There could be many reasons why someone would want to close down a company. Here are some of them:
- Ran out of capital
- Business no longer feasible to operate
- Business partners are no longer in good terms
- Incur too much losses
- No longer has any business activities
- and more…
To incorporate a new company, it’s easy and as fast as 1 day, however closing down a company takes a longer process. There are 2 ways to close down a company, Strike Off and Wind Up.
| Strike Off | Wind Up | |
|---|---|---|
| Cost | RM 2,500 | RM 10,000 – RM 20,000 |
| LHDN Income Tax | All outstanding tax must be settled. | All outstanding tax must be settled. |
| LHDN Tax Clearance Letter | Must obtain. (Except Dormant) | Must obtain. |
| Duration needed by SSM | Min. 6 months | Min. 12 months |
| Balance Sheet | Must have no Assets & Liabilities. | Complex process. |
| Limitations | May be reinstated within 7 years from date of strike off. | Officially terminated upon notice of confirmation. |
Method 1: Strike Off a Company
- Striking off a company costs RM 2,500.
- It is cheaper than to Wind Up a Company (a.k.a “Deregistration”)
- All outstanding tax with LHDN must be settled.
- Obtain a tax clearance letter from LHDN before filing for a strike off.
- For Dormant Company: Tax Clearance letter is optional.
- It will take at least 6 months for SSM to process.
- Any amount owing to Director / Shareholder shall be settled (or written consent to write off entirely without paying back)
- The liability of Directors may still be enforced.
- The court may reinstate (cancel strike off) if found to be in operation within 7 years from the date it was struck off.
Method 2: Wind Up a Company
- Winding up costs RM 10,000 to RM 20,000.
- It is very expensive.
- Winding up is a Liquidation process.
- All outstanding tax with LHDN must be settled.
- Obtain a tax clearance letter from LHDN before filing for a strike off.
- It will take at least 12 months for SSM to process.
| Type | Members’ Voluntary | Creditors’ Voluntary | Compulsory |
|---|---|---|---|
| Status | company is solvent and able to pay all its debts | company is insolvent and unable to pay all its debts | by court order |
| Initiated by | Company Directors / Shareholders | Company Directors / Shareholders | Creditors |
Common Questions
Do I still need to pay for Company Secretary ?
Yes, a Company Secretary is still required until the company is officially struck off or wound up. You can also save up to 70% on the Company Secretary fees on Boss Boleh while waiting for LHDN to provide you the necessary documents and SSM to process.
I have decided to stop my business now, can I strike off immediately ?
Your audited financial statement shall show that there is no Assets and Liabilities left. It is also important that the company does not have any profits or be in operation. Then you may proceed to strike off.
What if there’s no Assets and Liabilities but there are Retained Earnings ?
SSM may reject your application to strike off.
Will the Director / Shareholder automatically be bankrupt or blacklisted upon Striking Off / Winding Up ?
No, they will not be bankrupt or blacklisted. However, SSM has the right to submit to court to blacklist the Director if found to have breached the Companies Act 2016.
What happens when Director declares bankrupt (due to other personal reasons) while Winding Up is in process ?
The Director General of Insolvency (Liquidator) will take over and handle it. So, there is nothing to be done.
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