Every business charts its own journey. If your company has chosen to cease operations for various reasons, it is essential to understand the legal process to officially close a Singapore company.
For both local entrepreneurs and foreign business owners who incorporate in Singapore, striking off a local company in Singapore is a straightforward and cost-effective way to shut down your business. However, a company’s strike-off application can only be approved upon meeting the necessary regulatory requirements of the Accounting and Corporate Regulatory Authority (ACRA).
Kickstarting a business closure in Singapore requires a thorough understanding of the rules and regulations involved in the process.
What Does Striking Off a Company Mean?
A company strike-off is an administrative process regulated by ACRA that removes a company from its official register. If a company’s strike-off application has been approved and initiated, it ceases to exist as a legal entity and no longer possesses any legal rights or obligations.
Is Striking Off the Same as Winding Up/ Liquidation?
(Source – Envato.Elements)
Though both are legally effective ways for a business to cease operations, striking off and liquidation are entirely two different processes.
A company qualifies for a strike-off if it has ceased business operations without any outstanding assets or liabilities, and no longer requires a legal presence. Liquidation, on the other hand, involves winding up a business formally by appointing a liquidator to settle debts, distribute assets and manage all outstanding obligations before a company is dissolved.
If you’re looking to close a Singapore company, choosing between a strike-off and liquidation entirely depends on your company’s financial and legal standing.
Is Your Company Eligible for a Strike Off?
For companies incorporated in Singapore, ACRA requires the following criteria to be met before a strike-off application can be submitted:
- Have ceased all business operations.
- Have no outstanding assets or liabilities.
- Have no ongoing legal proceedings.
- Have filed and settled all Corporate Income Tax in Singapore.
- Have no outstanding obligations with government agencies.
- Have closed all corporate bank accounts.
- Obtain the consent of its shareholders for the strike-off.
Duly meeting these requirements helps ensure an efficient Business Closure in Singapore without unnecessary delays and objections.
Common Reasons for Rejection
Many business owners assume that ceasing business operations is sufficient for business closure in Singapore. In reality, ACRA consults various government agencies before approving every strike-off application.
Common reasons for rejection include:
- Outstanding corporate income tax filings with IRAS.
- Active corporate bank accounts.
- Unresolved CPF contributions for employees.
- Ongoing legal disputes or court proceedings.
- Outstanding objections from agencies such as the Ministry of Manpower (MOM), IRAS, or the CPF Board.
Identifying and resolving these issues is crucial to improving the chances of an effective strike-off application.
A Step-By-Step Guide for Striking Off Companies
(Source – Envato.Elements)
An effective company strike-off takes place across seven key stages:
1. Eligibility Confirmation
A detailed internal review of the company’s financial, legal, and regulatory status to ensure it qualifies for strike-off.
2. Settlement of Outstanding Obligations
Due settlements of all tax filings, regulatory submissions, nominee director appointments and financial matters before the application submission.
3. Application Submission
Lodging an application with ACRA through the BizFile+ portal.
4. ACRA Review
ACRA reviews the application and consults relevant government agencies to determine whether there are any objections.
5. First Gazette Notification
If there are no immediate objections, ACRA publishes a notice in the Government Gazette.
6. Objection Period
A 60-day objection period is provided for creditors, shareholders and government agencies to raise any valid objections.
7. Final Gazette Notification
If no objections are received, ACRA publishes the final Gazette notice, officially removing the company from the register.
Hire an ACRA-Regulated CSP for Strike-Offs
Although straightforward at first glance, striking off a local company in Singapore requires due compliance and careful preparation to be executed efficiently.
An ACRA-certified company secretary such as One Tax CM is highly experienced in supporting foreign founders with company incorporations and strike-offs in Singapore.
Whether you are planning to incorporate in Singapore or close a Singapore company, an experienced Corporate Service Provider (CSP) can help assess your eligibility, identify outstanding obligations, coordinate with the relevant government agencies, and prepare accurate submissions on your behalf.
With experienced Company Secretary firms like One Tax CM, foreign entrepreneurs and business owners are better equipped to deal with the unfamiliar terrain of Singapore’s corporate regulatory landscape. This will not only help in minimising unnecessary delays, but also ensure due compliance with ACRA’s regulatory requirements.