How to Close a Company in Singapore – 2025 Complete Guide
Although Singapore is known for being one of the easiest places to register a company in Singapore, rising global economic pressures like inflation, market volatility, and unforeseen challenges can sometimes force businesses to shut down. Closing a company in Singapore requires strict compliance with legal procedures to ensure all regulatory obligations are fulfilled.
In this latest guide, we’ll walk you through the comprehensive process of how to close a company in Singapore, covering the methods, costs, procedures, and frequently asked questions to help you navigate this challenging decision effectively.
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What You Need to Know About Closing a Company in Singapore
When it comes to closing a company in Singapore, there are two primary methods: striking off and winding up. The approach you take depends on the company’s financial situation—whether it’s solvent (debt-free) or insolvent.
Striking off is a simpler and less expensive process, generally used for solvent companies that are no longer in operation. On the other hand, winding up is used when a company is insolvent and cannot pay off its debts. The winding-up process can be initiated by either the company directors or its creditors.
Here’s a breakdown of both methods:
| Method | Best for | Duration | Cost |
|---|---|---|---|
| Striking Off | Solvent companies with no debts | 4-6 months | Lower, approx. S$300-S$500 |
| Winding Up (Voluntary) | Solvent companies winding up voluntarily | 6 months – several years | Higher, due to liquidation costs |
| Winding Up (Compulsory) | Insolvent companies unable to pay debts | Several years | Significantly higher, includes legal fees |
In either case, failing to follow the proper legal procedures can result in serious penalties or further financial liabilities. Let’s explore both processes in more detail.
Reasons for Closing a Company in Singapore
Closing a company can result from various circumstances, including:
- Financial Struggles: Cash flow issues, falling profits, or increasing debts.
- Market Shifts: Changes in market demand, industry disruptions, or economic downturns.
- Change of Focus: The business owners want to focus on other ventures or personal projects.
- Health and Well-being: Physical or mental strain on the business owner, prompting a need for personal recovery.
- Failure to Scale: Despite a strong start, some businesses may fail to grow or meet market expectations.
According to business trends in Singapore, around 30% of startups are projected to fail within the first three years, due to factors like a lack of talent, funding, or market access. Closing the business might be a tough decision, but it’s sometimes necessary for long-term success.
In entrepreneurship, failure is part of the journey. Closing one door often leads to new opportunities for growth and innovation.” – Singapore Entrepreneur Network, 2024.
Methods of Closing a Company in Singapore
1. Striking Off a Company
Striking off is the simpler and more cost-effective way to close a company in Singapore, typically used by solvent businesses that have ceased operations. The Accounting and Corporate Regulatory Authority (ACRA) oversees this process and will remove the company’s name from its register, effectively dissolving it.
Conditions for Striking Off:
- The company has ceased trading or never commenced operations since incorporation.
- There are no outstanding debts, taxes, or liabilities owed to the Inland Revenue Authority of Singapore (IRAS), the Central Provident Fund (CPF), or any other government agencies.
- The company has no ongoing legal proceedings or regulatory actions.
- There are no outstanding charges on the company’s assets.
- All directors authorize the application for striking off.
Process of Striking Off:
- Apply to ACRA: Submit the online application for striking off, along with supporting documents.
- Wait for Public Notification: ACRA will notify the public of the company’s intended striking off. If there are no objections within the stipulated time frame, the process will proceed.
- Striking Off Confirmation: After around four months, ACRA will confirm that the company has been struck off the register.
Once the company is dissolved, any remaining tax credits owed to the company are transferred to the Insolvency and Public Trustee’s Office (IPTO). Shareholders must approach the IPTO to claim any tax credits, and there may be additional processing fees involved.
2. Winding Up a Company
Winding up is a more involved process used for companies that are insolvent or need to close despite being solvent. The process involves liquidating the company’s assets to pay off creditors and formally closing the business.
Types of Winding Up:
- Members’ Voluntary Winding Up: This method is used if the company is solvent and can pay off its debts within 12 months of starting the process. The company’s directors declare solvency, and a liquidator is appointed to oversee the distribution of assets.
- Creditors’ Voluntary Winding Up: If a company is insolvent and unable to pay its debts, the directors can initiate a creditors’ winding up. Creditors will appoint a liquidator to sell the company’s assets and distribute the proceeds among them.
- Compulsory Winding Up: This occurs when a creditor applies to the court to liquidate the company. The court will appoint a liquidator, usually the Official Receiver, to manage the winding-up process. The process is complex and can take several years.
Steps for Winding Up:
- Directors’ Declaration: In the case of voluntary winding up, directors must file a declaration of solvency.
- Appoint a Liquidator: The company will appoint a licensed liquidator to handle the asset liquidation and distribution.
- Final Meeting: Once the liquidation is complete, the liquidator will call a final meeting with creditors and shareholders to present a report on the winding-up process.
- Dissolution: After all steps are completed, the company is dissolved.
Costs Involved in Closing a Company in Singapore
The cost to close a company in Singapore varies depending on the method used:
- Striking Off: Typically costs between S$300 – S$500, including ACRA fees and administrative costs.
- Voluntary Winding Up: Costs range from S$5,000 – S$10,000 or more, depending on the complexity of the company’s assets and debts.
- Compulsory Winding Up: Can be much more expensive, due to legal fees, liquidator costs, and the length of time involved, often tens of thousands of dollars.
Engaging a professional corporate services firm, such as Vero, can help streamline the process and ensure all legal requirements are met, reducing the potential for costly mistakes.
Closing a Foreign Company in Singapore
Foreign companies operating in Singapore can also be closed using the same methods as local businesses. However, additional considerations may apply depending on the company’s structure (e.g., branch office or subsidiary).
Steps for Closing a Foreign Company:
- Notify Authorities: Inform ACRA, IRAS, and other relevant authorities of your intention to close the company.
- Appoint a Liquidator: If the foreign company is insolvent, a liquidator must be appointed to manage the process.
- Comply with Local Regulations: Ensure compliance with Singapore’s legal requirements, such as submitting final tax returns and financial statements.
Foreigners can also engage professional service providers in Singapore to assist with closing the company, including appointing nominee directors or providing a local registered address if required.
When Can You Close a Company in Singapore?
You can apply to close a company in Singapore if:
- The company has ceased trading or never started operations.
- All outstanding liabilities and debts are settled.
- The company has fulfilled all regulatory obligations, such as filing taxes and annual returns.
- The directors and shareholders have agreed to close the company.
- There are no ongoing legal disputes or charges against the company.
Final Steps to Closing a Company
Once the decision to close a company has been made, there are additional steps that must be completed to finalize the process:
- Business Closure Announcement: Notify your employees, clients, suppliers, and other stakeholders about the closure. Ensure that employee compensation, such as unpaid wages and benefits, is settled.
- Settle Debts and Taxes: All outstanding debts and taxes must be paid. Access the IRAS myTax Portal to check for any outstanding liabilities.
- Notify Suppliers and Terminate Contracts: Inform suppliers and service providers of the closure and terminate any ongoing contracts. Make sure all services are fully paid for and conclude any deliveries.
- Close Business Accounts: Close bank accounts, cancel business licenses, and shut down social media and digital platforms associated with the company.
- Distribute Remaining Assets: Any remaining company assets should be liquidated, and the proceeds distributed to shareholders or creditors, depending on the company’s financial situation.
When Should You Not (or Cannot) Close Your Company
Knowing when to close your company and when to avoid or delay closing is crucial for business continuity and regulatory compliance. Here’s a comparison of situations where closing your company may be the right decision, and cases where you should not or cannot legally proceed with closing your business.
| Scenario | When You Should Close Your Company | When You Should Not or Cannot Close Your Company |
|---|---|---|
| Insolvency (Unable to Pay Debts) | If the company is insolvent and unable to meet its financial obligations, it’s necessary to wind up the business to settle outstanding debts with creditors. | If there is a restructuring plan or legal proceedings underway to resolve insolvency, you cannot close the company until the process is complete. |
| Ceased Operations | If the company has permanently stopped business activities, striking off or voluntary winding up may be the right choice. | If there are still pending business activities, such as open contracts or unfulfilled customer orders, you should not close the company until they are resolved. |
| No Outstanding Liabilities | If the company is debt-free and has no liabilities (financial or legal), striking off the company can be a straightforward process. | If the company owes outstanding debts or taxes to IRAS, CPF, or other entities, it cannot be closed until these obligations are settled. |
| Directors and Shareholders Agreement | When all directors and shareholders agree on the closure and authorize the striking off or winding-up process, you can proceed. | If there is a disagreement between directors or shareholders about closing the company, you cannot legally proceed with closure until the dispute is resolved. |
| Legal Disputes or Proceedings | If there are no ongoing legal actions against the company, you may close the company. | If the company is involved in ongoing legal proceedings, such as lawsuits or regulatory investigations, closure cannot occur until those matters are resolved. |
| Company Assets and Liabilities Settled | If all assets have been liquidated, liabilities have been paid, and shareholders have received distributions, you can wind up the company. | If there are still unresolved liabilities or unliquidated assets, you cannot close the company until these are fully addressed. |
| Pending Tax Filings | Once all tax filings are submitted and cleared by IRAS, the company can be closed. | If there are any pending tax returns or unresolved tax issues with IRAS, the company cannot be closed until they are cleared. |
| Ongoing Business Licenses or Permits | If the company no longer needs any business licenses or permits and has ceased operations, you can close it. | If the company holds valid business licenses or permits that require cancellation or expiration, you cannot close the company until the licenses are properly terminated. |
Close Your Company with Confidence and Peace of Mind
Closing a company is a complex process that requires strict adherence to Singapore’s legal and regulatory framework. Whether you’re opting to strike off or wind up your business, ensuring that all steps are completed correctly will prevent future complications.
Vero provides expert guidance throughout the entire process, helping businesses of all sizes navigate the legal and administrative hurdles of closing a company in Singapore. With Vero, you can focus on the next chapter of your business journey, knowing that your company closure is in good hands.
Ready to close your company? Contact Vero today for expert assistance!
FAQs About Closing a Company in Singapore
Here are some commonly asked questions about closing a company in Singapore:
What is the fastest way to close a company in Singapore?
The fastest way to close a company is through striking off, provided that the company is solvent and meets ACRA’s conditions. The process typically takes 4-6 months.
What happens to outstanding debts when closing a company?
Outstanding debts must be settled before a company can be closed. If the company is insolvent, it will go through the winding-up process, where a liquidator sells off assets to pay creditors.
How long does it take to wind up a company in Singapore?
Winding up a company can take several months to several years, depending on the complexity of the company’s assets and liabilities.
Can I strike off a dormant company in Singapore?
Yes, a dormant company can be struck off if it meets the criteria, including no outstanding liabilities and the cessation of business activities.
Team Vero
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