When a firm has been established but has not yet started operations. Many owners formally go for the Close Company Singapore option. In these instances, first-time business owners sometimes find the numerous compliance and administrative obligations to be rather onerous. Or sometimes a business owner merely decides to move the activities of their firm before choosing to shut it down.
Whatever the cause, it’s crucial to close down your business properly and according to the right steps rather than abandoning it and moving on as if nothing had occurred.
Failing to do so may have legal repercussions. We’ll go through the two methods of winding up a corporation in Singapore in this article: striking it off and winding up. We’ll go through the distinctions between each approach, why one is best for you, and when you should think about letting your business remain inactive rather than completely shutting it down.
A company can be struck off and deregistered:
Deregistration, commonly referred to as striking off a corporation, and happens when a director or secretary requests to have the company removed from the Registrar. To formally start the application, the director or secretary must apply to the Accounting and Corporate Regulatory Authority (ACRA).
If the firm satisfies the following requirements, ACRA may accept the application:
- Since its inception, the firm has either not engaged in any business activities or has never done so
- The corporation has no unpaid obligations to any government body, including the Central Provident Fund (CPF) Board, the Inland Revenue Authority of Singapore (IRAS), and others
- You, as the applicant, are authorized to apply on behalf of the firm by all of the directors or at least a majority of the directors
- At the time of the application, the corporation has no current assets or obligations
- There are no potential future obligations or assets for the firm
- There are no unpaid invoices from the business in the charge registry
- The business is not embroiled in any legal disputes either at home or abroad
- There are no disciplinary actions or current or pending regulatory actions against the firm
Liquidation and company winding up:
When a company’s assets are sold and turned into cash, it is said to be winding up, also known as liquidating. The remaining liabilities and debts owed by the business are subsequently settled with cash. Any extra money is divided among the company’s stockholders through affordable accounting services Singapore. The corporation is formally ended and ceases to exist after all of that is finished. Members’ voluntary winding up, creditors’ voluntary winding up, and winding up by court order are the three ways to dissolve a corporation.
The firm names a liquidator in the first approach “to wind up its affairs and file the relevant notices needed under the Companies Act or Insolvency, Restructuring, and Dissolution Act” If a company’s directors think it will be able to pay off all of its obligations within a year of initiating the winding-up process, they may pick this option.
The firm may file for a creditors’ voluntary winding up if the directors do not feel that it can pay off all of its obligations within 12 months of the procedure beginning. In this case, the choice of the liquidator and whether or not the firm should be wound up is made by the creditors. To debate these and other pertinent matters, they also hold a creditors meeting.
Winding Up a Company Vs Hiring Off Employees:
A firm can be shut down more quickly, easily, and inexpensively by being struck off the register. It’s often preferable for smaller and/or dormant businesses that have no debts, no pending IRAS penalties, no outstanding ACRA disputes, and no insolvency processes, as well as businesses that are neither active nor inactive.
On the other side, winding up is for larger businesses with more going on. These are businesses that must sell off a variety of sophisticated assets and liabilities to clear their debts, creditors, and other obligations before they can be properly closed down.
The size and complexity of your firm and its activities will determine the best option for winding it down. It’s generally best to wind it up if it’s quite huge and involved in several complicated transactions.
