Company Liquidation and Winding up
Closure of a company with Safe No Stress Hassle Free
Company Liquidation and winding up
As a registered Liquidators and Receivers in Singapore, we assist companies with its closure of business either by striking off or winding up. Prior to taking the last resort, we offer advice on the feasibility of continuing with businesses in difficulty, corporate reorganization including negotiation for the sale of businesses.
What are the typical reasons to close down a company?
- Company has creased the operation and decided not to continue.
- Company does not have the ability to pay off its debts and is insolvent.
- Management deadlock – Argument between shareholders.
- Oppression – shareholders dispute under section 216 of the Companies Act 1967
- Corporate Restructuring among a group of companies.
- Company is dormant and the owner does not want to incur ongoing compliance and maintenance costs
- Breach of statutory provisions, including offences committed
Compare to striking off of a company, winding up has a very different process and it required a liquidator.
What are liquidation and Winding-up?
Liquidation is a process where the company’s assets are seized and realized, with the resulting proceeds used to pay off its debts and liabilities. Any surplus is then distributed among the shareholders of the company according to their rights and interests or otherwise dealt with as the constitution of the company directs.
Upon the completion of the liquidation, the company goes into dissolution and it ceases to exist.
The purposes of liquidation are:
- to ensure a fair distribution of the company’s assets among creditors and contributories
- to terminate the company’s existence by its eventual dissolution
When a company is being wound up, the business will cease operations and its assets with the affairs handed over to an independent liquidator whose powers, duties and functions are regulated by the Insolvency, Restructuring and Dissolution Act 2018.
The company assets will be “frozen” once the liquidation has commenced. Therefore, disallowing the company to pay any unsecured creditors to avoid unjust preference payment. Unsecured creditors are paid on a pari passu basis, i.e. they are paid out of the company’s assets equally. Any surplus is then distributed among the shareholders of the company.
What are the various types of winding up in Singapore ?
1. Members’ voluntary winding up
The members of the company may convene an EGM and pass Special/Ordinary Resolution that the company should be wound up pursuant to Section 160(1)(b) of the Insolvency, Restructuring and Dissolution Act 2018 and appointment of liquidator to conduct the winding up and fixed his remuneration. This mode of winding up is applicable where the company is able to pay its debts in full within 12 months after passing of the resolution for the winding up. The directors of the Company are required to file a declaration of solvency. Winding up shall commence at the time of passing of the resolution.
2. Creditors’ voluntary winding up
If the company is unable to meet its liabilities, the company may convene a meeting of its creditors for the purpose to consider its proposal for a voluntary winding up of a company. If a winding up Special Resolution is passed in the favour of the Creditors Voluntary Winding Up, the company shall nominate a liquidator, subject to any preference the creditors may have as to the choice of liquidator
3. Compulsory winding up
Under section 124 of the Insolvency, Restructuring and Dissolution Act 2018, the company itself, creditors, contributories, liquidator, judicial manager or the Minister may present a petition to the High Court for the winding up of the company.
The winding up is deemed to have commenced as at the date of the presentation of the winding up application.
Section 125 of the Insolvency, Restructuring and Dissolution Act 2018 states all the grounds under which the Court may liquidate a company. The common grounds for a company to be wound up by the Court include:
- Inability to pay its debts
- Just and Equitable
4. Liquidation and Winding up Process
Depending on the complexity of the liquidation, the voluntarily winding up process will usually takes around 6 months to complete. There are several stages to go through before dissolution of a company.
- The board of director will have to hold a meeting to approve the winding up of the company and appoint a liquidator.
- The Liquidator will then take over the affairs of the company
- Place public notice on government e-gazette
and newspaper like business times to announced the winding up of company. - Sending notices to all debtors and creditors
- Hold a creditors’ meeting
- Director to complete the statement of affairs.
- Realisation of assets, calling to claims, distributing of dividends
- Clear the liabilities and debts including tax, CPF, employee’s salary, creditors etc.
- Submit the accounts to ACRA & officer receiver
and dissolve the company.
Next Steps...
Speak to us today, and let our experienced team support you through each step of the winding-up process. With over 20 years in the industry, we understand that making the decision to close down a business can be challenging, especially after investing so much dedication and effort. We are here to provide guidance and help ease the burden of this process.
Our Commitment:
- Provide clear and timely guidance throughout the entire winding-up process
- Offer personalized advice and support to help you make informed decisions
- Assist in fulfilling all required compliance obligations and documentation
- Ensure a smooth transition and help reduce the stress involved in winding down your company