The Accounting and Corporate Regulatory Authority oversees the actions, operations, and incorporation of all companies in Singapore. In receiving an application to strike off a company in Singapore, if it deems that the conditions are suitable company to close down, it will go ahead and do so.
Otherwise, ACRA can only force the closure of a Singapore company when there is a court order to do so. This implies that the company must have undergone a trial and court proceedings.
A company secretary usually handles the paperwork in striking off a company in Singapore. The directors will have to decide in agreement with shareholders to kick things off.
What is Strike Off of a Company?
Strike off of a company refers to the process of removing a company’s name from the official register i.e. ACRA, effectively dissolving the company and ceasing its legal existence. This occurs when a company is no longer actively trading, has fulfilled its purpose, or failed to meet statutory obligations. The strike off procedure involves notifying the relevant government authority and publishing a notice of intent in the official gazette or other designated publications. Once the strike off is completed, the company’s assets, if any, may be transferred to the government, and the company is no longer able to engage in any business activities or incur liabilities.
Who can submit the application ?
Here are the individuals who can put in a company strike-off application:
In order for your business to be eligible for striking off approval by ACRA, it must satisfy a set of conditions and criteria. These requirements, established by ACRA, are designed to ascertain the company’s non-operational status. Here are the essential criteria to consider:
The company should either have not initiated business activities since its incorporation or have ceased trading.
There should be no ongoing court proceedings involving the company, either within or outside Singapore.
No outstanding charges should be recorded against the company.
The company must have no pending tax liabilities with IRAS (Inland Revenue Authority of Singapore), such as unpaid taxes, and no outstanding employers’ contributions owed to CPF (Central Provident Fund Board) or any other debts with government agencies.
The directors must have obtained written consent from the majority of shareholders, authorizing you (the applicant) to submit the striking off application on behalf of the company.
The company should not be subject to any ongoing or impending regulatory actions or disciplinary proceedings.
For public companies limited by guarantee, the latest audited accounts should have been submitted. For other companies, the most recent unaudited balance sheet must be provided.
As of the application date, the company’s accounts should not reflect any existing assets or liabilities, including contingent assets or liabilities that may arise in the future.
In case there are assets or liabilities, the applicant must furnish documentary evidence demonstrating the disposal of assets and the settlement or waiver of liabilities.
By fulfilling these conditions and meeting the specified criteria, your company can be considered for ACRA’s approval for striking off.
Pre-conditions to Strike Off a Company
The Registrar only allows a Company to be struck off if the pre-conditions are fulfilled:- :
Non-commencement or Cessation of Business: The company has either not started its business activities since its incorporation or has ceased trading altogether.
Absence of Assets and Liabilities: The Company should not possess any current or future assets or liabilities. Its accounts must reflect a state of no assets and liabilities.
Disposal and Settlement of Assets and Liabilities: If there are assets and liabilities, the applicant must provide documentary evidence demonstrating that the assets have been disposed of and the liabilities have been settled or waived. This may involve collecting debts owed to the company and repaying any debts owed by the company. Additionally, any remaining assets should be returned to the company’s shareholders. Refer to our article on closing a Singapore business for detailed guidance on settling the assets and liabilities of a company being closed.
Shareholder Approval: The Company’s directors must obtain written consent from the majority of the shareholders before applying for striking off.
Financial Reporting: For public companies limited by guarantee, the company must submit its last set of audited accounts. For all other companies, the latest unaudited balance sheet should be provided.
Tax and Statutory Compliance: The Company should not have any outstanding tax liabilities with the Inland Revenue Authority of Singapore (IRAS) or unpaid employers’ CPF contributions owed to the Central Provident Fund Board. Additionally, there should be no outstanding debts owed to any other government agency, and no charges pending in the charge register.
Legal Proceedings: The Company should not be involved in any ongoing court proceedings, either within Singapore or elsewhere.
Process of How ACRA Strikes Off a Singapore Company
ACRA will only strike off a Singapore-based company if the company has made an application to be closed to ACRA. Here’s the general process of striking off a Singapore company:
After the application to strike off the company is approved, all relevant stakeholders will be informed, along with a Striking Off Notice sent to the registered address within 14 days.
Any objections to the application must be raised within the one-month period
A notification for intention of strike off will be made in the Government Gazette upon the expiry of the one-month period. Any interested person can raise an objection to the strike off application for 60 days.
If there is no objection after the 60 days from the first Government Gazette notification, ACRA will proceed to strike off the company off its register and publish the Final Gazette Notification.
Sole proprietorships, partnerships, and private limited companies are struck off by ACRA in different ways.
1. Sole proprietorships
When a sole proprietorship or partnership makes an application to ACRA for closure, it must file a Cessation of Business transaction. This is to be done online through the use of BizFile+. A CorpPass must be used by any company owner who plans to do so.
2. Private limited companies
Private limited companies, on the other hand, have two possible methods of being closed down by ACRA.
a. In the first, the company applies to be voluntarily liquidated. This method is also known as winding up. Companies which select this option must appoint a liquidator who will oversee the company’s cessation of business operations, distribution of assets among the members of the company, and payment of any remaining debts should the company have any.
b. Private limited companies in Singapore may alternatively choose to apply to ACRA for striking off. Doing so will lead to removal from the country’s company register. This method will be approved by ACRA if the company in question has fulfilled certain criteria. Among these criteria are:
The closure of all of the company’s bank accounts,
No outstanding charges according to the Register of Charges,
Complete disposal and distribution of the assets and liabilities of the company,
The consent of the directors of the company to its closure, and
No outstanding tax liabilities, among other matters.
Fulfilment of all relevant criteria will permit ACRA to proceed with the striking off of the company in question.
Objections to Striking Off a Singapore Company
If there are any objections at any stage of the strike off, the company will be notified by ACRA. This means that the application will be put on hold and the company will be granted 2 months to resolve these objections.
Once all outstanding objections are cleared and resolved, the individual or company who objected the initial strike off must lodge a Clearance of an Objection to Striking Off for the process to continue.
If no resolution are found, the application will be automatically withdrawn and the company must submit a new application once the objection is cleared.
Difference Between Striking Off and Winding Up a Company
The striking off and winding up of a company are two distinct processes related to the closure of a company, but they differ in their nature and implications. Striking off refers to the voluntary removal of a company’s name from the official register, often initiated by the company itself, and typically occurs when the company is no longer actively trading or has fulfilled its purpose. It is a simpler and less formal procedure, mainly involving administrative steps and minimal involvement of the court. Once struck off, the company ceases to exist legally.
On the other hand, winding up (also known as liquidation) is a more formal and comprehensive process carried out either voluntarily by the company’s members or compulsorily through a court order. Winding up usually occurs when a company is insolvent, unable to pay its debts, or when there is a need to distribute its assets and settle obligations in an orderly manner. The winding-up process involves appointing a liquidator, who takes control of the company’s affairs, investigates its financial position, sells its assets, and distributes the proceeds to creditors and shareholders in a prescribed order of priority. Winding up concludes with the dissolution of the company, which entails the legal termination of its existence.
Appeal Against Striking Off of Company
In Singapore, the striking off of a company occurs when the Accounting and Corporate Regulatory Authority (ACRA) decides to remove a company’s name from the Register of Companies. This process can have severe consequences, including the company losing its legal existence, ceasing operations, and facing potential liabilities. However, Singapore’s legal framework offers provisions for companies to appeal against such striking off orders.
Initiating the Appeal Process:
Obtain Legal Representation: To effectively navigate the appeal process, it is advisable to engage the services of a qualified lawyer specializing in corporate law. They will provide expert guidance, assess the viability of the appeal, and represent your interests throughout the proceedings.
File a Notice of Appeal: The first step in launching an appeal against the striking off order is to file a Notice of Appeal with the ACRA. This notice must be submitted within one month from the date of the striking off order. Failure to adhere to this timeline may result in the appeal being dismissed.
Grounds for Appeal:
When filing the Notice of Appeal, it is crucial to provide compelling grounds to challenge the striking off order. The following are some common grounds for appeal:
1. Ongoing Business Activity:
Demonstrate that the company is still actively engaged in business operations and provide evidence to support this claim. This could include recent financial transactions, contracts, or evidence of ongoing commercial relationships.
2. Compliance with Statutory Obligations:
Prove that any non-compliance issues raised by ACRA have been rectified. Submit the required financial statements, annual returns, or other documents that were outstanding during the striking off process.
3. Administrative Errors:
If you can demonstrate any administrative errors made by ACRA during the striking off process, such as incorrect address notifications or failure to receive correspondence, it may strengthen your appeal.
Appeal Hearing and Submissions:
Upon receiving the Notice of Appeal, ACRA will arrange for an appeal hearing before the Accounting and Corporate Regulatory Authority Board (ACRA Board). This is an independent body that reviews appeals against striking off orders.
During the hearing, both parties will have the opportunity to present their arguments and supporting evidence. It is crucial to thoroughly prepare for the hearing, including gathering relevant documents and crafting persuasive submissions. Your lawyer will play a vital role in building a compelling case on your behalf.
ACRA Board Decision:
After considering the arguments and evidence presented, the ACRA Board will make a decision regarding the appeal. The possible outcomes include:
Upholding the Striking Off Order: If the ACRA Board dismisses the appeal, the striking off order will stand, and the company’s name will remain struck off the Register of Companies.
Setting Aside the Striking Off Order: If the appeal is successful, the ACRA Board may set aside the striking off order. In this case, the company will be reinstated on the Register of Companies, and it can resume its business operations.
Why foreign entrepreneurs with a Singapore company should think twice before striking off
If you are a foreigner with a Singapore company, you should consider keeping your Singapore company dormant and riding a tough period out because:
Bank accounts are getting increasingly difficult to open
If your business has been actively running with a Singapore corporate bank account, don’t waste that. Bank accounts in Singapore are getting very difficult for foreign directors to open because of a lack of tax substance or a physical presence in Singapore.
Your Employment Pass is precious
You won’t know if the next time you plan on working in Singapore, whether you can attain one. This comes in lieu of tightened regulations on foreign workers making it difficult to be eligible, coupled with lower quotas of foreign work passes being issued. The Employment Pass requirements are also stricter, with a minimum qualifying monthly salary of S$5,000, upped from the previous S$4,500.
Instead of striking off your Singapore company, consider these 2 solutions:
Keep your company dormant for the time being.
Compliance cost should be minimal since taxes and financial statements are nil returns. You’ll only need to attend annual general meetings and file annual returns through your company secretary.
Seek employment and arrange a contracting type arrangement
Seek local employment in Singapore and suggest having a contracting type arrangement with your company instead of having you on their payroll.
Look for overseas business or employment
If it is overseas employment, also suggest a contracting type of arrangement with your company. Otherwise, you may use your local Singapore company to do business with overseas clients. With this structure, there might be tax benefits as well.
What To Do After the Company Has Been Struck Off?
If a company has been struck off, there is a possibility of restoring it within a period of six years through a Court Order. The restoration process involves lodging the order electronically through BizFile+ platform, after which the company’s status will be changed from “Struck Off” to “Live.” It is important to note that no filing fee is required for the restoration of the company.
However, it is crucial to be aware of a specific provision regarding company directors. If a director has been involved in the management of at least three companies that were struck off by ACRA within a span of five years, they will face disqualification from holding the director position or participating in the management of any company for the subsequent five years following the striking off of the third company. This provision aims to ensure that individuals with a track record of repeated striking off incidents do not continue to hold directorial positions or contribute to the management of companies for a specified period.
Therefore, while restoration is possible for a struck-off company, it is essential for directors to exercise caution and maintain compliance to avoid disqualification from future directorial roles or management involvement due to repeated instances of struck off companies.
How and Why Companies in Singapore May Be Forcibly Closed
1. Court orders for forced closure due to business operations
The primary reason for the forced closure of a Singapore company is that of the inability to pay all of its remaining debts. However, in certain situations, court authorities may consider it to be in the best interests of everyone involved with the company if the company were to be closed down despite the company’s lack of insolvency.
Courts in Singapore may produce court orders which force the closure of a Singapore company. Such court orders may be obtained after all necessary court proceedings have been completed. After the court order has been issued to the company, which is to be closed, the court might choose to select a liquidator who will oversee the closure of the company as mandated by the court. A court may also choose to have the Official Receiver carry out all tasks related to liquidation.
2. Forced closure under receivership
There is a second scenario in which a company in Singapore is to be forcibly closed. In such a scenario, the company is to be forcibly closed because doing so would be of benefit to everyone in the company who holds any of the company’s debentures. Such a situation will cause the company in question to be placed under receivership, which is another way of striking off the Singapore company.
Striking off a Singapore company requires much liaising between the company, creditors, government authorities and other parties in your business. Therefore, a local company secretary would be able to facilitate a smooth procedure and advise the company of proper regulations.
STAY COMPLIANT WITH THE RIGHT COMPANY SECRETARY IN SINGAPORE
Come to our office or get in touch virtually for a consultation on your company registration, and other corporate services today.
You can engage with an expert from Paul Hype Page. Paul Hype Page is a Full Practicing Member of the institute of Certified Public Accountants of Singapore (ICPAS) and also registered as a Public Accounting Firm with Accounting and Corporate Regulatory Authority (ACRA).
My company’s financial year is not 12 months, what should I do?Timothy2020-12-16T10:38:29+08:00
A company must declare its income by completing the Income Tax Form for companies. This is known as Form C and must be completed each year.
IRAS will send the first Form C to a newly incorporated company in the second year following the year of incorporation.
Thereafter, Form C for subsequent YAs will be sent to your company in March or April every year.
You may need to request for the first Form C to be sent to you earlier, that is, in the year immediately after the year of incorporation (instead of the second year following the year of incorporation) under certain circumstances.
Note that income is assessed on a preceding year basis. This means that the basis period for any YA generally refers to the financial year ending in the year preceding the YA.
Your company is incorporated on July 1, 2007, and its financial year end is June 30.
If your company’s first set of accounts covered the period from the date of incorporation (July 1, 2007) to June 30, 2008, your accounts will be for YA 2009. You do not need to request for Form C for YA 2008.
Your company is incorporated on July 1, 2007 and its financial year end is December 31.
If your company’s first set of accounts covered the period from the date of incorporation (July 1, 2007) to December 31, 2007, your accounts will be for YA 2008. In this case, you have to request for Form C for YA 2008.
Form C can be requested via the form titled “Request for Form C for Newly Incorporated Companies or Companies Granted Waiver to Submit Form C/Change of Particulars (36KB)”.
If a company’s first set of accounts covered the period from the date of incorporation to December 31 of a particular year, accounts will be for the YA after the December 31 which ends the period. There is no need to request for Form C for the YA before it.
Accounts for a given period are to be submitted with the Form C. Form C will be sent to a company in March or April. When filing Form C for a YA, separate tax computations must be submitted for each of two YAs if accounts cover a period of more than 12 months. Income must also be apportioned for each period, and a letter stating that tax computations for the two YAs are enclosed must be attached.
Why must Singapore have Tax exemptions on International air travel and shipping Income?Timothy2020-06-23T13:17:28+08:00
The countries to which these tax exemptions apply are heavily involved in shipping and air routes to and from Singapore. Therefore, these exemptions encourage the people of these countries to continue to engage with and conduct business activities in Singapore.
How to claim for tax exemption?Timothy2020-06-23T13:16:53+08:00
You are required to make a declaration in your income tax returns by giving the nature and amount of the foreign-sourced income that was remitted to Singapore. You are also required to complete the Declaration Form for Foreign-Sourced Income Received in Singapore From 22 Jan 2009 to 21 Jan 2010 (60KB) for submission to IRAS. Although you have to state the use of the foreign income in the declaration form, the usage of such foreign income will not affect the claim for tax exemption.