Kathy is a supplier for a company known as ABC Sdn Bhd which is owned by Dennis. Unfortunately Kathy has yet to receive any payment from ABC Sdn Bhd which has led to a debt of RM 25,000.00. Kathy now wants to initiate an action against the ABC Sdn Bhd by way of court-ordered winding up. Kathy’s friend informed her that the debt of RM 25,000.00 is insufficient in order to file for a winding up petition against the company because according to the Bankruptcy Act 1967, a creditor must prove a debt exceeding RM 30,000.00. Is this true?
According to Section 217 in conjunction with Section 218 of the Companies Act 1965, Kathy as a creditor may raise the presumption of insolvency of non-payment by the debtor’s company, having been served with a ‘statutory demand’ for payment. A statutory demand being a notice setting out a debt worth at least RM 500.00 due and payable by the company to the creditor within three weeks.
According to the Companies Act 1965, a company is presumed to be insolvent if it fails to comply with a statutory demand.
So, how much did you know about this Legal Myth?
Share with us your thoughts and feedback to us. Ask us a question on AskCA@Thursday or suggest a Myth Buster for us.