Shutting down a business is a tough decision, and the method you choose can affect your finances, timeline, and legal responsibilities. In Singapore, the two primary options are striking off and liquidation. Each has distinct processes and implications, and picking the wrong one can lead to delays, costs, or legal issues.
Here’s a clear guide to help you select the right approach.
What Is Striking Off?
Striking off is a simple and cost-effective way to dissolve a company. It involves requesting ACRA (Singapore’s corporate regulator) to remove your business from its official register.
It’s best for:
- Companies that have ceased all operations.
- Businesses with no outstanding debts.
- Firms with all taxes settled.
- Companies holding no assets.
The Striking Off Process
- File an application with ACRA.
- ACRA reviews the application, possibly asking for additional details.
- If approved, the company is struck off in about 4–6 months.
Striking off is quick and affordable, but it’s only possible if the company is free of liabilities. If debts or disputes exist, liquidation is the required path.
What Is Liquidation?
Liquidation is a formal process to wind up a company’s affairs. It involves selling assets, paying off creditors, and distributing any remaining funds to shareholders.
There are two types:
- Voluntary liquidation: The company chooses to close, often due to insolvency or lack of purpose.
- Compulsory liquidation: A court orders closure, typically over unpaid debts.
Liquidation is necessary when:
- The company has debts or assets to manage.
- There are disputes among shareholders or directors.
- A structured process is needed to meet legal or creditor demands.
A liquidator oversees the process, and many businesses rely on firms offering corporate secretarial services to navigate the complexities.
Striking Off vs. Liquidation: Key Differences
| Feature | Striking Off | Liquidation |
|---|---|---|
| Cost | Low | Higher (due to legal and admin fees) |
| Timeframe | ~4–6 months | 6–18 months or longer |
| Debts Allowed? | No | Yes (managed by liquidator) |
| Suitable For | Dormant, debt-free companies | Companies with debts or disputes |
| Court Involvement | No | Sometimes (compulsory cases) |
Common Mistakes to Avoid
- Striking Off with Debts
ACRA will reject applications if the company owes money. Clear all debts or opt for liquidation. - Ignoring Records
Both processes require up-to-date financial statements and tax filings. Missing records can delay closure. - Handling It Solo
Closing a company involves legal steps that are easy to miss. Secretarial services in Singapore can ensure compliance and efficiency.
When to Choose Striking Off
Opt for striking off if:
- The business is inactive with no operations.
- All debts and taxes are paid.
- You want a simple, low-cost closure.
- The company has no future plans.
It’s a clean and efficient way to exit.
When to Choose Liquidation
Go with liquidation if:
- The company has debts or assets to resolve.
- There are disputes or legal risks.
- A formal process is needed for transparency.
It’s more complex but ensures all obligations are met.
Don’t Delay
Delaying closure can lead to extra costs and compliance burdens. Even inactive companies must file annual returns and pay fees. Acting promptly saves time and effort.
If you’re unsure which option is best, consult experts in corporate secretarial services. They can assess your situation and guide you to the right solution.
A Smooth Exit
Striking off and liquidation are practical tools for closing a business. By picking the right method, following the process, and seeking professional corporate secretarial services, you can shut down your company smoothly and move forward with confidence.