Closing a company in Singapore
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
A company may apply to ACRA to have its name strike off from the Register. This is usually the easiest, less expensive way to close a company, but it has to meet very specific criteria to be able to do so. To be able to be strike off:
- The company must not have commenced business since its incorporation, or must have ceased trading;
- The company must not have any outstanding debts owed to IRAS (Inland Revenue Authority of Singapore), CPF (Central Provident Fund) or any other government agency;
- There are no outstanding charges in the charge register;
- The company must not be involved in any legal proceedings, inside or outside Singapore;
- The company must not be subject to any ongoing or pending regulatory action or disciplinary proceeding;
- The company must not have any existing assets and liabilities as the date of application and no contingent assets and liabilities that may arise in the future;
- All or a majority of the Director(s) authorize the applicant to submit the online application for striking off on behalf of the company.
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
A foreign branch has to close its operation in Singapore if its head office has been dissolved or is in liquidation. The authorised representative of the foreign branch is required to lodge “Notice by Authorised Representative of Foreign Company of Liquidation or Dissolution of Company” via BizFile+.
When a foreign branch has ceased its activity in Singapore, the authorised representative is required to lodge “Notification by Foreign Company of Cessation of Business” via BizFile+.
The foreign company may apply for striking off with ACRA if it is able to meet the following criteria:
- The only authorized representative cannot resign because the company has not appointed a replacement;
- The authorized representative has not received any instruction from the company for at least 12 months after a request has been made regarding whether the foreign company intends to continue operations in Singapore;
- The foreign company does not have an authorized representative (only the registered filing agent can file it).
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:
- CPF (Central Provision Fund) Board
- MAS (Monetary Authority of Singapore)
- Other relevant bodies like MOM (Ministry of Manpower), ICA (Immigration and Checkpoints Authority), etc.
Argus Global can professionally advise you on the process of striking off of your company. Do contact us to find out what is the cost effective way for closing a company with us or if you need any other corporate compliance services.