How to Close an Existing Company?

This article discusses how one can close an existing company by either winding it up or striking off.

How to Close a Company in Singapore?

The initial step involves evaluating its financial condition to close a limited or private limited company in Singapore. If the company is insolvent, liquidation is the only viable option. However, if the company is debt-free and financially sound, you can choose between winding up or striking off.

Though these processes may appear similar, striking off is the preferred choice for many businesses in Singapore. The striking-off process typically takes about four months, whereas winding up can span several years.

Striking off is generally more economical, as it avoids liquidation expenses and is less likely to face objections or complications.

Closing an Existing Local Company

Striking Off

A company can send an application to ACRA to strike off its name from their Register. ACRA has to approve the application in case there is rational reason to believe that the company is not running or conducting business, and the company satisfying the criteria for the process of striking off.

In case the company is GST-registered and is not carrying on any business any longer, then it needs to apply for cancelling their GST registration with IRAS. You can refer to the IRAS website to find out more about this.

You can click here if you require more information about striking off a local company.

Voluntary Winding up by Members

A company has the right to decide to wind up their business or affairs voluntarily in case its directors think that the company would be able to pay off the debts in full, and within 12 months after the beginning of the process of winding up. The company has to appoint either a liquidator, or a provisional liquidator, who can wind up its business and affairs and also file the required notifications needed under the Companies Act. Please refer to the Companies Act or take professional advice if you need more information.

Voluntary Winding up by Creditors

A company can choose the option of “creditors’ voluntary winding up” if its directors think that the company cannot, due to its liabilities, further carry on its business. The company needs to appoint either a liquidator, or a provisional liquidator, who winds up its business and affairs and also files the required notifications that are needed under the Companies Act. Please refer to the Companies Act or take professional advice if you need more information.

Compulsory Winding up

A company could be wound up under an Order of the Court which is passed due to certain circumstances, for example, the company is not able to pay its debts. The Court can appoint a liquidator to wind up the company’s business of affairs. In cases, where a liquidator is not appointed by the Court, the Official Receiver has to be the liquidator of that company.

The liquidator is supposed to file the required notifications that are needed under the Companies Act. Please refer to the Companies Act or take professional advice if you need more information.

Judicial Management

In cases where a company, or its creditor(s), think that the company is or would be in near future not able to pay its debts and there is a rational likelihood of rehabilitating the company, then rather than resorting to winding it up, the Court may order upon an application that the particular company should be placed under the judicial management. A judicial manager would be appointed in this case. Please refer to the Companies Act or take professional advice if you need more information.

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How to Close a Foreign Company?

A foreign branch needs to shut or cease its operations in Singapore in case its head office is already dissolved or is in the process of liquidation. The authorized representative of that particular foreign branch is needed to lodge a “Notice by Authorized Representative of Foreign Company of Liquidation or Dissolution of Company” online through BizFile.

The foreign company has to apply to ACRA to strike it off in case it satisfies the following criteria for striking off:

The sole authorized representative is not able to resign as the company has still not appointed his or her replacement
The authorized representative has not got any instructions from the company for a time period of at least 12 months post a request has been made concerning if the foreign company plans to continue its operations in Singapore
The foreign company does not have an authorized representative (in that case, it can be only filed by a registered filing agent)

In case the foreign company or any of its local branches in Singapore are GST-registered, then it has to first apply for cancelling of the GST registration with IRAS. You can refer to the IRAS website to find out more about this.

Steps to Successfully Close Your Company in Singapore

Announce Business Closure Inform your employees about the closure. Clearly communicate the reasons, timeline, and details of the closure. Employees will also need information about severance packages and any remaining benefits.
Settle Debts and Taxes Notify creditors if you have outstanding debts. Verify any claims made against your company to ensure their accuracy. Also, check for any unresolved tax issues through myTax Portal or by calling the IRAS 24-hour hotline.
Return Capital to Shareholders
Lay Off Employees
Terminate Office Space Rental
End Contracts with Suppliers and Service Providers
Notify Clients of the Business Closure

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