Shutting down a business is a tough call, but deciding how to do it can be just as challenging. In Singapore, the two main options are striking off and liquidation. Each serves a different purpose, and choosing the wrong path can lead to delays, extra costs, or legal headaches.
Here’s a straightforward guide to help you pick the right method for your company.
What Is Striking Off?
Striking off is the simpler, budget-friendly way to dissolve a company. It involves requesting ACRA (Singapore’s corporate regulator) to remove your business from its register.
It’s best for companies that:
- Have stopped all operations.
- Have no outstanding debts or liabilities.
- Are up to date on taxes.
- Hold no assets.
How Striking Off Works
- Submit an application to ACRA.
- ACRA reviews the submission, possibly asking for clarifications.
- If approved, the company is struck off in about 4–6 months.
Striking off is quick and affordable, but it’s only an option if the company is free of unresolved issues. If there are debts or disputes, you’ll need to consider liquidation.
What Is Liquidation?
Liquidation is a more formal process to wind up a company’s affairs. It involves selling assets, paying creditors, and distributing any remaining funds to shareholders.
There are two types:
- Voluntary liquidation: The company opts to close, often due to insolvency or lack of purpose.
- Compulsory liquidation: A court orders closure, typically over unpaid debts.
Liquidation is required when:
- The company has debts or assets to settle.
- There are disputes among directors or shareholders.
- A formal process is needed to satisfy legal or creditor requirements.
A liquidator manages the process, and many businesses hire firms offering corporate secretarial services to handle the complexities.
Striking Off vs. Liquidation: At a Glance
| Feature | Striking Off | Liquidation |
|---|---|---|
| Cost | Low | Higher (due to legal and admin work) |
| Timeline | ~4–6 months | 6–18 months or more |
| Debts Allowed? | No | Yes (liquidator manages) |
| Best For | Inactive, debt-free companies | Companies with debts or disputes |
| Court Involvement | No | Yes, in compulsory cases |
Pitfalls to Avoid
- Striking Off with Debts
ACRA will reject applications if the company owes money. Clear all debts first, or choose liquidation. - Ignoring Record Updates
Both processes require current financial statements and tax filings. Outdated records can delay or derail closure. - Handling It Solo
Closing a company involves legal steps that are easy to miss. Secretarial services in Singapore can ensure everything is filed correctly and on time.
When to Strike Off
Choose striking off if:
- The business is dormant with no activity.
- All taxes and debts are settled.
- You want a low-cost, simple exit.
- There’s no intention to restart the company.
It’s an efficient way to close a clean business.
When to Liquidate
Opt for liquidation if:
- The company has debts or assets to manage.
- There are disputes or legal risks to address.
- A formal process is needed for transparency.
It’s more involved but ensures proper closure.
Don’t Postpone Closure
Delaying can lead to unnecessary costs. Even inactive companies must file annual returns and pay fees, creating extra work. Acting quickly minimizes complications.
If you’re unsure which option fits, consult experts in corporate secretarial services. They can analyze your situation and guide you to the best solution.
A Clean Business Exit
Striking off and liquidation are tools to close a business properly. By picking the right approach, following the process, and getting professional help, you can shut down your company smoothly and move on with peace of mind.
