name of a Company under Section 555(1) of the Companies Act 2016 (the ‘Guideline’) to provide guidance on the application procedure to reinstate the name of a company that has been struck off the register under sections 549 and/or 550 of CA 2016.
 
A company that has failed to comply with section 68 (duty to lodge annual return) and section 259 (duty to lodge financial statements and reports) or, a foreign company that has failed to comply with section 575 (duty to lodge financial statements and related documents) and section 576 (duty to lodge annual return) is presumed to be not carrying on business or not in operation.4
 
An application to reinstate the name of a company that has been struck off the register under sections 549 and/or 550 of CA 2016 is to be made under section 555 of CA 2016 and Order 88 rule 2 of the Rules of Court 2012. The latter stipulates that the proceedings shall be commenced by way of an originating summons (‘Originating Summons’).
 
Paragraph 9 of the Guideline requires the Originating Summons to be supported by an Affidavit in Support (‘Affidavit’) setting out the grounds and evidence in support of the application.
 
The requirements set out in the Guideline in relation to the application for reinstatement under section 555(1) of CA 2016 are summarised below: 
  1. The defendant: The Companies Commission of Malaysia through the Registrar, i.e. ‘The Registrar, Companies Commission of Malaysia”, is to be named as the defendant in the application; 

  2. Contents of the Affidavit: The Affidavit must include the following: 
  • Information on the directors of the company;
  • Information on the shareholders;
  • Consent letter from the other directors (if there is more than one director);
  • Address of the registered office of the company;
  • Grounds of the application;
  • Other necessary and relevant facts;
  • A copy each of the Annual Return and Financial Statement (current and overdue) of the company as evidence in support of the application; and
  • Other evidence that is relevant to the grounds in the Affidavit; for example, if a company owns assets when its name is struck off the register, the plaintiff must adduce evidence to show the existence of the assets, such as a recent official search of the title, the land title, and bank statement.5 
The Guideline includes examples of the cause papers for an application to reinstate the name of a company into the register. The noteworthy points of the cause papers are set out below:
 
Specimen Originating Summons (Attachment A to the Guideline)
 
The orders sought from the Court must include: 
  1. an order that the plaintiff lodge the overdue statutory documents which have not been previously lodged, including, without limitation, the audited financial statements and annual return for the relevant years, and other related documents (if any); 

  2. an order that the cost of the proceedings of RM2,000.00 be paid by the plaintiff within 30 days of the order being made; and 
  3. an order that the cost of the application be borne by the plaintiff. 
Specimen Affidavit (Attachment B to the Guideline)
 
The contents of the Affidavit is to include the following: 
  1. a copy of the official search from the Companies Commission of Malaysia must be exhibited as evidence in support of the information on the names of the director(s) and shareholder(s) of the company; 

  2. a statement that the company has during the financial periods referred to in the financial statements and draft financial statements been actively carrying on business and operations and has been profitable; 

  3. a statement that the employee and/or agent of the plaintiff has contacted the defendant and been informed by the latter that the company has been dissolved by reason of its failure to lodge its financial statements and annual returns for a specified period; 

  4. a statement that the plaintiff’s agent, representative and/or employee has contacted the company that provided company secretarial services to the company, and the company secretary was unable to provide any reasonable explanation for their failure to lodge the statutory documents with the defendant; 

  5. a statement that the plaintiff had, at all material times, believed that the statutory documents, namely the audited financial statements and annual returns for the relevant periods had been lodged by the company secretary with the defendant in accordance with the Companies Act 1965/ CA 2016; 

  6. a statement that it is material for the company to be reinstated into the register and to provide reasons and evidence in support of the statement, e.g. the company has at all material times been actively carrying on business and recording encouraging profits and the company has been awarded a project that is still ongoing; 

  7. a statement that if the name of the company is not reinstated into the register, irreparable harm which cannot be compensated by damages would be caused to the company as the company’s economic activities cannot be expanded thereby affecting the company’s employees as well as expose the company to potential legal action due to the company’s inability to fulfil its contractual obligations; 

  8. a schedule of the company’s employees and proof of payment of the contributions to the Employees’ Provident Fund (EPF), Social Security Organisation (SOCSO) and Inland Revenue Board for the relevant years are to be included as exhibits; 

  9. a statement that the company’s failure to lodge its overdue audited financial statements and annual returns with the defendant can be regularised; 

  10. a statement that the company has prepared the annual returns and audited financial statements that have not been lodged with the defendant and the said documents together with the draft financial statements are ready to be lodged if the application is allowed by the Court; and 

  11. a statement that in any event, the defendant can impose a fine or compound against the company in consequence of the company’s failure to lodge the overdue annual returns and audited financial statements as opposed to striking off the name of the company from the register. 
Comments
 
It can be seen from the above that the Guideline is limited in scope and deals only with an application to reinstate the name of a company into the register where the name had been struck off by reason of the company’s failure to lodge its annual return or audited financial statements in accordance with the requirements of CA 2016.
 
From the specimen Affidavit, it appears that the Registrar has set stringent conditions in respect of an application for reinstatement. For example, the plaintiff is required to state in the Affidavit that: (i) the failure to lodge the relevant documents was due to the company secretary (and by implication, not due to the default or neglect by the directors) and the company secretary has been unable to provide any reasonable explanation for the failure to do so; (ii) the plaintiff had, at all material times, believed that the relevant documents had been lodged by the company secretary; and (iii) the company has paid all statutory contributions and taxes. While it is possible that the Registrar may oppose an application that does not fulfil the requirements imposed by him, it is ultimately at the Court’s discretion whether or not to allow an application for reinstatement as section 555(2) of CA 2016 provides that the Court may order the name of a company to be reinstated in the register if it is satisfied that the company was, at the time of the striking off, carrying on business or in operation or it is just to do so.
 
Alert by Tan Wei Liang (Senior Associate) of the Corporate Practice of Skrine. 
 
1 The register is referred to in section 15(a) of CA 2016.
2 The power to strike the name of a company off the register is exercisable by the Registrar on his own motion or upon application by a director, member or liquidator of the company (section 550, CA 2016).
3 This right to seek reinstatement must be exercised within seven years after the name of the company has been struck off (section 555(1), CA 2016).
4 Paragraph 4 of the Guideline.
5 These requirements are set out in paragraphs 9 to 11 of the Guideline.

This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.

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