Section 176 Of Companies Act 1965
Section 176 of Companies Act 1965.
By. Kartikayen Supramaniam.
In Malaysia companies Act 1965 (CA), is one of the vital statutes which govern and regulate the formation and operation of a company. All the sections in this statute govern each and every part of company governance. In this case section 176 of Companies Act plays a very important role on arrangements and reconstruction of a company when the company heavily burdened with debt. Financial crisis is the most dangerous and a serious disadvantage for a company, in such situations companies normally will use this provision to escape and avoid liabilities against their creditors. This section allows the company to make arrangement and reconstruction where they can negotiate with the other parties such as creditors regarding the debt they owe.
Section 176(5) of CA, must be read together with section 176 (3) of CA, where this section stress that the order made under subsection (3) is not valid until a copy of the said order is given to the registrar and only after the order is lodged, the said order will carry a binding effect from the date of the order lodgment. On the other hand, if the court find is reasonable than the court may determine any earlier date as specified in the order. This section basically talks about the date and effectiveness of the notice which been agreed by members and creditors as per subsection (3) of this provision.1 According to subsection (6), a copy of the order which made under subsection (3), must be put together or annexed with every single copy of the company’s memorandum which is issued after the order made under subsection (3).2 In the event where the company does not have a memorandum, than the order should be annexed to all instruments constituting or defining the constitution of the company. This is generally to give knowledge to a third party about the agreement between the company and the members or creditors. In this case the court may and have power to determine the
By. Kartikayen Supramaniam.
In Malaysia companies Act 1965 (CA), is one of the vital statutes which govern and regulate the formation and operation of a company. All the sections in this statute govern each and every part of company governance. In this case section 176 of Companies Act plays a very important role on arrangements and reconstruction of a company when the company heavily burdened with debt. Financial crisis is the most dangerous and a serious disadvantage for a company, in such situations companies normally will use this provision to escape and avoid liabilities against their creditors. This section allows the company to make arrangement and reconstruction where they can negotiate with the other parties such as creditors regarding the debt they owe.
Section 176(5) of CA, must be read together with section 176 (3) of CA, where this section stress that the order made under subsection (3) is not valid until a copy of the said order is given to the registrar and only after the order is lodged, the said order will carry a binding effect from the date of the order lodgment. On the other hand, if the court find is reasonable than the court may determine any earlier date as specified in the order. This section basically talks about the date and effectiveness of the notice which been agreed by members and creditors as per subsection (3) of this provision.1 According to subsection (6), a copy of the order which made under subsection (3), must be put together or annexed with every single copy of the company’s memorandum which is issued after the order made under subsection (3).2 In the event where the company does not have a memorandum, than the order should be annexed to all instruments constituting or defining the constitution of the company. This is generally to give knowledge to a third party about the agreement between the company and the members or creditors. In this case the court may and have power to determine the