Companies in Singapore can be closed voluntarily or by court decision if certain conditions are met. According to the Companies Law in Singapore filing for insolvency falls under the duty of the company’s director or directors. An insolvent company has reached the point in which debts can no longer be paid. The most usual reasons a company is declared insolvent are unprofitable business undertakings, the inability to pay its debts and even disputes that can appear between shareholders. Companies in Singapore can be liquidated by striking off or winding up.
According to Section 344 in the Companies Law, companies are allowed to file a petition with ACRA (The Accounting and Corporate Regulatory Authority) to have its name stricken off the Companies Register in Singapore. In order for ACRA to approve the company’s request there are some conditions to be satisfied. These conditions are:
If these requirements are met and the file contains all documents requested by ACRA, the striking off procedure should not take more than 7 days. Once the liquidation procedure is completed a striking off notice will be sent to the company’s registered office, its shareholders and also to the Singapore tax authorities. The final notification for company liquidation will come in about 4 months after the first notice was released.
As mentioned in the first paragraph, company liquidation may be voluntary or compulsory. The voluntary winding up procedure can be initiated by the creditors or by the company’s shareholders.
Shareholders can decide to liquidate a company if within 12 months form starting the winding up procedure it will be able to pay all its debts. At this point, a majority of the directors will write a declaration of solvency and file it with the Singapore Trade Register. Within 5 weeks from submitting the declaration an Extraordinary General Meeting must be held in order adopt a special resolution for company liquidation and the appointment of the liquidator or liquidators. The appointment and copy of the declaration of solvency must be published in minimum 4 daily newspapers in English, Chinese, Tamil and Malay languages.
A special resolution given to liquidators that will divide the assets of the company must be drafted. This resolution must be submitted with ACRA and must be published in one or more newspapers. After the winding up of the company takes place, the liquidator will prepare a report in which all operations are stated. The report will be presented to the shareholders and will also be filed with ACRA and the Official Receiver. The liquidation of the company will be in effect after 3 months after submitting the request with the Singapore Companies Register.
Companies may also choose to let its creditors to conduct the liquidation process and the process will be the same as the shareholders’ voluntary liquidation procedure.
Compulsory liquidation of a Singapore company will occur with a court order. The court will appoint a liquidator that will see all business trading of the company is wound up. If no liquidator is appointed, the Official Receiver will act as a liquidator. He will assess all company’s assets and creditors’ claims and will decide on the best way to divide the assets. In compulsory liquidation, the directors of a company will only be allowed to cooperate with the liquidator during the procedure. If any surplus remains after paying off the creditors, it will be divided among the shareholders.
Upon company liquidation in Singapore there are several authorities to be notified. These are the ACRA, the Central Provident Fund Board (CPF), the Inland Revenue Authority (IARS) and the licensing authorities.