Weekly E-KTP Newsletter #191: Permanently increase of Indebtedness threshold to RM50,000
A higher threshold for winding up proceedings against a debtor who inability to pay debts
Suruhanjaya Syarikat Malaysia (SSM) has permanently raised the indebtedness threshold for companies from RM10,000.00 to RM50,000.00 with effect from 1 April 2020; after introduced a temporary measure from 23 April 2020 to 31 March 2021 under Section 466 of the Companies Act 2016.
This initiative was aimed to reduce the burden and impact on companies facing cash flow problems. This is prevention to companies being winding up and able to continue doing business during the COVID-19 pandemic.
Upon implementation of this initiative, the number of winding-up petitions is expected to reduce and companies will be able to continue doing business without worry. This is supported by the number of petitions submitted to SSM from April to December 2020 recorded at 665 cases as compared to 1,760 cases in the year 2019 and 1,533 cases in the year 2018.
Is the threshold considered an appropriate amount? As elaborate from Datuk Seri Alexander Nanta Linggi, the Minister of Domestic Trade and Consumer Affairs, this amount was considered appropriate from two (2) perspective as below:
1. not too low in forcing companies to wind up due to small amounts of debt, and
2. not too high which could burden smaller creditors for not being able to take action against companies in debt.
Hence, SSM hopes that the implementation of this initiative will help and support the corporate sector during the economic recovery period, especially for companies affected by the COVID-19 outbreak.
SSM Press release https://bit.ly/3dLpE7s
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Published : 8-Apr-2021