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Quick Reference Guidelines

on Litigation Records

Prepared by: CTOS Training Department

Version: 1.0

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Table of Contents (I) Glossary of Terms ................................................................................................................................ 3

(II) CTOS Remarks .................................................................................................................................... 5

(III) Basic Legal Procedure ........................................................................................................................ 6

(IV) Types of Litigation Record in CTOS Report ......................................................................................... 7

A. Foreclosure Proceedings .............................................................................................................. 7

B. Bankruptcy Proceedings ............................................................................................................. 10

C. Companies with Petition or Winding Up Order Issued ................................................................ 13

D. Directors of a Company with Winding Up Petition/Order Issued ................................................ 16

E. Reference of Dispute to the Cooperative Societies Tribunal ....................................................... 17

F. Company Restructure/ Equity Reduction.................................................................................... 18

G. Companies under Special Administration ................................................................................... 19

H. Section 308 Power of Registrar to Strike Off Defunct Company from Registration ...................... 20

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(I) Glossary of Terms

No. Legal Terms Definition

1 Adjudication Order A court order that made a debtor bankrupt

2 Charging Order The judgement debtor’s shares or stocks can be sold to satisfy the

debt through a court order. This order is made known to the company

where debtor has the shares

3 Creditor’s petition Creditor makes an application to the court to make a debtor bankrupt

4. Defaulter A person or an entity who fails to perform a task or fulfill an

obligation, especially failure to meet a financial obligation

5. Defendant The person/ entity who gets sued/ accused in court

6. Garnishee order The judgement creditor can get a court order to attach the debtor’s

bank accounts or funds owed to the debtor by third parties to satisfy

the judgement debt

7. Government gazette A periodic publication that records the business and proceedings of

the government and has been authorized to publish public or legal

notices

8. Judgement debtor This is an order of the court where the judgement debtor is to appear

summons before the court and be cross examined by the creditor’s

lawyer.

The purpose is to assess his assets or funds to determine how the

debtor can best satisfy the judgement debt.

9. Liquidation Sale of assets of a business to pay off debts

10. Liquidator Officer appointed when a company is wound up. This officer in charge

of collecting all assets of the company and settling all claims against

the company

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11. Personal service Delivering of summon, complaint, notice to quit tenancy or other

legal document which must be served by handing it directly to the

person named in the document.

12. Petitioner One who signs and/or files a petition

13. Plaintiff A person who brings a legal case against someone in a Court of Law

14. Process Server The procedure by which a party to a lawsuit gives an appropriate

notice of initial legal action to another party (such as defendant),

court or administrative body.

This is to exercise the jurisdiction over the other party so as to enable

him or her to respond to the proceedings before the court, body or

other tribunal.

There are 2 types of service: personal service and substitute service.

15. Prohibitory Order Court order to seize and sell the debtor’s landed property

16. Respondent A person against whom a petition is brought

17. Solicitor Lawyer

18. Substituted service Indirect delivery of a legal document through an advertisement in the

local newspaper, requesting an individual’s presence in court

19. Summon Order to appear in court

20. Winding up A process in which the existence of a company is brought to an end

and where assets of a company are collected and sold

21. Writ of Seizure Where the creditor knows that the debtor has movable properties

e.g. Stock, furniture, vehicles , fixtures and fittings, he can apply to

the court for a writ of seizure

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(II) CTOS Remarks

No. Remarks Definition

1 Action withdrawn, debt

fully settled

Case settled and action withdrawn

2 Account Regularised Repayment in progress

3 Bankruptcy Annulled,

Discharged, Rescinded or

Revoked

Subject discharged/annulled from Bankruptcy

4. Bankruptcy Creditor’s

Petition issued

Second stage of Bankruptcy action. Subject is not yet a bankrupt

5. Bankruptcy Notice issued First stage of Bankruptcy action. Subject is not yet a bankrupt

6. Bankruptcy, Receiving or

Adjudication Order issued

Final stage of Bankruptcy action. Subject is a bankrupt

7. Company Winding Up,

Petition issued

Second stage of winding up action. Subject is not yet a wound up

8. Director of a company

with petition or winding

up order issued

The individual was a director of a company, which is being sued for

winding up

9. Petition Struck off Case discontinued

10. Petition Withdrawn Case discontinued

11. Proclamation of Sale

under National Land

Code/Deed of Assignment

Auction on a piece of land to pay off a debt

12. Summon, defendant

named in suit/party

named in suit

Summon case filed on a subject

13. Company winding up ,

order issued

Final stage of winding up action. Subject was wound up

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(III) Basic Legal Procedure

1. For debt recovery purposes, credit grantors or lenders can pursue legal action.

2. The Limitation Act provides a time frame for seeking relief through courts. All debts have to be within

6 years before any legal action can be taken.

3. Below shows the basic legal procedure that a credit grantor/ lenders have to go through in order to

recover a debt.

4. Upon obtaining judgement, plaintiff can take action to recover the debt.

5. Examples of legal action:

- Judgement Debtor Summon

- Writ of Seizure

- Prohibitory Order

- Charging Order

- Garnishee Proceedings

- Bankruptcy

Letter of Demand (LOD)

File a Summon

Serving Process

Personal Service

Substituted Service

Hearing

Non appearance

Trial

Judgement

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(IV) Types of Litigation Record in CTOS Report

A. Foreclosure Proceedings

1. Foreclosure is a legal process where the creditor sell the property of the debtor for the purpose

of repaying the debt owed on the property.

2. The Foreclosure process is shown below:

Letter of Demand (LOD)

LOD is issued to the borrower informing him of his breach (of the loan

agreement) to demand the borrower to pay

Notice

If the borrower fails to satisfy the bank / creditor, a foreclosure notice in Form

16 D of the National Land Code is issued

Originating Summon

The bank/Creditor files an Originating Summon (OS). This will be served on the

borrower

After the hearing of OS, the Court must be satisfied that the legal documents have

been served on the borrower before granting order of sale (sale of property)

Proclamation of Sale

Once the auction date has been fixed by the court and auctioneer has been

appointed, the auctioneer will prepare Proclamation of Sale and advertise this,

approximately 2 weeks before the auction date

Property sold, Liability Discharged

On Auction day, property is sold to the successful bidder

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3. Examples of Foreclosure Proceedings reflected in CTOS Report, Section D:

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*Proclamation of Sale under Deed of Assignment- for property without title

*Proclamation of Sale under the National Land Code- property with title

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B. Bankruptcy Proceedings

1. Bankruptcy is a process where debtor is being declared bankrupt upon receiving Adjudication

Order made by the High Court.

2. The debt has to be at least RM 30, 000.

3. The legal process starts from summon (refer to basic legal procedure in page 6).

4. Below is the summary of Bankruptcy Proceedings, after obtaining Judgement.

Judgement

Notice: 1st Stage of Bankruptcy

Petition: 2nd Stage of Bankruptcy

Adjudication Order: Final Stage- Debtor is bankrupt

Annulment/ Discharge – Debtor no longer bankrupt

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5. Examples of Bankruptcy records in CTOS Report, Section D:

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C. Companies with Petition or Winding Up Order Issued

1. Winding up is a process where a company is brought to an end, where assets of a company are

collected. The assets collected are used to pay off the company’s debts and liabilities.

2. There are 2 types of winding up:

Voluntary Winding Up

Winding Up by The Court

Voluntary Winding Up: The liquidation of a company where the directors of the company have

come to a decision to wound up the company.

Winding Up by Court: This is also known as compulsory winding up. It begins with the

presentation of petition in Court. Minimum debt to wound up a company: RM 500

3. Below is the summary of Winding Up process:

Judgement

Petition

Order

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4. Example of companies with Petition or Winding-up Order issued/Voluntary Winding-up

reflected in CTOS Report, Section D:

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D. Directors of a Company with Winding Up Petition/Order Issued

1. If the subject happens to be a director of a company with winding up petition or order issued, it

will be reflected in the subject’s report, Section D.

2. This legal record is directed on the Company, not the director.

3. Records like this reflect past business behavior of the subject.

4. Example:

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E. Reference of Dispute to the Cooperative Societies Tribunal

1. Tribunal is an institution set with authority to judge or solve issues or disputes.

2. This type of dispute is settled privately in the tribunal without going to the Court.

3. When parties cannot come to an agreement, the referee (a third party which is legally qualified

in helping people to reach an agreement) will make a decision. The referee manage the hearing

in a tribunal.

4. In Tribunals, the referee will usually invite the parties into a hearing room at the appointed time

and the hearing will be conducted in private.

5. This method of solving disputes is cheaper and less complicated as compared to Court cases.

6. Example:

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F. Company Restructure/ Equity Reduction

1. This is a process where private or public company reorganize the operational, ownership or other

structures of the company for several reasons.

2. Some companies might undergo company restructure for the purpose of making it more

organized or profitable.

3. However, for some companies who undergo financial distress or faces cash flow problems,

company restructure/ equity reduction can take place. The purpose of this is to help reduce the

company’s debt and to restore the liquidity of the company.

4. Example of company restructure/equity reduction reflected in CTOS report, Section D:

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G. Companies under Special Administration

1. Where a company is a borrower and is unable to manage its debts or fulfill its obligations, a third

party can be appointed to this company. This third party is called as ‘Special Administrator’.

2. The Special Administrator will acquire, manage, finance and dispose of assets and liabilities of the

companies.

3. Example of company under special administration in CTOS report, Section D:

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H. Section 308 Power of Registrar to Strike Off Defunct Company from Registration

1. Strike off under Section 308- It is a process in which the Registrar’s exercises his power to strike

off the name of a defunct company off the register if the Registrar has reasonable cause to

believe:

The company is not in operation or is not carrying on business

The company has been wound up but no liquidator is acting

The liquidator failed to lodge any return

The company has no asset or insufficient funds to pay the costs of obtaining an order from

the Court to dissolve the company

2. Example: