The Process of Closing a Local Enterprise: Strike-Off Company in Singapore
May 13, 2022
May 13, 2022
Starting a business is a dream come true for people who have always aspired to be business owners. Although managing an enterprise is not an easy job, dedicated owners of startups would go the extra mile to nurture the fruit of their labour. They became very involved and put a lot of time and effort into running their business. But the sad reality is that some endeavours do not sometimes end up as expected. While other companies in Singapore thrive, others meet their end someday. A lot of companies have become a part of many lives. They would leave their marks, and it is saddening to see them go. But even if it is a harsh reality to face, some companies must close down for the better. If the process of a strike off company in Singapore intrigues you, read through this article below. This article also discusses the reasons for company closure in the Singaporean business hub. Stay tuned.
Company Strike Off Is One Way to Close a Company
If you are thinking of closing down a company in Singapore, there are two different ways to do this: striking off or winding up. But before you decide which one to choose, it is essential to consider some factors, such as the company’s condition of owing money, the status of taxation, and the state of that company’s assets.
Whichever case the business falls into, completing the necessary steps for business closure must be observed at all times. Failure to follow or omission of actions will lead to further liabilities. Instead of letting go of the burden of running a business, the worst things might happen if you take a shortcut in business closure.
How Strike Off Company in Singapore Works
Although a business owner can choose to strike off or wind up their enterprise under some circumstances, we will focus more on the process of a strike-off company in Singapore. Let us get deeper into how this method of business closure works.
According to the Singapore Companies Act Section 344, the Company Registrar in Singapore has the power to strike off a company from its Register. When a company with an asset value greater than its liabilities, is no longer in operation, it can apply for a strike-off. It is a more straightforward way of shutting down a business than winding up.
The company director may apply to the Accounting and Corporate Regulatory Authority (ACRA) to process company closure through a strike off from the register. Suppose the request has reasonable cause and can convince the authorities that the company in question is no longer doing business. In that case, there is a high chance that ACRA may approve the application.
Aside from that, here are the criteria a business has to follow to carry on the process of a strike-off company in Singapore:
- Since its incorporation, the company has not started any business operation or has halted trading.
- The company must have cleared out its outstanding debts owed to the Inland Revenue Authority of Singapore (IRAS), the Central Provident Fund (CPF), and any other government agency.
- The company has no unsettled charges in the register.
- There is no ongoing legal proceeding the company is involved in within or outside Singapore.
- The company is not under any ongoing or pending regulatory action or disciplinary proceedings because of previous charges.
- As of the date of application, the company must not have existing assets and liabilities and no contingent assets and liabilities that may arise in the future.
- All or the majority of the directors agree to let someone, including but not limited to employees, affiliates, and representatives, apply for a strike off on behalf of the company.
Outstanding Tax Credit
Another thing every business should note if they are considering a company strike off is to ensure that there is no pending tax credit owed to the company. But when the company is dissolved with an outstanding tax credit, it will be paid to the Insolvency and Public Trustee’s Office (IPTO). The shareholders of this company may reach out to IPTO if they wish to get the tax credit, and the IPTO may impose charges to process the claim. Learn more details about claiming the tax credit through IPTO’s website.
What to Expect After the Strike Off Application
After this has been sorted out, the next thing is to wait for ACRA to approve the application. Usually, when a strike off company in Singapore application is approved, ACRA will send a striking notice to the company’s registered address. Sometimes, they send the notice to an officer’s address, including the director, company secretary, and shareholder.
Furthermore, 30 days after the approval of the striking off application, if there is no objection, ACRA will publish the company’s name in the Government Gazette. Then, 60 days after the First Gazette Notification, ACRA will publish the company’s name in the Government Gazette again. Then the register will remove the company name, and the Final Gazette will officially state the date of a successful business closure.
Closure Could Save a Company from Future Difficulties in the Industry
In a competitive and saturated business landscape like Singapore, company closure is inevitable, and it could happen to almost every company, whether a small business or not. Business closure happens for various reasons, such as poor products, low sales, ineffective marketing strategy, and more. When this happens, ending a business’s operation could be one of the best routes to take instead of continuing a seemingly hopeless case.
The reason for business closure is not always bad, though. Some business owners would opt to have their existing business get closed down because they want to focus on other things. As an investor looking into expanding market share, it is wise to put money into promising projects and business ventures with much potential. Who could blame them if they decide to hop into another endeavour that might enrich their asset?
Despite various reasons for company closure, business owners must meet the required procedures to close the business properly. Like when a business is just starting, closing it needs to go through a process consisting of various steps. It is crucial not to miss any of the steps, and otherwise, the process will not be considered done.
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