Companies Act 2016 · Updated to 31 Jan 2025 · Chapter III
369C. Power of Court to approve compromise or arrangement without meeting of creditors
Feedback & supportWhere a compromise or arrangement is proposed between a company and its creditors or any class of those creditors, the Court may, on an application made by the company, grant an order approving the compromise or arrangement without any meeting of the creditors or class of creditors.
If the proposed compromise or arrangement is approved by order of the Court under subsection (1), the approved compromise or arrangement is binding on the company and the creditors or class of creditors meant to be bound by the approved compromise or arrangement.
The Court shall not approve a compromise or arrangement under subsection (1) unless—
the company has provided each creditor meant to be bound by the proposed compromise or arrangement with a statement that complies with subsection (6) and contains the following information:
information concerning the company’s property, assets, business activities, financial condition and prospects;
information on the manner in which the terms of the proposed compromise or arrangement will, if it takes effect, affect the rights of the creditor;
such other information as is necessary to enable the creditor to make an informed decision on the proposed compromise or arrangement;
the company has published a notice of the application under subsection (1) in the manner as determined by the Registrar;
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the company has sent a notice and a copy of the application under subsection (1) to each creditor meant to be bound by the proposed compromise or arrangement; and
the Court is satisfied that had a meeting of the creditors or class of creditors been summoned, the conditions in subsection 366(3) would have been satisfied.
Notwithstanding paragraph (3)(c), the company may, if directed by the Court, give notice of the application under subsection (1) to the creditors or class of creditors in such manner as the Court may direct.
The Court may grant its approval of a proposed compromise or arrangement subject to such alterations or conditions as the Court thinks just.
The statement referred to in paragraph (3)(a) shall—
explain the effect of the proposed compromise or arrangement and, in particular, state—
any material interests of the directors of the company, whether as directors or members or creditors of the company or otherwise; and
the effect that the proposed compromise or arrangement has on those interests, in so far as that effect is different from the effect that the proposed compromise or arrangement has on the like interests of other persons; and
where the proposed compromise or arrangement affects the rights of a debenture holder, contain the like explanation as required under paragraph (a) with respect to a trustee for the debenture holder.
Each director of a company and each trustee for a debenture holder shall give notice to the company of such matters relating to the director or trustee for the debenture holder as may be necessary for the purposes of subsection (6) within seven days after the director or
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trustee for the debenture holder receives a request in writing from the company for information as to those matters.
Any director of a company or trustee for a debenture holder who contravenes subsection (7) commits an offence and shall, on conviction, be liable to a fine not exceeding five thousand ringgit or to imprisonment for a term not exceeding twelve months or to both.
A person, being a director of a company or a trustee for a debenture holder, shall not be liable under subsection (8) if the person shows that the person’s contravention of subsection (7) was due to the refusal of another director of the company or trustee for a debenture holder to provide the person with the particulars of the person’s material interests affected by the compromise or arrangement.
Unless the Court orders otherwise, an order made under subsection (1)—
has no effect until an office copy of the order is lodged with the Registrar; and
upon being so lodged, the order shall take effect on and from the date of lodgement or such earlier date as the Court may determine and as may be specified in the order.
Where the terms of any compromise or arrangement approved under this section provide for any money or other consideration to be held by or on behalf of any party to the compromise or arrangement in trust for any person, the person holding the money or other consideration shall after the expiration of two years but before the expiration of ten years, starting from the date the money or other consideration was received by the person, transfer the money or other consideration to the Official Receiver.
The Official Receiver shall—
deal with any moneys received under subsection (11) as if the moneys were paid to the Official Receiver under section 508;
and
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sell or dispose of any other consideration received under subsection (11) in such manner as the Official Receiver thinks fit, and deal with the proceeds of the sale or disposal as if those proceeds were moneys paid to the Official
Receiver under section 508.