Author: Lawyer Zhang Jingxinyue, PRC-qualified Lawyer | Singapore Registered Foreign Lawyer
Note: Singapore, as an Asian financial centre, attracts investors with its open business environment, strong government support and relatively low tax rates. At the same time, some businesses leave the market because of changes in operations, market conditions or other reasons.
Closing a Singapore company is subject to formal approval requirements, although the process is relatively straightforward. The application will be allowed only if it is not being used to evade tax obligations. The company therefore normally needs to deal with both the Inland Revenue Authority of Singapore (IRAS) and the Accounting and Corporate Regulatory Authority (ACRA).
This article introduces the available methods of closing a Singapore company, the key precautions and the process for restoring a company after strike-off.
The main methods of ending a Singapore company’s business include:
- Strike-off: if a company no longer intends to operate, it may apply to ACRA to remove its name from the register. Where ACRA has reasonable grounds to believe that the company has not carried on business and the statutory requirements are met, the application may be approved.
- Liquidation: the company appoints a liquidator or provisional liquidator to wind up its affairs and files the reports required under the Companies Act or the Insolvency, Restructuring and Dissolution Act.
- Members’ voluntary liquidation: where the directors believe that the company can pay all debts in full within 12 months after liquidation begins.
- Creditors’ voluntary liquidation: where the directors believe that the company cannot continue its business because of its liabilities.
- Compulsory liquidation: a court may order liquidation, for example where the company cannot pay its debts. The court may appoint a liquidator; if it does not, the Official Assignee becomes the liquidator.
- Simplified insolvency programme (SIP): a faster and lower-cost procedure for micro and small companies to wind up or restructure debts.
- Simplified winding-up programme (SWUP) for an insolvent micro or small company that intends to stop business and liquidate.
- Simplified debt restructuring programme (SDRP), allowing a micro or small company to restructure debts while remaining viable.
A micro company generally means one with annual revenue below SGD 1 million; a small company generally means one with annual revenue below SGD 10 million. 4. Receivership: where a receiver is appointed for the benefit of a secured creditor, the company’s property may be placed in receivership. 5. Judicial management: where a company cannot or is likely to become unable to pay its debts but there is a reasonable prospect of rehabilitation, the court may place it under judicial management instead of ordering liquidation.
In practice, a Singapore company that meets the strike-off requirements will usually choose strike-off because it is relatively inexpensive, simple and quick. The remainder of this article focuses on strike-off.
01 Two situations for striking off a Singapore company
A company may be operating or dormant. The issues to be addressed on strike-off differ between the two.
1. Striking off an operating company
An operating company will have tax filing obligations. It must complete its accounts and tax filings before submitting a strike-off application to ACRA. Before applying, it should file all outstanding corporate income-tax returns, financial statements and tax computations, together with an explanation of the decision to strike off.
- A company filing Form C-S does not need to submit financial statements and tax computations with the return, but it must keep them ready and provide them if IRAS requests them.
- A company filing Form C must submit its financial statements and tax computations together with the return.
The company may check the IRAS website to determine whether there are unpaid taxes or unresolved tax matters: https://mytax.iras.gov.sg
2. Striking off a dormant company
If the company has declared itself dormant and has been approved for exemption from corporate income-tax filing, it may start the strike-off process directly.
Consequences of failing to close a Singapore company promptly
If a Singapore company is not closed, the authorities will generally continue to treat it as existing and operating. The company should either apply for dormant status or maintain its annual filings and submit nil tax returns.
A company that remains inactive, fails to file annual returns or tax returns and does not apply for closure may be treated as operating unlawfully and fined. In serious cases, it may be compulsorily closed by ACRA and its directors may be placed under enhanced scrutiny. If three companies under a director’s name are compulsorily closed by ACRA, the director may be placed on the ACRA blacklist and be prohibited from serving as a director of another company for five years.
02 The two main steps for striking off a Singapore company
1. Tax clearance and closure
Before striking off a Singapore company, tax clearance should be completed:
- Liquidate all company assets and liabilities and resolve any outstanding summonses, fines and domestic or overseas disputes.
- Prepare the latest financial statements.
- Hold a general meeting and have all shareholders sign the financial statements and the resolution to close the company.
- File the final corporate income-tax return (Form C-S or Form C). If the company was registered for GST, cancel the GST registration first and then complete the closure process.
2. The company strike-off process
After tax matters have been dealt with:
- Submit the strike-off materials to ACRA through https://www.bizfile.gov.sg and await review.
- Internal review period: ACRA sends a notice to the company, its directors and secretary and opens a one-month period during which relevant persons may object.
- Public notice period: if there is no objection, ACRA issues a second notice and starts a three-month strike-off publication period. Relevant persons may still object.
- Once the three-month period ends without objection, the company is formally struck off.
3. Process overview
- Decision: the directors and shareholders discuss and approve the closure.
- Appoint a strike-off agent: under Singapore law, a registered agent handles the strike-off, including preparing and filing documents and communicating with government agencies.
- Prepare documents: these may include the strike-off application, board and shareholder resolutions, financial statements, tax schedules, the latest certificate of incorporation and company records. The directors and shareholders sign the documents, which are reviewed and organised by the agent.
- Submit the application: file the documents with ACRA for review.
- Liquidate and distribute assets: settle debts, collect receivables and dispose of company assets in accordance with Singapore law, including any required notices.
- Publish notices: after the assets have been dealt with, publish the strike-off notice in the official newspaper and notify relevant government agencies and stakeholders.
- Completion: once all steps are completed, the company is formally struck off. The owners should then close bank accounts and cancel tax registrations as appropriate.
03 Conditions for striking off a Singapore company
- The company has never carried on business or has ceased trading and has no ongoing operations.
- The company has no existing or contingent assets or liabilities.
- All shareholders and directors have approved the strike-off in writing.
- The company has no unresolved legal matters, including court summonses or litigation in Singapore or overseas.
- The company is not subject to any pending regulatory or disciplinary proceedings.
- The company has no unpaid fines or taxes, including outstanding IRAS filings, ACRA fees, CPF liabilities or debts owed to other government agencies.
- All outstanding Form C-S or Form C income-tax returns have been filed.
- All financial statements and tax returns due before cessation of operations have been submitted.
- GST registration has been cancelled and no GST remains outstanding.
04 How long does strike-off take?
After the application is filed, the authorities conduct a preliminary review, mainly of the company’s financial position and tax filings, and allow the directors, shareholders and other relevant persons time to object. This usually takes about one month.
If no objection is raised and no information is missing, the application enters a three-month public-notice period. This gives creditors and debtors sufficient time to object.
If no objection is filed during the three-month period, the strike-off is completed and the company’s status on the ACRA website changes to “STRUCK OFF”.
If ACRA receives an objection, the company is notified and normally has two months to resolve the matter. If it cannot do so, the application lapses and a new application may be made only after the objection is cleared.
The strike-off procedure therefore requires at least four months, and unexpected objections or missing information can extend the period considerably.
05 Precautions when closing a company
- Because tax matters may still need to be handled through the company’s bank account, close the bank account only after the strike-off is completed.
- If the company has debts and the owners wish to close it, it must go through liquidation rather than strike-off.
- After successful strike-off and dissolution, retain the company’s books and records for at least five years from the date of dissolution.
06 How to restore a company after strike-off
Like other offshore companies, a Singapore company may be restored after strike-off through legal proceedings. The maximum period may be 15 years; under a court order, restoration may generally be sought within six years after the company’s name was struck off.
The process is complex. The applicant must first obtain a court order restoring the company and provide sufficient reasons for restoration, including explaining why restoration is necessary and whether third parties will be affected. If the court considers restoration unnecessary, approval will be difficult.
After obtaining the court order, the company must submit the order for restoration to ACRA. Once ACRA approves it, the company’s registration can be restored and its status on the official website will change from struck off to active.
- For advice on Singapore company incorporation, strike-off and related applications, please contact the Zhongxin Legal News professional team.
Author｜Zhang Jingxinyue Review｜Pending CMS Review
This article is for information only and does not constitute formal legal advice.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.