In Singapore, the process of closing a business varies depending on the type of company and legal structure. Whether you are a foreign company with a branch in Singapore or a private limited company, understanding the procedures involved is essential to ensure a smooth and proper closure.
In this article, we will provide a comprehensive guide on how to close a business in Singapore, considering the different scenarios that may arise.
Closing a Representative Office
A Representative Office is a temporary arrangement and does not have a legal status in Singapore. The process for closing a Representative Office is relatively straightforward.
The RO or its parent entity must inform Enterprise Singapore within one month of the closure or if it is upgrading its operations.
Closing a Branch Office
Foreign companies with branches in Singapore have a specific procedure to follow for closure:
Lodge a notice with ACRA
Within 7 days after the branch ceases to have a place of business or carry on business in Singapore, the foreign company should lodge a notice with the Accounting and Corporate Regulatory Authority (ACRA). This notice serves as an official notification of the branch’s cessation of operations.
Inform IRAS in writing
The branch must inform the Inland Revenue Authority of Singapore (IRAS) in writing about the closure. This is to ensure that tax matters and liabilities of the Singapore branch can be properly settled.
Closing a private limited company
There are two ways to close a private limited company in Singapore:
- Striking off
- Members’ voluntary winding up
- Creditors' voluntary winding up
Striking off
Under Singapore’s Company Act, the power to strike off a company from its register lies with the Company Registrar. This application to the registrar should be made through a qualified professional, such as a company secretary or by the company director.
Eligibility for striking off
- Business status: The company should not have commenced business since its incorporation or should have ceased trading at the time of the striking-off application.
- Assets and liabilities: The company should have no existing assets and liabilities as of the date of application, and there should be no contingent assets and liabilities that may arise in the future.
- Tax and debt obligations: The company must have no outstanding debts owed to government agencies, such as the Inland Revenue Authority of Singapore (IRAS) or the Central Provident Fund (CPF) Board.
- Regulatory and legal proceedings: The company should not be subject to any ongoing or pending regulatory actions or disciplinary proceedings. Additionally, the company should not be involved in any legal proceedings within or outside Singapore.
- Charges: There should be no outstanding charges registered against the company. A charge refers to a claim or encumbrance on the company's assets, often created to secure a loan or debt.
- Director's authorization: All or a majority of the company's directors must authorize the submission of the online application for striking off on behalf of the company.
Meeting these criteria is essential for a company to be considered eligible for striking off. Once the company meets these conditions and the striking-off application is approved, the company will be officially dissolved, and its name will be removed from the register of companies.
Restoration application
If someone objects to the striking off of the company's name, they may apply to the court within 6 years of the striking off date to restore the company's name to the register if deemed justifiable.
Time frame
The striking off process usually takes around 4-6 months, subject to clearance from the Tax Authorities.
Members’ voluntary winding up
A company may decide to wind up its affairs voluntarily, known as Member's Voluntary Winding up, when the directors believe that the company can pay off its debts in full within 12 months from the commencement of the winding-up process.
Thereafter, the company will designate a liquidator or provisional liquidator responsible for concluding its operations and fulfilling the mandatory notifications specified by the Companies Act/IRDA.
During this process, the company's assets will be sold off, generating cash to settle its debts and obligations. After all debts have been paid, any leftover assets or surplus cash will be distributed among the company's creditors and shareholders in a final meeting of the company’s members, signifying the final closure of the company.
The liquidator is then obligated to submit a return to the Accounting and Corporate Regulatory Authority (ACRA) and Official Receiver within seven days after the final meeting. This return must provide details of the meeting that took place, along with a copy of the account attached. The purpose of this submission is to comply with regulatory requirements and provide a formal record of the company's winding-up process to the relevant authorities.
Restoration
No restoration is possible under this process.
Timeframe
The company's dissolution will be completed three months after the submission of the return to the Accounting and Corporate Regulatory Authority (ACRA) and Official Receiver. However, the Singapore court can declare the dissolution of a company void up to two years from the date of its dissolution.
Creditors' voluntary winding up
Company directors utilize this method of closing a business in Singapore when they believe that the company is unable to sustain its business due to overwhelming liabilities. In such cases, if the company is incapable of settling its debts within 12 months of winding up, and no Declaration of Solvency is filed, then opting for winding up is a prudent decision.
The company's affairs will be managed by a liquidator, or provisional liquidator, responsible for conducting the winding-up process and submitting the required notifications according to the Companies Act and the Insolvency, Restructuring, and Dissolution Act. However, it's important to note that the decision to wind up the company and appoint the liquidator will be in the hands of the company's creditors. They will have the authority to hold a creditors meeting and determine the course of action regarding the company's winding-up proceedings.
Changing and updating company information
A foreign company can make changes to its information, including its name, registered address and opening hours, and appointment of company offices, through the BizFile portal.
A branch or subsidiary of a foreign company can only change its name if the name of the parent company or head office has also changed. Before settling on a new company name, investors should check that another entity hasn’t already registered the name by looking it up in the BizFile database.
The application process for changing a company name is very similar to the naming process when registering a new entity and can be submitted through BizFile for a fee of S$15 (US$15). When the name application has been approved, foreign companies must lodge a Notice of Change of Company Name through BizFile.
In some cases, the name application may have to undergo an in-principle approval by the relevant referral authorities, which can take between 14 and 60 days. Once the application has been approved, the company must lodge a Notice of Resolution on BizFile.
Other changes to a company’s information, such as the authorized representatives or directors, branch location, office address and office hours, company activity, and legal form in place of incorporation, must be logged through BizFile within 14 days of the change occurring. Making these changes is free of charge.
Changing company structure
Singapore currently doesn’t offer any means of directly changing the structure of a foreign company. Therefore, switching from a sole proprietorship or partnership to a limited liability partnership, for example, can be a lengthy and complicated process involving deregistration of the existing entity and reregistration of the new entity.
To change the structure of a foreign company, investors must:
- Deregister the existing company through the BizFile portal.
- Register a new entity on the BizFile portal, including registering the company name, appointing company officers, and registering company address. Investors must ensure that their business meets the criteria for the structure they are registering their company as.
- Transfer all assets and contracts from the old company to the new company.
Inward redomiciliation
Singapore now permits companies incorporated overseas to transfer their registration to Singapore. This procedure also requires the existing overseas incorporated company to be deregistered before it can be redomiciled in Singapore.
To redomicile a company, investors should first ensure that the company is eligible by meeting the below criteria.
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Criteria for overseas incorporated company to redomicile in Singapore |
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Size (must meet two of the three criteria) |
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Solvency |
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Legality |
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Fiscal |
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Source: Accounting and Corporate Regulatory Authority (ACRA) website, “Inward Re-domiciliation Regime in Singapore” |
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To apply, investors must fill out the Application for Transfer of Registration under Section 358(1) and submit it via the BizFile portal and pay an application fee of S$1,000 (US$739.7). It can take up to two months to process the application. A list of supporting documents required for the application can be found on the ACRA website.
After receiving confirmation of the successful registration, investors must submit proof of the deregistration of the overseas incorporated company to ACRA within 60 days. If the investor cannot submit this evidence within the time limit, they can apply for a 60-day extension by filling out the Application for Extension of Time under Section 359(7) form and submitting it through BizFIle. Each extension will incur a fee of S$200 (US$147.54).
