Certain companies may decide to close down for a variety of reasons. These companies may have ceased business and the shareholders and directors may decide that they would like to close down the company. Some other reasons might include unprofitability of business, the retirement of key personnel and disagreements among key members in the company. Whatever the case, there are certain ways and matters which need to be settled before closing down a company.
There are two ways to close down a company:
- Winding Up
- Striking Off
Winding up is the more formal procedure of the two. It involves the appointment of a liquidator to manage the winding up process. The liquidator will be in charge of liquidating the company’s assets and paying off any creditors. Only after creditors have been repaid can there be any distribution of whatever surplus there may be to the shareholders.
There are two main types of winding up. Voluntary winding up by Members or Winding up by Creditors.
We will touch more on winding up in a separate article as the process is rather complex.
Striking off a company is less formal and is usually the route that most companies take to close down. It involves the company making an application to ACRA to have its name removed off the register of businesses. The following criteria must be fulfilled before a company can be struck off the register.
- There must not be any court proceedings within or outside of Singapore.
- The company must have ceased all business activities or not have commenced business since incorporation.
- The company has no existing assets and liabilities as at the date of application and no contingent asset and liabilities that may arise in the future.
- The company has no outstanding debts owed to the Inland Revenue Authority of Singapore (IRAS), the Central Provident Fund (CPF) Board or any other government agency.
- The company must not have any outstanding charges in the charge register.
- The company is not subject to any ongoing or pending regulatory action or disciplinary proceeding.
- The company (all or the majority of the directors) authorise the applicant to submit the striking off application.
NOTE: Please ensure that there is no outstanding tax credit owing to the company before applying for striking off. When the company is dissolved, any tax credit due to the company will be paid over to the Insolvency and Public Trustee’s Office (IPTO). The shareholders of the defunct company may approach IPTO if they wish to claim the tax credit. Please note that IPTO may impose charges for the processing of the claim. For more information on how to make a claim, please visit IPTO’s website.
- Application is approved
ACRA will send a striking off notice to the company’s registered office address and its officers at their addresses in ACRA’s records.
- Objection Period
The first 30 days is the objection period. If there are no objections to the striking off, a notice of striking off with the company’s name will be published in the Government Gazette.
- First Gazette Notification
For the next 60 days, the notice of striking off with the company’s name will be published in the Government Gazette. It will include the date that the company is struck off.
- Final Gazette Notification
The next step, ACRA will publish the name of the company in the Government Gazette again and the name of the company will be struck off the register. The date that the company is struck off will be stated.
The total process should take at least 4 months. Any interested person can submit an objection against a striking off application. The transaction fee to submit an objection is free. The company will be given 2 months to resolve the matter and the striking off application will lapse. The company can resubmit a new striking off application once the application has been cleared.
When in doubt, seek legal advice or consult an experienced ACRA Filing Agent.
The editorial team at Acra Filing Agent
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