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Striking Off & Liquidation
The two main ways that a Singapore company can be “closed down” are either by Striking Off or Liquidation (also known as Winding up). Striking off and Winding up both result in a company ceasing to exist. However, very different processes are involved in deriving at either and they should not be confused with one another.
A company may apply to ACRA to strike off its name from the Register. ACRA may approve the application if there is reasonable cause to believe that the company is not carrying on business, and the company is able to satisfy the criteria for striking off.
Liquidation (Winding up) in finance and economics is the process of bringing a business to an end and distributing its assets to claimants. It is an event that usually occurs when a company is insolvent, meaning it cannot pay its obligations when they are due. As company operations end, the remaining assets are used to pay creditors and shareholders, based on the priority of their claims. There are three types of Winding up as follow:
• Members Voluntary Winding up
• Creditors Voluntary Winding up
• Compulsory Winding up
Members’ Voluntary Winding up
A company may decide to wind up its affairs voluntarily if the directors believe that the company will be able to pay its debts, in full, within 12 months after the commencement of the winding up. The company will appoint a liquidator, or provisional liquidator, to wind up its affairs and file the necessary notifications required under the Companies Act / Insolvency, Restructuring and Dissolution Act.
Creditors’ Voluntary Winding up
A company may decide to opt for a ‘creditors’ voluntary winding up” if its directors believe that it cannot, by reason of its liabilities, continue its business. The company will appoint a liquidator, or provisional liquidator, to wind up its affairs and file the necessary notifications required under the Companies Act / Insolvency, Restructuring and Dissolution Act.
Compulsory Winding up
A company may be wound up under an Order of the Court under certain circumstances e.g. the company is unable to pay its debts. The Court may appoint a liquidator to wind up the affairs of the company. Where no liquidator is appointed by the Court, the Official Receiver shall be the liquidator of the company. The liquidator will file the necessary notifications required under the Companies Act / Insolvency, Restructuring and Dissolution Act.
Contact us for further discussion that how we can help you on Liquidation (Winding up) of your Company.
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