Question (a)

The issue is whether or not the procedures of winding-up is valid and in accordance with the
law?

First and foremost in winding up procedure, one of the grounds of winding up is company’s
inability to pay its debts as in section 465(1)(e) of the Companies Act 2016 and inability to pay
debts can be further scrutinized in section 466(1)(a). In section 466(1)(a), a company is said to
fail in paying the sum demanded when the creditor is owed a sum exceeding the amount
prescribed by the Minister (currently set at RM10,000 and court judgment not required), notice
of demand served by creditor requiring the company to pay the sum due by leaving the notice at
the registered office of the company and finally the company has for 21 days after the service of
the demand neglected to pay the sum or to secure or compound for it to the satisfaction of the
creditor.

Applying to the law above, the first requirement of amount exceeding RM10,000 is indisputable
as the debt owed was clearly shown RM300,000. On top of that, it was also explicitly mentioned
that the payment demanded was not cleared by the company thus, can be inferred that the
company knew about the notice but chose to be silent about it. Therefore, from these instances,
due to non-compliance of notice of demand by the company, Jing can proceed to present petition
of winding-up within 6 months after non-compliance as provided in section 466(2).

Furthermore, moving on to procedures of winding-up, the next thing that a creditor should do is
to do filing of affidavit verifying petition in Form 7 within 4 days as mentioned in Rule 26 of the
Company (Winding-up) Rule 1972 followed by service of petition and affidavit in Rule 25 and
file it. In Quicksafe Freightlines Pty Ltd v Shell Co (Aust), it is sufficient to serve the notice at
the company’s registered address. Next, according to Rule 24, an advertisement of petition as in
Form 4 must be published 7 clear days before the hearing followed by Rule 21 which is filing of
memorandum of advertisement and together with notice of intention of party to appear as in Rule
28 by using Form 8.

Moreover, by virtue of Rule 30(1) the company can do filing and service of affidavit opposing
petition at least 7 days before hearing if they have grounds to oppose and the creditor can file and
service of affidavit in reply within 3 days of service of affidavit opposing petition as in Rule
30(2).

Applying the law to the current dispute, Jing had failed to comply with Rule 26 as he filed
affidavit verifying petition on 7 April which was 7 days after the presentation of winding up
when the maximum days to verify is within 4 days only. In addition, the petition was served to
one of the director’s wives instead of the company itself thus, by virtue of the case of Quicksafe
Freightlines Pty Ltd v Shell Co (Aust), since it was not served to the company, it can be deduced
that the service was not suffice to be an effective service. Besides that, advertisement of petition
must be published 7 clear days before hearing and in the current circumstances, it was advertised
three days (on 15 June) before hearing date (18 June). Hence, it is proven that on behalf of Jing,
there are few procedural mistakes that he committed which leads to defective petition of
winding-up. Apart from that, the company itself also made a mistake when it did not comply
with Rule 30(1) in filing and service affidavit of opposing the petition within 7 clear days before
hearing, thus, there was also a defect on behalf of Persenic Bhd.

In conclusion, the procedures of winding-up is invalid and not in accordance with the law as Jing
(the creditor) and Persenic Bhd did not comply with Rule 24, 25, 26 and 30(1) of the Company
(Winding-up) Rules 1972. In the event if both parties wish to continue with the proceedings, they
must follow the rules strictly to constitute an effective winding-up.