Appointment of Receivers - Company Law (malaysia)

Appointment of Receiver/ Manager

In Asia, if a repayment is secured by a charge against other assets of the company, the document is called a debenture. Hence, the debenture holders of the current debenture would be called secured creditors. A debenture normally provides that a debenture holder may appoint a receiver to take charge over the secured property of the debtor company, at any time after the principal money secured by the debenture becomes payable or upon occurrence of an event of default as specified in the debenture.

Until an application to court is made, the debenture holder or an unsecured creditor is not entitled to appoint a receiver.  The court may make an order to enforce appointment of receivership if the court is satisfied over the rationales in support of the need of such appointment. At present, a receiver becomes the representative of the debtor company upon his appointment, by virtue of the inclusion of provisions to that effect in the debenture under which he is appointed.

Rules to be followed in creating the Statement of Affairs

There are a few provisions in section 189 states about the details that need to be recorded in the statement, person that is required to submit the statement, and payment to the person who is responsible to create this statement.

The date of the statement that is required to be submitted to the receiver shall be dated as of the receiver's appointment date. Relevant particulars that are helpful to this receivership shall be noted down as well. Examples of these particulars are the company's assets, debts and creditors, the details of its creditors and the details of securities held by them.

The statement shall be submitted by the below persons who are in position at the date of the receiver's appointment:

1. the directors of the company,
2. the secretary of the company,

or, the persons which is mentioned by the receiver that he feels required to submit and verify the statement, such as:

1. anyone who are or have been officers;
2. anyone who have taken part in the formation of the company at any time within one year before;
3. anyone who are in the employment of the company, or have been in the employment of the company within that year, and are in the opinion of the receiver capable of giving the information required;
4. anyone who are or have been within that year officers of or in the employment of a corporation which is, or within that year was, an officer of the company to which the statement relates.

Whoever creating the statement shall be approved and shall be reimbursed by the receiver from his receipts for reasonable costs that is used during the preparation and creating the statement.

Upon the appointment of a receiver, effect of receivership on these certain areas are as follows: