How does Cessation of Company in Singapore Works?

Despite its size, Singapore has a booming business economy. In fact, it has more than half a million companies in business at the moment! Regardless of all those businesses that are thriving, there are some that aren’t and need to apply for the strike off company in Singapore.

Whether due to the global pandemic that hit in 2019 or other issues, cessation of a company in Singapore sometimes has to happen. Business owners may decide that closing a Singapore company makes more financial sense than hanging onto a dying enterprise.

If you’re looking into closing your Singapore business, we can help. Keep reading to learn everything you need to know about closing a business in Singapore!

Wind Up vs Strike off company in Singapore

In Singapore, there are two methods of closing a company: winding up and striking off. Although these are both methods of closing a company, there are a few differences between the two.

Generally, strike off company singapore is the more affordable and faster way to close a company. It’s the last step to be taken once you’ve tied up any loose ends in your business, such as getting rid of all assets and liabilities. This process is best for companies that are dormant or small.

Sometimes, however, closing a company can create other issues due to its liabilities. In such a situation, you’ll need to wind up (or liquidate) your company. Not only does this process take a lot more time, it is also done much more formally than a strike-off.

How to Strike Off Company in Singapore

The first method of closing a company in Singapore is a strike-off. In this situation, a director or secretary of the company will apply to the Accounting and Corporate Regulatory Authority for a strike-off.

The ACRA requires businesses to meet a few criteria in order to strike off their company. These criteria include:

• Not commencing business transactions since incorporation or cessation of its business activities
• Having no existing liabilities or assets
• Having written consent of the strike-off from shareholders
• Submitting the last audit account and unaudited balance sheet to the IRAS
• Having no outstanding tax liabilities, issues, or matters
• Having no outstanding Central Provident Funds for employees
• Canceling the GST registration
• Having no outstanding debts
• Having no outstanding court proceedings or legal charges

Once you meet these criteria, a company officer or secretary will need to submit an online application for a strike-off.

After this step, the ACRA will publish the name of the company in the Government Gazette. Sixty days later, they will strike it off the register.

Remember, you are only able to complete the final strike-off if the government doesn’t receive any objections to your application. If they do, you’ll have two months to resolve them and resubmit your application.

How to Wind Up a Company

Winding up a company essentially means converting your company’s assets into cash, then using that cash to pay off outstanding liabilities. Thereafter, any remaining assets are distributed among shareholders and creditors.

There are three ways you can wind up a company in Singapore. Let’s take a closer look at each of these methods.

1. Members’ Voluntary Wind Up

If your company’s directors feel that they can pay off their debts within a year of closing the company, they may want to go with this option. In this situation, you’ll need to complete a few steps:

• Have a majority of directors agree to a Declaration of Solvency
• Hold an Extraordinary General Meeting of members to adopt wind up resolutions and appoint liquidators
• Meet the publicity and solvency requirements
• Pass a resolution for wind up
• File the wind up with the ACRA in 7 days and advertise the wind up in a Singapore newspaper within 10 days
• Notify the IRAS of the wind-up
• Receive a tax clearance from the IRAS and set a final meeting date

Once the company has wound up its affairs, the appointed liquidator will create a document outlining how the winding-up process took place and how the company disposed of its property.

After the liquidator completes this task, he or she will hold a meeting. Thereafter, he or she will file a return with the Official Receiver and the Accounting and Corporate Regulatory Authority proving that the meeting took place.

The company is considered to be officially dissolved 3 months after the company files its declaration. Just keep in mind that the ACRA can annul the dissolution in the two years following the wind-up if they find any issues with the process.

2. Creditors’ Voluntary Wind Up

If you have creditors who believe that the company cannot continue operations due to its liabilities, they can opt for a creditors’ voluntary winding up. This type of wind-up usually takes place because a company can’t pay its debts within one year of commencing a wind-up.

In this situation, creditors can decide whether or not a company should be wound up and also choose the liquidator for the process. Finally, they will hold a creditors meeting that must be advertised in a Singapore newspaper at least one week before it takes place.

3. Wind-Up by Court Order

Sometimes, winding up a business occurs not because business members want to close the company, but because another party asked the court to liquidate the company. Any liquidator, company creditor, or judicial manager can apply for the liquidation of a company.

In order to wind up a business by court order, the applicant must file an originating order. This can be caused by:

• Insolvency
• Failure to lodge statutory reports
• Failure to hold statutory meetings
• Illegal activity

Remark : The above methods of closing of a company are subject to change according to the latest requirements by the local authorities or any amendment of the latest regulations.