Company challenges by-law gazetted during MCO on debt recovery

A Penang company says an amendment to the Companies Act during the movement control order has prevented it from recovering its debt.

GEORGE TOWN: A construction company is seeking to challenge a by-law granting a six-month extension for companies to settle their debts, after it was unable to serve a notice to its debtor during the movement control order (MCO).

It said the Companies (Exemption) Order 2020, gazetted on April 23 during the second month of the MCO, was gazetted without going through Dewan Rakyat for debate, and was inconsistent with the Companies Act.

The by-law states that companies with outstanding debts can defer their debts up to six months even if they were slapped with the 21-days settlement notice.

However, under Section 466(1)(a) Companies Act, a company which fails to pay its debt may risk a winding-up petition within six months of the deadline.

In its judicial challenge naming the government, Domestic Trade and Consumer Affairs Minister Alexander Nanta Linggi, Companies Commission of Malaysia and the debtor company, the company said it had obtained a judgment on Feb 24 through an arbitration process against its debtor, which was ordered to pay a disclosed sum by March 26 for a construction job.

However, it said it could not serve the notice due to the MCO which began on March 18.

“While the country was placed under MCO, the minister made a by-law under the Companies Act that affected our rights to recover debt,” the company said.

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