MED publishes Regulation on Dissolution Procedures of Non-Compliant Companies

On 18 June 2019, the “Regulation on Dissolution Procedures for Companies to be Dissolved by Decision of the Registrar of Companies” was published in the Government Gazette.

The Regulation, which was formulated pursuant to the Fourth Amendment to the Companies Act, which commenced on 20 December 2018, specifies procedures to be followed by the Registrar with respect to the dissolution of Companies which fall within the ambit of Section 75(b)(1) of the Companies Act.

Section 2(a) of the Regulation indicates that the Registrar has the power to dissolve companies that fall within the circumstances described under Section 75(b)(2) of the Act which are, failing to pay their annual fee by the end of the month or May, or companies which do not conduct any transactions for a period of 1 (one) year following the date of incorporation, or companies which do not conduct any commercial transactions for a 2 (two) year period, or where a Managing Director of a company is fined pursuant to Section 69(a) (failure to submit annual report and related documents within 15 days of the Annual General Meeting), the Registrar may proceed with the process of the liquidation of the non-compliant company if the Managing Director fails to submit the required documents even if the fine amount has been settled. Furthermore, Section 2(b) stipulates that the fine and documents indicated in Section 2(a)(4) must be submitted by 30 June.

The Regulation also states that a general announcement will be made in the government gazette for any claims or debts pertaining to companies to be dissolved under Section 2(a)(4) of the Regulation. Following the announcement, any party that has a claim against the company will have a 14 (fourteen) day period to notify the Registrar of such claim. If the Registrar of Companies is notified of any such claim, the Registrar shall file for dissolution with the relevant court of law, as per Section 7 of the Regulation.

Companies which are to be dissolved, as per this Regulation, may notify the Registrar of Companies of their intent to re-commence business operations within the 14 (fourteen) day period stipulated in Section 3 of the Regulation. However, such companies are required to fulfil all outstanding obligations within the 14 (fourteen) day period as well.

Section 6 of the Regulation also permits any company, subject to dissolution under Section 2(a), and after the expiry of the 14 (fourteen) day period specified in Section 3, to apply for fine relief with respect to any fees or fines owed to the state.