When we talk about winding up a company, it is basically the process of liquidation where all assets of the respective company are either seized or converted into cash. The seized assets or received cash may be further used to repay the liabilities and debt associated with the company. This process ensures a fair distribution of assets among shareholders, creditors, and members of the organization. The existence of the company is finally terminated when all liabilities and debts are clear.
How to wind up a company in Singapore?
The company can be closed by the owners or as per the notice given by the court in few circumstances. Generally, it is the company director’s duty to wind up the insolvent company. Note that an insolvent company is one that is not able to pay pending debts and is facing charges due to those liabilities. There are so many reasons that may act behind company close in Singapore, such as inability to pay debts, ceasing activities that are not profitable, the irrevocable dispute between shareholders, the owner, is not interested in managing ongoing maintenance and compliance costs.
If you are interested in wind up company Singapore, you can choose any of the three possible methods. The first option is the member’s voluntary winding up, the second is the creditor’s voluntary winding up, and the third is winding up with the court’s orders. Most of the business owners choose the first route where the majority of directors need to sign the Declaration of Solvency. The next step is to organize the Extraordinary general meeting of members just within five weeks, where they sign the approval for liquidation.
Now the special resolution must be passed to wind up the company, and for this, they can receive assistance from professionals as well. The requisite requirements for solvency must be met and soon after that. An advertisement for the closure must be given in the Singapore newspaper within ten days of passing the resolution. The next step is to receive tax clearance, and then the final meeting date can be decided. You can also receive professional assistance on how to wind up a company in Singapore.
Difference between striking off and winding up a company:
Generally, striking off the company is a faster way to deal with the closure, and it involves lesser expenses. When everything in the company has been already wrapped up, especially liabilities and debts, it gets easier to strike off. However, in case if the company has several liabilities and the involved persons are not finding a way to pay off the debts, they can choose to wind up. It is a more formal and longer process; you may also need an appointment from a professional liquidator to handle the assets and procedures.
The striking-off method is suitable for dormant or small companies, whereas the wind up company Singapore procedures can be initiated for both solvent and insolvent companies. However, closing a company doesn’t mean that you cannot lead a business again; there are always some new opportunities to access.