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.

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

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.