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Overview To Closing A Company In Singapore

Overview to closing a company in Singapore.

There are various reasons why one would close a company. Especially in current times where the impact of the Covid-19 proves to be overwhelming. This article will give an overview of ways to close a company and the conditions required of each unique method.

For Local Companies in Singapore

Here are 6 ways to close a local company in Singapore:

Striking off

One of the most common and easiest ways to close a company in Singapore. A company can request that its name be removed from the Register by submitting a request to ACRA. If there is probable cause to think that the company is not carrying on business and the company can meet the conditions for striking off, ACRA may approve the application.

Conditions for striking off:

  • Since its incorporation, the company has either not started doing business or has stopped trading.
  • The corporation owes no money to the Singapore Inland Revenue Authority (IRAS), the Central Provident Fund (CPF) Board, or any other government body.
  • There are no outstanding charges in the charge register.
  • There are no legal proceedings pending against the company (within or outside Singapore).
  • There are no active or pending regulatory actions or disciplinary proceedings against the company.
  • As of the date of application, the corporation has no existing assets or liabilities, and no contingent assets or liabilities that may arise in the future.

Read more on striking off here.

Members’ Voluntary Winding up

If the directors feel the company will be able to pay its debts in full within 12 months of the winding up, the firm may choose to wind up its affairs voluntarily. The firm will appoint a liquidator, or temporary liquidator, to wind up its business and file all relevant notifications under the Companies Act / Insolvency, Restructuring and Dissolution Act.

Conditions for member’s voluntary wind up:

  • Company able to pay its debt in full within 12 months

Creditors’ Voluntary Winding up

A company’s directors may decide to opt for a “creditors’ voluntary winding up” if they consider the company’s liabilities prevent it from continuing to operate. The firm will appoint a liquidator, or temporary liquidator, to wind up its business and file all relevant notifications under the Companies Act / Insolvency, Restructuring and Dissolution Act.

Conditions for creditor’s voluntary wind up:

  • Company due to liabilities is no longer able to operate the business

Compulsory Winding up

A company may be wound up by court orders in certain situations, such as when it is unable to pay its debts. The Court has the authority to appoint a liquidator to wind up the company’s affairs. If the Court does not appoint a liquidator, the company’s liquidator is the Official Receiver.

Conditions for compulsory winding up:

  • Certain situations such as – inability to pay debts

Receivership

If a business fails to pay its debts when they are due due to a debenture or a contractual arrangement, a creditor can initiate a recovery action known as a receivership to retrieve payments owed. 

Unlike liquidations, however, receivership appointments are solely focused on seizing and realizing certain secured assets for the benefit of the secured creditor. The receiver’s authority and power are confined to those specified in the contract, therefore unless that right is clearly granted in the contract, the receiver has no right to manage the company’s business. When receivers are appointed over a company’s shares, the receiver may exercise all of the shares’ rights (including voting) subject to any additional terms of the security documents.

Conditions for receivership:

  • Requires a creditor to initiate a receivership

Judicial Management

Instead of resorting to a liquidation process, if a company or its creditor(s) believes the firm is/will be unable to pay its debts and there is a realistic likelihood of rehabilitating the company, the Court may, upon application, order that the company is placed under judicial management. There will be an appointment of a judicial manager.

Conditions for Judicial Management:

  • Upon approval of the application by the Court

For Foreign Companies in Singapore

If a foreign branch’s head office has been liquidated or is in liquidation, it must discontinue operations in Singapore. The overseas branch’s authorized representative is required to file a “Notice by Authorised Representative of Foreign Company of Liquidation or Dissolution of Company” via BizFile+

If a foreign company’s local branch ceased business, the authorized representative is required to lodge “Notification by Foreign Company of Cessation of Business” via BizFile+.

Striking Off For Foreign Companies

If the foreign firm meets the following criteria for striking off, it may file a strike-off application with ACRA:

  1. The corporation has not chosen a replacement, thus causing the lone authorized representative to be unable to quit.
  2. After a request to determine whether the foreign firm wants to continue operations in Singapore, the authorized representative has received no instructions from the company for at least 12 months.
  3. There is no authorized representative for the foreign company (can be filed only by registered filing agent).

Looking to close a company in Singapore and require services to do so? Contact Us today for us to assist you or to know more about liquidation procedures.

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