After setting up a company in Singapore to building the business for a period of time, many owners are looking at options to close down the company due to several difficulties in maintaining the business. There are different solutions available for closing a company in Singapore, depending on its type and its business. For most, two processes exist: liquidation by winding up or striking off, which are both handled by ACRA (Accounting and Corporate Regulatory Authority).
Closing a local company: striking off
It is worth noting that if the company is GST registered and is no longer carrying on a business, it has to cancel its GST registration with IRAS.
The whole process generally takes around 5 to 6 months after the initial application is submitted to ACRA, depending on the complexity of the case and the comprehensiveness of the documentation submitted.
Closing a local company: winding up
Members’ Voluntary Winding up:
A company can decide to wind up its business voluntarily and appoint a liquidator, or provisional liquidator, if the directors are convinced the company will be able to pay its debt in the following 12 months.The liquidator will ensure all the notifications required under the Companies Act are filed.
Creditors’ Voluntary Winding up:
This is the option to choose when the directors do not believe the company can continue its business due to its liabilities. They will appoint a liquidator, or provisional liquidator, who will file the necessary applications required under the Companies Act.
Compulsory winding up:
The company may be wound up under an Order of the Court under particular circumstances; for instance if it becomes insolvent, which means that it cannot pay its debts as they fall due, or that it has liabilities due in excess of its assets. The proceedings can be initiated either by the company itself, its creditors, its shareholders, the liquidator or the judicial manager. The Court may then appoint a liquidator, and if not the Official Receiver is the liquidator.
The liquidator has to prepare a Statement of Affaires on the company’s assets and liabilities for its submission. To this end, he conducts a review of the company’s assets and the creditors’ claims, and investigates the directors and other people to realize the company’s assets in the best way for the firm and its creditors.
He is also allowed to authorize the continuation of the business if he believes it is the best option, and it is the duty of the company’s officers to assist him even without their power to run the company.
Afterwards, the liquidator will arbitrate whether the claims lodged are justified and settle them accordingly. What is left after paying the creditors will go back to the shareholders.
Closing a sole proprietorship or partnership
The sole partner or proprietor can notify ACRA they have ceased their business directly on BizFile+ by using SingPass or CorpPass. They have to file online the “Cessation of Business” application with the correct information and the business will be ceased immediately after its submission.
If the company is GST registered, a cancellation of GST registration must be filed with IRAS prior to application of cessation.
Closing a Limited Liability Partnership (LLP)
An LLP can be closed either through winding up or striking off.
The later process takes at least 4 months, after the LLP first apply to ACRA to strike its name from the Register. The application may be approved if ACRA find a reasonable cause to believe that the LLP is not carrying on business and the LLP is able to satisfy the criteria for striking off.
The process for winding up an LLP is similar as the one for local company. It can be done either voluntarily or compulsorily.
A member’s voluntary winding up can be decided if the partners believe the firm will be able to pay all its debts within 12 months after the beginning of the winding up. If the partners believe the LLP cannot continue its business due to its liabilities, they can opt for a creditor’s voluntary winding up: in this case, they organize a meeting with the creditors to obtain their approval on their proposal to wind up the company. In both process, a liquidator or provisional liquidator has to be appointed to wind up the LLP’s affairs and file the necessary notifications required under the LLP Act.
The LLP can be wound up by Order of the Court under special circumstances (if it is unable to pay its debts for example). The Court may appoint a liquidator, and if not the Official Receiver is the liquidator, to file the necessary notifications required under the LLP Act.
Closing a foreign company
The foreign company or its branch has to respectively cancel their GST registration with IRAS if they are GST registered.
Apart from ACRA and IRAS, already mentioned, other governmental agencies have to be informed of a company’s liquidation and of the resolution of all its outstanding matters:
Ace Success have years of experience in striking off of a company. We are able to professionally advise you on the process of striking off and the timeline to work towards the final stage. Do contact us to find out what is the cost effective way to close a company with us.