Malaysian businesses may require closure for various strategic or operational reasons. Market conditions may render continued operations unviable, shareholders may seek to exit investments, or companies may need restructuring to optimize their corporate structure. Financial difficulties remain the most common driver, with insolvency affecting businesses across all sectors during economic downturns.
The importance of choosing the correct closure method cannot be overstated. Improper procedures can result in ongoing legal obligations, tax liabilities, and potential penalties for directors and shareholders. Malaysian law provides distinct pathways for different business structures, each with specific requirements, timelines, and costs.
This guide covers closure options for all major business structures in Malaysia: sole proprietorships and partnerships registered under the Registration of Businesses Act 1956, Limited Liability Partnerships governed by the Limited Liability Partnership Act 2012, and Private Limited Companies regulated by the Companies Act 2016.
Recommended business closure methods by business type
Sole proprietorship and partnership
Sole proprietorships and partnerships follow a streamlined termination process under the Registration of Businesses Act 1956. Business owners must complete Tax clearance (Notice of Termination for Registered Business) and submit it to the Companies Commission of Malaysia (SSM) within thirty days of business termination.
Essential documents include the original Business Registration Certificate, photocopies of owner and partner identity cards, and any relevant supporting documents depending on termination circumstances. In cases of death, a copy of the death certificate must be submitted within four months of demise. Court-ordered terminations require copies of the relevant court orders.
Before termination, business owners must settle all outstanding obligations with the Inland Revenue Board (LHDN), Employees Provident Fund (EPF), and Social Security Organisation (SOCSO) if applicable. All business licenses and permits must be cancelled with relevant authorities. Failure to notify termination within the prescribed timeframe constitutes an offence punishable by fines up to RM 10,000 (USD 2,375) or imprisonment up to one year.
Limited Liability Partnership (LLP)
LLPs may be dissolved through three main methods:
- Compulsory winding-up by court order,
- Voluntary winding-up by partners, or
- Striking off by the SSM registrar.
Voluntary dissolution remains the most common approach for LLPs that have ceased operations and discharged all debts and liabilities.
Section 50(2) of the Limited Liability Partnership Act 2012 requires that the LLP has ceased operations and discharged all debts and liabilities before dissolution proceedings can commence. The compliance officer must obtain written clearance from the Inland Revenue Board confirming no objection to dissolution.
The dissolution process requires notices to all partners via registered post, publication in both Malay and English newspapers, and submission of a statutory declaration by a partner. The application must be submitted within seven days of the notice to partners or newspaper advertisement, whichever is later.
Private Limited Company (Sdn Bhd)
Private Limited Companies can be closed through two main approaches:
- Striking off for dormant or solvent companies with no assets or liabilities, and
- Winding up (liquidation) for companies with assets to distribute or debts to settle.
Section 551 of the Companies Act 2016 permits striking off when companies have not commenced business or ceased operations, have no intention to resume business, possess no assets or liabilities, and maintain no outstanding charges or government obligations. The process is faster and less expensive than formal liquidation.
Liquidation procedures include Members' Voluntary Liquidation (MVL) for solvent companies, Creditors' Voluntary Liquidation (CVL) for insolvent companies, and Compulsory Winding Up ordered by courts. Each method serves different circumstances and requires specific procedures and documentation
Method 1: Striking off a company in Malaysia
Companies eligible for striking off must be dormant for at least three months with no ongoing business operations. The company must have zero assets and liabilities on its balance sheet, including no bank account balances or outstanding debts. All statutory obligations must be current, with no overdue penalties or compounds under the Companies Act 2016.
Tax clearance from LHDN is mandatory, demonstrating that all tax obligations have been satisfied. Companies must close EPF, SOCSO, and other statutory accounts before proceeding. All business licenses and permits must be cancelled with relevant authorities.
Director and shareholder consent is required, typically through ordinary resolution. If majority consent cannot be obtained due to untraceable shareholders, applications may proceed with evidence of attempted contact via registered post.
Step-by-step procedure
- The striking off process begins with a board resolution confirming the company meets all eligibility criteria. Companies must prepare Form 550 along with supporting documents including latest management accounts showing zero assets and liabilities.
- Upon submission, SSM conducts preliminary review within 30-45 days. If satisfied, SSM publishes a first notice in the Government Gazette allowing 30 days for objections. Without objections, SSM issues a final notice declaring the company struck off and dissolved.
- The complete process typically requires 6-9 months from submission to final gazette notice. Processing time depends on document completeness, SSM workload, and absence of objections during the public notice period.
Common reasons for strike-off rejection
SSM commonly rejects applications due to outstanding tax filings or unpaid penalties.
Any ongoing legal proceedings or regulatory disputes will result in application denial.
Incomplete or inaccurate documentation frequently causes delays or rejections. Companies must ensure all statutory declarations are properly executed and supporting evidence is comprehensive. Attempts to trace untraceable shareholders must be thoroughly documented.
Method 2: Winding up a company in Malaysia
|
Aspect |
Members’ Voluntary Liquidation (MVL) – Solvent Companies |
Creditors’ Voluntary Liquidation (CVL) – Insolvent Companies |
Compulsory Winding Up – Court Ordered |
Applies to All Closure Methods |
|
Eligibility |
Company must be solvent; directors can declare ability to settle debts within 12 months. |
Company is insolvent; directors unable to make solvency declaration. |
Initiated when company defaults, ceases business, or upon petition by creditors, shareholders, or authorities. |
Applies regardless of method chosen. |
|
Initiation |
Directors make statutory declaration of solvency, supported by Statement of Affairs. |
Shareholders initiate, but creditors drive process due to insolvency. |
Court petition filed by eligible parties. |
— |
|
Appointment of Liquidator |
Appointed by shareholders via special resolution (75% approval required). |
Appointed at creditor meetings; creditors’ choice prevails. |
Court appoints liquidator (often the Official Receiver). |
— |
|
Control of Company |
Liquidator takes over from directors once appointed. |
Liquidator acts in interest of creditors; assumes full control. |
Liquidator assumes immediate control once court order is granted. |
— |
|
Creditors’ Role |
Limited – as debts are expected to be fully paid. |
Central – submit claims, attend meetings, approve liquidator. |
Strong – creditors may petition court and influence proceedings. |
— |
|
Process and Documentation |
Liquidator settles debts, distributes surplus to shareholders, files dissolution with SSM. |
Liquidator verifies and pays claims based on priority (secured > unsecured). |
Court proceedings and oversight increase duration and complexity. |
Final tax returns, employee settlements, contributions, license cancellation. |
|
Final Meeting and Dissolution |
Final meeting with shareholders; dissolution 3 months after filings. |
Creditors’ meetings; dissolution after asset distribution and reporting. |
Dissolution occurs following court-supervised liquidation. |
— |
|
Timeline and Cost |
Generally faster and less costly. |
Moderate; depends on claims volume and asset recovery. |
Typically longer and more expensive. |
— |
|
Director Implications |
Directors must sign solvency declaration; lower scrutiny. |
Directors lose control; risk of creditor scrutiny. |
Directors face higher scrutiny and possible liability. |
Directors remain responsible for compliance with tax, employment, and statutory obligations. |
|
Key Risks |
False solvency declaration exposes directors to liability. |
Insufficient assets may leave creditors unpaid. |
Prolonged process, legal costs, and reputational damage. |
Failure to obtain clearances or cancel licenses may delay closure or create ongoing liabilities. |
|
Tax Clearance |
Must file final tax return and obtain clearance from LHDN. |
Same requirement. |
Same requirement. |
Mandatory. |
|
Employment Obligations |
Must comply with Malaysian Employment Act – notice, salaries, compensation. |
Same requirement. |
Same requirement. |
Mandatory. |
|
Statutory Contributions |
Settle EPF, SOCSO, EIS; obtain clearance. |
Same requirement. |
Same requirement. |
Mandatory. |
|
Licenses and Permits |
Cancel business/trade licenses and sector permits. |
Same requirement. |
Same requirement. |
Mandatory. |
Frequently Asked Questions (FAQs): Close Down Company in Malaysia
Can I close a company without audited accounts?
Companies eligible for striking off do not require audited accounts if they have no assets or liabilities. However, management accounts showing zero balances are typically required. Companies undergoing liquidation must prepare final audited accounts as part of the process.
How long does SSM take to approve a strike-off?
SSM typically processes strike-off applications within 6-9 months, including preliminary review (30-45 days), gazette publication (30 days objection period), and final processing. Timeline may extend if objections are received or additional documentation is required.
What happens if I don't close a dormant company?
Dormant companies remain subject to annual filing requirements and penalties for non-compliance. SSM may initiate involuntary strike-off proceedings for companies failing to meet statutory obligations. Directors remain liable for ongoing compliance failures until the company is properly closed.
Can foreign-owned companies strike-off in Malaysia?
Foreign-owned companies can utilize strike-off procedures provided they meet all eligibility criteria. Additional considerations may apply regarding foreign investment regulations and tax clearance requirements. Professional advice is recommended for foreign-owned entities.
What's the difference between strike-off and winding up?
Strike-off is a simplified administrative process for dormant companies with no assets or liabilities, while winding up involves formal liquidation procedures for active companies with assets to distribute or debts to settle. Strike-off is faster and less expensive but has strict eligibility requirements.
Do I still need to file annual returns while waiting for strike-off?
Yes, companies remain subject to all statutory obligations including annual returns until officially struck off. Failure to maintain compliance during the strike-off process can result in application rejection and penalties. Regular filing requirements continue until the final gazette notice is published.
