If you wish to close your company down, you may either wind up the company or strike off your company’s name from the Singapore register. Typical reasons for closing a company include business cessation, insolvency or dormancy. Companies may also close because of an irreconcilable dispute or breach of statutory requirements.
However, there is a difference between striking off and winding up a company. Striking off is an easier and faster procedure that usually applies to small or dormant companies that satisfy certain criteria. Companies that are involved in insolvency or legal proceedings must go through proper winding up procedures. Given the complexity of the issue, it is best that you engage a professional corporate services provider that can walk you through the procedures.
Striking Off a Company
As a director, you may apply to the Accounting and Corporate Regulatory Authority (ACRA) to strike off your company’s name from the register. ACRA may approve the application if it has reasonable cause to believe that the company is not carrying on a business and that the company is able to satisfy the criteria for striking off.
- The company must not have commenced business since incorporation, or has ceased trading
- The company must not have any outstanding liabilities with the Inland Revenue Authority of Singapore (IRAS), Central Provident Fund (CPF) Board or any other government agency
- The company must not be involved in any legal proceedings within or beyond Singapore
- The company must have no assets and liabilities at the time of application
- The company must not have any pending regulatory action or disciplinary proceedings
How to Strike Off
An application may be submitted online via BizFile+. If ACRA is satisfied that your company meets all the criteria for striking off, a striking off notice will be sent to your company’s registered office address. After a period of four months, a final Gazette Notification will be made stating that the company has been struck off.
Objection to Striking Off
Before a company is officially struck off, any interested person can submit an objection against a company strike-off to ACRA. The company will be informed of the objection and will be given two months to resolve the matter. If the company is unable to resolve the issue within the two months, the striking off application will lapse.
Liquidation or Winding Up of a Company
The winding up or liquidation of a company is the process by which a company’s assets are sold in order to pay its debts. After a company’s debts have been paid off, any assets remaining can be distributed among its shareholders and creditors. Thereafter, the company ceases to exist. A company may be wound up either compulsorily by a Court order, or voluntarily.
- Compulsory Winding Up
If a company is unable to pay its debts, it may be wound up under court order. A company is deemed unable to pay its debts if:
- A creditor files a claim that more than SGD 10,000 is owed, and the debt is not paid within 3 weeks;
- A court order against the company as obtained by a creditor remains unfulfilled; or
- The court believes that the company is unable to pay its debts.
Once a winding up order is issued, a court-appointed liquidator will take over the control of the company and the company’s members will not be able to carry on the business of the company.
- Voluntary Winding Up
A Singapore company can be liquidated voluntarily by either its members or creditors.A company may decide to wind up voluntarily if its members believe that the company is able to pay its debts in full within 12 months after the commencement of winding up. Thus, if a company is struggling to pay its debts, it may choose to wind up voluntarily.
For this to happen, the company must produce a members’ resolution as well as convene a meeting with its creditors to discuss the voluntary wind up. The company may then appoint a liquidator.
Once winding up commences, the company shall cease to carry on its business. However, the corporate powers of the company shall continue until the company is dissolved. The company’s shareholders also cannot transfer their shares without sanction from the liquidator.
- Compulsory Winding Up
The Role of a Liquidator
For compulsory winding ups, a public officer known as the Official Receiver will be appointed by the court to oversee liquidation. For voluntary winding ups, either the creditors or shareholders may appoint a liquidator of their choice, depending on the situation.
The role of a liquidator includes:
- Investigating into the affairs and assets of the company, the conduct of its officers and the claims of creditors and third parties
- Recovering and realising the company’s assets in the most advantageous manner to the company
- Resolving creditors’ claims and ensuring an equitable distribution of the company’s assets among creditors and shareholders
In addition, a company must notify the following bodies as part of closing down its business:
- Accounting and Corporate Regulatory Authority (ACRA)
- Central Provident Fund (CPF) Board
- Inland Revenue Authority of Singapore (IRAS)
- Relevant Licensing Authorities
- An advertisement may be required to be placed in an English and a Chinese local daily newspaper
Let Corporate Services Singapore Assist You
Closing a company can be a complex and time-intensive procedure. In addition, you must comply with all the necessary legal and statutory requirements. If you have decided to close your Singapore company down, it is highly recommended that you seek the help of a professional corporate services provider that can assess your business situation, recommend the best course of action, and assist you through the procedures and paperwork.
At Corporate Services Singapore, we provide professional assistance on all types of company liquidations in Singapore, whether voluntary or compulsory. Access expert financial advice and solutions today by giving Corporate Services Singapore a call at 6602 8286 or email firstname.lastname@example.org.