Value of Indebtedness Temporarily Increased to RM50,000 in Malaysia
Malaysia’s Ministry of Domestic Trade and Consumer Affairs has announced a temporary increase in the value of indebtedness to more than RM50,000.
This is pursuant to 466(1)(a) of the Companies Act 2016 (Act 777) (CA 2016) of the Malaysian Companies Act. Companies who are considered unable to pay their debts will now have it increased to more than RM50,000. The previous amount in the Federal Government Gazette’s “Prescription of Amount of Indebtedness of a Company” was RM10,000.
The temporary increase will be effective until 31 December 2020. This is aimed to help ease the financial burden experienced by corporations because of the COVID-19. The directive was gazetted on 23 April 2020.
Notice of Demands
Malaysia Companies are also exempted from responding to any notice of demands that happen after the 21-day period. Companies will now have 6 months after they have been served the notice of demand to respond to any notice of demands received. Failing to respond within the stipulated period will give creditors permission to file for a petition winding up the company.
The directive is aligned with the Companies Commission of Malaysia (SSM)’s announcement on 10 April 2020. The increase in the value of indebtedness in Malaysia is part of the SSMs initiatives. The SSM intends to assist companies affected by the Movement Control Order (MCO) and minimise instances where the company is ordered to wind up.