04 May 2020
TO ALL ACCOUNTANTS
TEMPORARY INCREASE IN VALUE OF INDEBTEDNESS TO RM50,000 UNTIL 31 DECEMBER 2020 PURSUANT TO SECTION 466(1)(A) OF THE COMPANIES ACT 2016
On 21 April 2020, the YB Minister of Domestic Trade and Consumer Affairs issued a directive pursuant to section 466(1)(a) of the Companies Act 2016 (Act 777) (CA 2016) that the amount of indebtedness of a company deemed to be unable to pay its debts, which currently is gazetted as amount exceeding RM10,000 in the Federal Government Gazette’s ‘Prescription of Amount of Indebtedness of Company’, is temporarily increased to an amount exceeding RM50,000. The directive is effective from 23 April 2020 to 31 December 2020. The temporary increase in the value of indebtedness is to help ease the burden on the corporate communities as a result of the COVID-19 pandemic. Please refer to the Direction of The Minister Under Paragraph 466(1)(A) which was gazetted on 23 April 2020 for the formal directive.
In addition, the YB Minister has also issued an order pursuant to section 466(1)(a) of the CA 2016 where a company is exempted from responding to any notice of demand within the period of 21 days after the service of the notice of demand on the company. The company is now given up to a period of six (6) months after the service of the notice of demand on the company to respond to the notice of demand. Failure of the company to respond within that period allows the creditor to file a petition for winding up of the company. This order is effective from 23 April 2020 until 31 December 2020.The directive and order are in line with the announcement made by the Companies Commission of Malaysia (SSM) on 10 April 2020 regarding SSM’s initiatives in assisting companies that are affected by the implementation of the Movement Control Order (MCO) to reduce the winding up action against companies. Please refer to MIA’s Circular 41/2020 issued on 13 April 2020 for further details on the SSM’s initiatives.
The directive and order as well as the frequently asked questions can be accessed on SSM’s website at www.ssm.com.my .For any enquiries, please send your email to SSM Contact Centre at firstname.lastname@example.org.You may refer to HERE for the announcement issued by SSM.
Please be guided accordingly.
MALAYSIAN INSTITUTE OF ACCOUNTANTS
DR. NURMAZILAH DATO’ MAHZAN
Chief Executive Officer