The following are the different ways to close a company in Singapore, depending on which state your company is in.
- Members’ Voluntary Winding Up of a Company
- Creditors’ Voluntary Winding Up of a Company
- Compulsory Winding Up of a Company by Order of Court
- Striking off a company
Winding up, also known as liquidation in Singapore means that all of the company’s assets are sold off to pay their creditors. Any amount remaining after all debts, expenses and costs have been paid off, are to distributed evenly amongst the shareholders of the company. There are 2 modes of winding up a company. They may be either – by the Court, or voluntary. When the winding up has been completed, the company is formally dissolved and it ceases to exist.
Voluntary winding up is when the directors of the company believe that the company will be able to pay its debts fully, within 12 months after the initiation of the winding up.
Members’ Voluntary Winding up of a Company
Voluntary winding up is when the directors of the company believe that the company will be able to pay its debts fully, within 12 months after the initiation of the winding up. The following steps are to be followed accordingly to ensure that the company can be wound up successfully:
- File a Declaration of solvency with an attached statement of affairs.
- Pass a special resolution for the purpose of winding up the company via the holding of an Extraordinary General Meeting (EGM) within 5 weeks.
- Hold an EGM to pass a resolution for the appointment of at least one liquidator.
Once the liquidator is officially appointed, they will convert any remaining assets into cash and pay as many creditors as possible with those funds. If the company has successfully paid of all of its creditors, the company shall cease to carry on its business. However, the corporate powers of the company shall continue until the company is dissolved. Any shares transferred, or made to or with the authorisation of the liquidator, and any alteration in the status of the embers made after the commencement of the winding up, shall be void.
In the event that the liquidator consider that the company is unable to pay off its creditors within 12 months, it will be deemed insolvent and thus, converted into creditors’ voluntary winding up.
Creditors’ Voluntary Winding Up of a Company
Creditors’ voluntary winding up is applicable when the directors of the company believe that the company is unable to reason of its liabilities, to continue its business. No Declaration of Solvency needs to be filed as the company is insolvent. The steps for winding up a company are as follows:
- File a declaration with the Official Receiver.
- Convene an Extraordinary General Meeting (EGM) with the company’s creditors to consider for the purpose of winding up the company.
- Appoint a provisional liquidator via another EGM.
- Lastly, pass a resolution for creditors winding up to be proposed by holding an EGM.
Before filing a declaration with the Official Receiver, the directors of the company have to fix a date to meet with the company and its creditors to take place within 1 month of the date of the declaration. If the resolution is passed in favour of the winding up, the company will appoint a provisional liquidator, subject to the preference of the creditors. A notice of appointment together with a copy of the declaration lodged with the Official Receiver shall be advertised within 14 days in at least 4 local daily newspaper, one each published in the English, Malay, Chinese and Tamil languages.
The appointment of a provisional liquidator shall continue for one month from the date of his appointment or for such further period as the Official Receiver may allow in any particular case or until the appointment of a liquidator, whichever first occurs.
The company shall cause a meeting of the creditors of the company to be summoned for the day, or the day next following the day, on which a meeting has to be held at which the resolution for voluntary winding up is to be proposed, and shall cause the notices of the meeting of creditors to be sent by post to the creditors simultaneously with the sending of the notices of the meeting of the company. The meeting should be held at a time and place convenient to the majority of the creditors be given a clear 7 days’ notice before the commencement of the meeting. The creditors’ meeting should also be advertised in a local newspaper at least 7 days before the date of the meeting.
Compulsory Winding Up of a Company by Order of Court
Compulsory winding up of a company by Order of Court is most commonly due to a company’s inability to pay its debts. A company is deemed to be unable to pay its debts if:
- A creditor having a claim against the company for a sum exceeding S$10,000 has served a written demand requiring payment, and has for 3 weeks neglected to pay the sum;
- Execution issued on a judgement obtained by a creditor against a company remain unsatisfied in part of in whole; or
- It is proved to the Court’s satisfaction that the company is unable to pay its debts.
An Originating Summons to wind up a company compulsorily should be filed by the court in either Form 2 or Form 3 of the Companies (Winding Up) Rules must be filed together with a supporting affidavit (in Form 5).
More information regarding the procedure for the compulsory winding up of a company by Order of Court can be found here:
Final Meeting and Dissolution
Once the affairs of the company are fully wound up, the liquidator will make up an account showing how the winding up has been conducted and the property of the company has been disposed of. An EGM will be held to lay the account and give any explanations thereof to the attendees. The liquidator shall lodge with ACRA and the Official Receiver a return of the holding of the meeting with a copy of the account attached.
3 months after the lodgement with ACRA, the company will be dissolved. However, the Court may at any time within 2 years after the date of dissolution, on application of the liquidator or any other interested person, may apply to court to void the company’s dissolutions.
Striking off is the quickest and cheapest method of closing a company. However, this method is not applicable for every company. Only companies that are inactive, or does not have any existing assets or liabilities can choose to close their company with this method. This process takes at least 4 months if there are no objections. However, the company has to meet certain requirements to in order to be approved by ACRA to be struck off. The requirements are as follow:
- A resolution has been passed by the majority of the directors and shareholders to consent of the striking off of the company.
- The company has not commenced business since incorporation or has ceased trading.
- The company does not have outstanding debts owed to Inland Revenue Authority of Singapore (IRAS), Central Provident Fund (CPF) Board and any other government agency.
- There are no outstanding charges in the charge register.
- The company is not involved in any legal proceedings (within or outside Singapore)
- The company does not have ongoing or pending regulatory action or disciplinary proceeding.
- The company has no existing assets and liabilities from the date of application or that may arise in the future.
- There are no outstanding tax credit owing to the company.
Once the above-stated requirements have been made, the company director, company secretary or the registered filing agent of the company can submit an online application via BizFile+ using SingPass or CorpPass to strike off the company. Once the application is approved by ACRA, a ‘striking off’ notice will be sent to the company’s registered office address and its officers (such as the director, company secretary and shareholder) at their residential addresses in ACRA’s records.
After 30 days, the company should receive an approval of the striking off application only if there are no objection. ACRA will publish the name of the company in the Government Gazette. This is known as the First Gazette Notification. After 60 days from the First Gazette Notification, if there is no objection, the Final Gazette Notification will be published and the name of the company will be struck of from the register.
For more details or questions regarding the procedures, we advise you to seek professional help or feel free to contact us.