Deregistration / Closure
Closing a company is a difficult time for business owners. It can be logistically challenging to wrap up all the loose ends and ensure the necessary arrangements have been made. It can also be an emotionally difficult time. Below are the Government bodies that are required to be notified on the closure of business:
- Accounting and Corporate Regulatory Authority (ACRA)
- Central Provident Fund (CPF) Board
- Inland Revenue Authority of Singapore (IRAS)
- Relevant Licensing Authorities
In Singapore, there are different methods of closing a business, below are some of the methods necessary for a company closure:-
Application for Striking Off with the Accounting and Corporate Regulatory Authority of Singapore (ACRA)
Striking off is a more straightforward process and at the same time the cost of the process is lower. However, companies are required to fulfil certain requirements before Striking Off is viable. Companies are required to ensure the following:-
- The company has not commenced business since incorporation or has ceased trading.
- The company has no 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 is not subject to any ongoing or pending regulatory action or disciplinary proceeding.
- 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.
- All/majority of the shareholders have consented and approved to submit the online application for striking off.
For Striking Off, the directors will each have to make a declaration that the company has fulfilled the requirements as mentioned above. Thereafter, the directors will proposed and the shareholders will approve the application to strike-off the company. The whole process from the date of submission of documents to ACRA will normally take about 3 to 6 months.
Once the application is approved, ACRA may send a striking off notice to the company’s registered office address, its officers (such as director, company secretary and shareholder) at their address in our records. After 30 days from the approval of the striking off application, if there is 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, 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. This is known as the Final Gazette Notification.
A company can be restored within 6 years from the date of striking off. A person who would like to restore the company will need to obtain a Court Order to restore the struck off company.
Director who has at least 3 of his companies struck off by ACRA, within a period of 5 years, will be disqualified from acting as director, or to take part in the management of any company for a period of 5 years commencing after the date on which the third company is struck off.
Liquidation can be categorized into 3 different types namely Members’ Voluntary Liquidation, Creditors’ Voluntary Liquidation and Court Winding Up. When a company is in Liquidation, a Liquidator will be appointed and he shall takes control of the company during the liquidation process. The company must cease to carry on its business except so far as is in the opinion of the Liquidator required for the beneficial disposal or winding up of the business.
There are various reasons for Liquidation, below are some of the reasons:-
- Management deadlock
- Oppression – shareholders dispute Section 216 of the Companies Act (Cap 50)
- Corporate or financial restructuring of the group to which the company belongs
- Minimise tax liabilities or maximise tax advantages for the group to which the company belongs
- Breach of statutory provisions, including offences committed
- Company acting outside its scope of activities.
Members’ Voluntary Liquidation (“MVL”) – Solvent Company
The company’s contributories (also known as members or shareholders) may pass a resolution that the company be wound up and that a liquidator be appointed. The liquidation commences at the time of passing the resolution appointing the liquidator. It is adopted where the company is able to pay its debts in full within 12 months after the commencement of winding up. A MVL is a winding-up process to be initiated by the shareholders. The directors will need to execute a Declaration of Solvency. Thereafter, the shareholders will appoint a liquidator to wind up the company’s affairs and to file the necessary notifications required under the Companies Act with ACRA and Official Receiver. The Liquidator will also have to arrange for publications regarding the appointment of liquidator and final meeting in at least one local newspaper. For straight forward MVL with zerorised accounts, the process will usually take about less than a year to be completed.
Anybody with the capacity to perform the duty of liquidator can be appointed as the Liquidator (e.g. Director/Secretary).
Creditors’ Voluntary Liquidation (“CVL”) – Insolvent Company
If the company is not able to meet its liabilities, the company can convene a meeting with its creditors to consider its proposal for a voluntary winding up of the company. If a resolution is passed in favour of the winding up, the company will appoint a liquidator, subject to any preference the creditors may have as to the choice of liquidator. Contact us for more information.
Compulsory Winding Up – Insolvent Company
Under section 253 of the Companies Act, the company itself, creditors, contributories, liquidator, judicial manager or the Minister may present a winding up application to the High Court. Section 254(1) of the Companies Act states all the grounds under which the Court may liquidate a company. The common grounds for a company to be wound up by the Court include: Inability to pay its debts, just and equitable. The liquidation of an insolvent company is a process of collective enforcement of debts for the benefit of general body of creditors. Although it is not a process of execution because it is not for the benefit of a particular creditor, it is nevertheless akin to execution because its purpose is to enforce, on a pari passu basis, the payment of the admitted or proved debts of the company. Therefore, when a company goes into liquidation, a process is initiated which, for all creditors, is similar to the process which is initiated, for one creditor, by execution.