PETALING JAYA: The recently-gazetted exemptions to the Companies Act 2016, which allows troubled companies more time to repay their debts, is a move welcomed by the industry as they provide breathing space for businesses.
In the meantime, experts said further exemptions could be made to the Companies Act using the powers of the Domestic Trade and Consumer Affairs Minister to provide further relief and clarity for companies that are impacted by the pandemic. Lawyer Lavinia Kumaraendran, who specialises in dispute resolution, explained that the exemption, which allows companies six months instead of 21 days to respond to the demands issued by their creditors, was beneficial to companies as it gave them time and breathing space to “get their act together” by considering viable options to settle the debts or even to restructure the company if needed.
This includes a writ of seizure and sale, which allows the creditor to take ownership of the debtor’s property. The first, he said, was in terms of protecting companies with an enhanced moratorium period, during which creditors would not be able take action or make claims against them by seizing their assets, or other measures.
“By temporarily suspending this rule, the hope is that directors would be more willing to continue operations to save their companies” he said. “Those with perishable raw materials will need to reorder and will need more time than others, ” he said, noting that the six-month exemption period may not be sufficient.