Closing a Singapore registered Company - Strike off and winding up
Based on Singapore’s business operation guidelines, a company can be closed in two ways: striking off a company from ACRA registers or a voluntary or a compulsory closure of a company based on specific circumstances. The primary reasons for closing a company are:
- Stoppage of business activities or non-profitability;
- Bankruptcy and inability to pay debts;
- Irreconcilable differences among shareholders;
- Restructuring of parent company, either financial or corporate;
- Dormancy or inactivity wherein the owner wants to avoid operational and maintenance cost;
- Violation of legal provisions, including committing business offences
Depending on the company’s operating condition, it can cease to exist by either “striking off” or “winding up”. Striking off applies only to small or inactive companies that are financially solvent. It is a more efficient, cost-effective, and speedy process of closing business operations.
Companies that are under bankruptcy proceedings or have an active compromise agreement between creditors and company members cannot be stricken off. Instead, it undergoes winding up process wherein an appointed liquidator will perform the following:
- Liquidate the company’s assets;
- Pay any existing debts;
- Distribute available surplus assets among company members
Both procedures are considered complicated (But winding up is more complex and time consuming) and may need the services of professionals specializing in Singapore company closures.
Striking Off : Pre -requisites
Accounting and Corporate Regulatory Authority or ACRA is the government agency responsible for determining the validity of an application to strike off in relation to Companies Act Section 344. A company must be able to establish that it is no longer conducting business and it meets specific requirements outlined below
Steps involved in striking off the company
Completing pending matters
Before an application for company strike off is lodged all pending matters like accounting, AGM, IRAS need to be cleared. Usually it will take a period of approx.. 3-4 weeks for this. Once these activities are completed an application for strike off is lodged. You also need to conduct an AGM for obtaining approval of all relevant parties. Depending on your specific case there might be more activities might need to do. We will guide you on these matters in due course
Strike off notice
Once the application for strike off is approved, ACRA will send a striking off notice to the company’s registered office address, Directors, secretary and IRAS
Publication in first gazette
After a 1 month period, if no objection is received, ACRA will publish the name of the company in the Government Gazette. This is known as the First Gazette Notification
Final gazette Notification
After a 3-month period from the First Gazette Notification, if there is no objection, ACRA will publish the name of the company in the Government Gazette and the name of the company will be struck off the register. The date that the company is struck off will be stated. This is known as the Final Gazette Notification. Thus the entire process will take at least 5 months
About winding up
A Singaporean company can wind up its operation either voluntarily or compulsorily. Voluntary winding up can be initiated by the members or by the creditors. Member voluntary winding up happens when there is a strong belief among company directors that all its debts can be paid in full within twelve months after the winding up commences. Creditors’ voluntary winding up, on the other hand, is started if there are compelling reasons like liabilities that hinder business continuity. In both instances, a winding up proceeding is started following this outlined process.
A judicial body like the court of justice can order a company to be wound up in situations like inability to meet payment obligations or in instances when the liquidation is considered a fair and just resolution.
Broad steps involved in winding up
The procedures involved in closing a Singapore company (whether strike off or liquidation) are oftentimes complicated and lengthy. You are also mandated by law to comply with all legal and business requirements. Companies who decide to cease operation and liquidate their businesses should avail of professional services that can help assess the overall situation, provide relevant advice, and ensure the successful completion of all procedures.