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Posted at November 7, 2020

There is no irony here, given that companies do from time to time reconstruct themselves in line with changes of circumstances, therefore, tightening of provisions pertaining to scheme of arrangement and reconstruction are needed to enable such as reconstruction be carried out and to help companies to pick up again. It may be difficult for a company to meet the threshold of 75% under s.366, but if it can be met, this means that up to 25% of the company’s creditors involved in the SOA have no choice but to comply with the SOA, and they will not be able to get their money back (whether by legal proceedings or otherwise) unless the SOA falls through. A compromise or arrangement between a company and its members or creditors (or any class of them) under Part 26 of the Companies Act 2006.A scheme of arrangement can be used to effect a solvent reorganisation of a company or group structure, including by merger or demerger, as well as to effect insolvent restructurings such as by a debt for equity swap or by a wide variety of other … Implemented by the Singapore and Malaysia Governments, it allows residents from both countries to enter the other country for long-term work. The legal framework, transaction structure and process will depend on whether the entity being acquired is a public listed company or private limited company. Amongst others, the amendment includes matters pertaining to scheme of arrangements and reconstructions of companies. In such situations, there are normally 3 ways it can play out: the company can be wound up, a receiver & manager can be appointed, or the company can go for a ‘scheme of arrangement’ for the restructuring of the companies. The first advantage is the Court’s power to order compromise or arrangement with creditors and members even though some creditors may not agree with the scheme of arrangement. At this stage, the Court will need to ensure that: During the period that a company has already proposed an SOA, the company would be in a very tenuous position as it would be very difficult for a barely-solvent company to get the 75% it needs. [Part 2]. Posted on October 27, 2020 October 27, 2020 by shahirah. KUALA LUMPUR (Dec 2): The proposed scheme of arrangement between Prestariang Bhd’s unit Prestariang Skin Sdn Bhd (PSkin) and its creditors has received the High Court’s approval.The sanction was granted by Judicial Commissioner Liza Chan Sow Keng during an e-review hearing today. The Periodic Commuting Arrangement (PCA) is a scheme which will allow work and business-related travel between Singapore and Malaysia via the Johor-Singapore Causeway (Woodlands) and the Malaysia-Singapore Second Link (Tuas). One of the more overlooked distinctions between the three is that upon the Winding Up Order or the Notice of Appointment of Receiver or Receiver and Manager, control of the company’s affairs passes to either the liquidator or the receiver and manager, as applicable. Schemes of arrangement are used to execute arbitrary changes in the structure of a business and thus are … There are myriad differences between a company being wound up, a receiver & manager being appointed, and a scheme of arrangement. the company’s creditor, member, liquidator or judicial manager, where applicable) will have to file an application in Court pursuant to s.366 for leave to summon a meeting of the company between its creditors and/or members. Amending Pleadings: When Leave of Court is Required & When it is Not, Summary of Industrial Court Hearing Process. The issue is how shareholders particularly minority in target company can be treated under a scheme. The meeting(s) have been summoned and held in accordance with its previous Order; The proposals for the SOA have been approved by the requisite majority; and. Therefore, to let the company have a fighting chance at rehabilitation, the Court has additional powers under s.368(1) of the Companies Act 2016, to stop all further proceedings in any action or proceeding against the company, unless the parties suing the company get leave specifically from the Court to proceed with their particular proceeding, subject to any terms as the Court may impose. The benefits of a restructuring process via an SOA under s.366 lies in the details. Improvements to the scheme of arrangement procedure. Lawyer Nathalie Ker of Lim Chee Wee Partnership appeared for PSkin.The decision comes after 100% of the scheme … The recent amendments to the Companies Act exemplifies the Government's efforts towards promotion of effective ways of doing business in Malaysia. This is a mechanism by the Court to ascertain the genuineness of such schemes and therefore not an abuse of the Court’s process, and to facilitate agreement by creditors and/or members to the scheme of arrangement. A scheme of arrangement is a useful tool as it provides for a statutory form by which affected creditors and/or members may agree to a scheme which, if approved by the court, will bind dissenting creditors and/or members. Amongst others, the amendment includes matters pertaining to scheme of arrangements and reconstructions of companies. The current regime for an SOA is slightly more relaxed as compared to under the Companies Act 1965. The Court has to ensure that those parties who would be affected by the proposed compromise or arrangement will be given a proper opportunity to be present and to vote. Failure to comply attracts an increased penalty of fine not exceeding RM1 million and in case of a continuing offence, to a further fine not exceeding RM1,000 for each day. Secondly, once the Court has granted the Order for the summoning of the meetings, the meetings of different classes of creditors and/or members will be held. Schemes of arrangement can be used as an easier vehicle in a corporate acquisition. The prayers to be sought are for a Court Convened Meeting to be called for the company to present the Scheme of Arrangement. The challenge to implementation of scheme of arrangements is to obtain the 75% approval from creditors and/or members. Improvements to the scheme of arrangement procedure. Extension of the court-granted restraining order is … Scheme of Arrangement. a scheme of arrangement.2The use of a scheme of arrangement to effect a takeover has gained popularity in Malaysia; it is also seen as an easier route to acquire control as compared to the traditional takeover bid which is SCHEME OF ARRANGEMENT A restraining order can be a crucial tool to allow the distressed applicant company to have a moratorium from creditors’ actions and to allow for a successful restructuring of the company’s debts through a scheme of arrangement. At this stage, each meeting must approved the proposed SOA through a 75% majority of the total value of the creditors (or class of creditors) or members (or class of members) present and voting. In Malaysia, the most common type of merger and acquisition is by way of share purchase. An approved liquidator may be appointed by the court to assess the viability of the proposed scheme or arrangement. 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