Once you've navigated Singapore's ever-changing business scene, it might be time to think about your company's future. Knowing how to differentiate between these paths—whether it's accepting new endeavours, maintaining a dormant position, or bringing closure—is essential.
In this article, we shed light on the distinctions between striking off, winding up, and maintaining dormant status in Singapore, emphasizing the importance of professional advice for a seamless transition.
Striking Off (Deregistration)
Striking off, or deregistration, is a process allowing the removal of a company from the Accounting and Corporate Regulatory Authority (ACRA) register. It's suitable for companies with no significant assets or liabilities. The process typically takes around 6 to 9 months.
Striking off doesn’t mean clearing the company’s directors and members of liabilities if any remains.
Also, take note that the company director will be disqualified from managing any other company for five years after if he/she:
- Had also been the director of at least two other companies, and
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Said companies had been struck off within the previous five years.
Requirements for Striking Off in Singapore:
- The company has ceased operations.
- There are no outstanding liabilities or assets.
- The company has not commenced business three months prior to the application.
Striking Off Process
The submission for striking off can be made by the company director, company secretary, or a corporate service provider to the Company Registrar. ACRA typically takes approximately five to seven business days to process the application, depending on the specifics and documents provided. Notably, there is no fee for filing the application. The sequence of the striking-off procedure is as follows:
- Initiate the striking-off application online through BizFile+ with all requirements met, using SingPass or CorpPass;
- The Company Registrar dispatches a "striking off notice" to the company's registered office address, as well as to its directors and company secretary at their residential addresses and notifies the Singapore tax authorities;
- A 30-day period is allocated for objections to be raised;
- If no objections are raised, the Company Registrar publishes a Notice of Intention to Strike Off in the government gazette;
- The applicant has the option to withdraw the striking-off application;
- An additional 60 days are provided for objections to be raised;
- In the absence of objections, the Company Registrar publishes a final notice in the government gazette, confirming the company's striking off and specifying the date of the action;
- The company is officially dissolved; however, it's crucial to note that existing liabilities persist, and the Court retains the authority to wind up the company if deemed necessary;
- There is a provision for appealing against the striking off within six years;
- The entirety of the striking-off process spans around five to six months.
Winding Up (Liquidation)
Winding up, or liquidation, is a formal process concluding a company's existence and distributing assets to creditors and shareholders. There are two types of winding up in Singapore:
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Voluntary Winding Up:
- Members' Voluntary Winding Up: Applicable to solvent companies. A declaration of solvency is made, stating the company can pay its debts within 12 months.
- Creditors' Voluntary Winding Up: Chosen when the company is unable to pay its debts. A declaration of insolvency is made, and creditors decide on the winding-up resolution.
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Compulsory Winding Up:
- Initiated by court order due to insolvency or legal reasons.
Maintaining Dormant Status in Singapore
Dormant status is an option for companies not actively conducting business but wishing to retain legal entity status.
Requirements for Dormant Status
- No business activities or relevant accounting transactions except for permitted activities.
- Compliance with annual obligations like filing annual returns and financial statements.
Application for Dormant Status
A dormant company must file its Corporate Income Tax Return (Form C-S/ Form C-S (Lite)/ Form C) by 30 Nov every year unless the company has been granted a waiver to file Form C-S/ Form C-S (Lite)/ Form C.
Conclusion
Choosing the right option depends on your company's circumstances and future plans. Striking off is suitable for inactive companies, winding up for those with assets and liabilities, and dormant status for future resumption of business.
The closure process involves legal and financial complexities; hence, seeking professional guidance is essential for compliance and a smooth transition. Contact us today, for more details.