If you are considering the closing of a Pte Ltd company in Singapore. There is more than one way to approach it. Although the overall process of closing down a company is relatively straightforward, it is extremely important but we do not want you to take any risks. Therefore, a guide on the closing of a Pte Ltd company in Singapore can be seen below.
What are the typical reasons for the closing of a Singapore company?
- The company has discontinued operations or is no longer profitable.
- The company is bankrupt and unable to pay its debts.
- Unresolvable shareholder conflict.
- Corporate or financial restructuring of the company’s parent company.
- The company is inactive, and the owner does not want to incur continuous compliance and maintenance fees.
- Breach of legislative provisions, including criminal offenses.
What are the available methods of closing a Pte Ltd company in Singapore?
The two main methods for the closing of a company in Singapore are mainly Striking Off and Winding Up (Liquidation)
However, the steps involved in the two methods are entirely different and should not be confused with one another. Relin Consultants’ guide below provides further explanation on the steps of Striking Off and Winding Up.
What exactly does ‘Striking Off’ mean?
- A private company that is no longer in business and satisfies certain additional criteria may request to the Company Registrar to be struck from the registry. In general, striking off is a simpler, quicker, and less expensive method.
- Nonetheless, it is only appropriate for small or dormant businesses that can fulfill the precise requirements.
- A company cannot be struck off if it is the subject of or is about to become the subject of, insolvency proceedings or a compromise or settlement with its members or creditors.
What is the process for Striking Off a Pte Ltd company in Singapore?
- The company director or company secretary may apply to the Accounting and Corporate Regulatory Authority (ACRA) to have your company removed from the Registrar’s list. To qualify, your company must resolve all of its responsibilities, primarily taxes and debts, and sell all of its assets.
- It should be noted that if the main office of a foreign company with a Singapore-based branch dissolves, the local branch must be liquidated as well. As part of the process of striking off the company, companies must pay all due taxes and meet all tax obligations.
- If ACRA determines that the business fits all of the conditions for striking off, a “striking off notice” will be delivered to the company’s registered office address, its executives (directors and company secretary) at their home addresses, and finally to Singapore tax authorities.
What are the key requirements for the Striking Off method?
Applications will be permitted only if there are reasonable grounds to think that the company in issue is not conducting business and fulfills all of the conditions for strike-off, which are as follows:
- The company has not commenced doing business since its incorporation date or has never started doing business.
- The company currently has no assets or liabilities.
- The company’s assets and liabilities must have been dissolved.
- The majority of shareholders must have given their written consent to the directors.
- The company must have submitted the most recent set of audited accounts (for a public company limited by guarantee).
- The company must have submitted the most recent unaudited financial sheet (for all other companies).
- There are no outstanding tax liabilities with the Inland Revenue Authority of Singapore (IRAS), as IRAS will not give a tax clearance letter in order to file for strike-off (Latest Statement of Accounts).
- There are no pending tax issues or tax matters with IRAS (Last Notice of Assessment).
- Employees have no outstanding Central Provident Fund (CPF)
- GST registration has been revoked, and there are no pending GST issues.
- There are no outstanding debts.
- There are no outstanding charges on the registry or any judicial proceedings.
- The company is not involved in any legal actions and does not owe any fines (within or outside Singapore)
What exactly does ‘Winding Up’ mean?
- Winding up a company (or liquidation, as it is often known) is a more formal and time-consuming procedure.
- It necessitates the appointment of a liquidator to assist in the management of the business’s demise and assets.
- It is a process that may be performed regardless of whether your company is solvent or bankrupt. For example, if your company is in a more difficult condition, liquidation is the more likely alternative.
What is the process for Winding Up a Pte Ltd company in Singapore?
- Your company’s winding up, also known as liquidation, is a legal procedure in which its assets are transformed into cash, which is then used to pay off the company’s debts and liabilities. This process involves distributing the company’s residual assets/surplus to creditors and shareholders. Once this process is accomplished, the company’s existence is terminated.
- Some of the reasons you may choose to voluntarily dissolve your company are as follows: –
- Giving up your business activities
- Profitability is inadequate to sustain the company.
- Shareholder disagreements
- The company or one of its officers (a person engaged in an executive role) has violated its statutory obligations.
In Singapore, there are three ways to wind up a company, which is members’ voluntary winding up, creditors’ voluntary winding up, and court-ordered winding up.
Members’ voluntary winding up
- You can pick this option if the directors of your company feel that the company’s debts can be paid in whole within 12 months of the commencement date of its winding up.
- Once the decision to use the members’ voluntary winding up method has been made, the following actions must be taken:
- The Declaration of Solvency was signed by the majority of directors.
- Within five weeks, an Extraordinary General Meeting of Members (EGM) will be called to pass motions to wind up the company, appoint liquidators, and approve their salary.
- Pass a specific resolution to wind up the company and enlist the help of a professional liquidator.
- Comply with the necessary solvency and publicity requirements.
- After being passed, the resolution must be lodged with the Accounting and Corporate Regulatory Authority (ACRA) within 7 days and published in a Singapore newspaper within 10 days (one for each of the official languages English, Chinese, Tamil, and Malay).
- Notify IRAS of your intention to seek tax clearance.
- After receiving tax clearance from IRAS, the final meeting date will be determined, and the final advertisement will be issued accordingly.
- After the company’s affairs have been wound up, the liquidator must prepare an account detailing how the winding-up procedure was carried out and how the company’s property was disposed of. After completing the preceding stages, the liquidator will call a final meeting to explain the account to everyone in attendance.
- The Companies Act requires the liquidator to file a return with the Accounting and Corporate Regulatory Authority (ACRA) and Official Receiver within 7 days after the meeting’s conclusion, along with a copy of the account.
Creditors’ voluntary winding up
- If the directors of your company feel that the company cannot continue to operate due to its liabilities and no Declaration of Solvency is submitted, they might opt for the creditors’ voluntary winding up. A company will choose this option if it is unable to pay its obligations within 12 months of the commencement date of its winding up.
- Even if this option is taken, the corporation, not its creditors, must file for insolvency. The creditors are responsible for three things, which are:
- Have a vote on whether or not the company is dissolved.
- Determine who should be chosen as liquidator.
- Organise a creditors’ meeting – The notice of the meeting must be published in a Singapore publication at least seven days before the meeting date.
Winding up by the order of a court
- What distinguishes this process from others is that, instead of members of your business (e.g., directors), third parties may petition the court to have your company dissolved.
- The following individuals may apply to the court in order for this motion to be heard: –
- Any of the company’s creditors
- A liquidator
- A judicial administration
- In order for the procedure to begin, an Originating Summons must be filed in court. In addition to insolvency, the following factors may contribute to this: –
- The company failed to file statutory reports.
- The company has failed to convene statutory meetings.
- The company has not started doing business for a year since its establishment.
- The company has been utilised for malicious purposes.
If you need more explanation and guidance on the closing of your Singapore company, do contact our team.
What are the governing bodies that I will have to notify for the closing of a Pte Ltd Singapore company?
Among the governing bodies or authorities that you will need to notify are as follows:
- Accounting and Corporate Regulatory Authority (ACRA)
- Central Provident Fund (CPF)
- Inland Revenue Authority of Singapore (IRAS)
- Relevant Licensing Authorities
How long will it take to close my company if I opt for the striking-off method?
The entire process of reviewing the evaluation might take up to four months. If you change your mind, a company can be restored within six years of being struck off.
What are the effects of voluntary winding up?
- The company shall cease operations with effect from the date of the special resolution, except insofar as it is essential for the beneficial winding up in the judgment of the liquidator.
- Any transfer of shares is invalid unless made to or sanctioned by the liquidator, and the members’ status cannot be changed.