When the company directors need to close their business operations due to debts, they can go ahead with the winding-up procedure to dissolve the company.
“There are many different methods for Singapore company liquidation; you have to make a reliable selection for the most suitable one.”
The winding-up process leads to the ceasing of company assets so that the realized cash can be used to pay off pending debts and liabilities. The process involves the fair distribution of assets among shareholders, creditors, and members. The company’s existence gets terminated once all the liabilities and debts are paid off.
The winding-up process should not be confused with striking off, which is a different procedure to close company operations. The winding-up procedure can be followed when the company is still solvent as well as after it becomes insolvent. Solvent companies can easily apply for the winding-up process via members’ voluntary winding up.
What is voluntary winding up Singapore?
There are two main methods for a company winding up. You can either go ahead with voluntary winding up or compulsory winding up. In case of members’ voluntary winding-up procedure, the company can decide to wind up all operations with the consent of all directors. The idea is to use the assets of the company after liquidation to pay off the pending debts. The company directors need to hold a meeting and then sign a declaration of solvency with mutual consent to proceed ahead with the Singapore company liquidation process. The involved members will further choose a liquidator to handle the entire process.
The voluntary winding-up process can be also initiated by creditors when the directors feel that the company cannot lead its operations due to an increased load of liabilities. In this case, also, the company is likely to appoint a liquidator to wind up affairs as well as to file essential notifications under the Companies Act.
Effects of Voluntary winding up Singapore:
The voluntary winding up Singapore process is easy to follow for foreign as well as local entrepreneurs. It has the following effects:
- Right from the date of passing of the special resolution for company winding up, it should cease all business operations except insofar which is generally recommended by the liquidator to proceed beneficial winding up of the company.
- The powers of all directors will cease, except if the shareholders, with the liquidator’s consent, have agreed on directors to hold some powers.
- The transfer of shares is declined unless sanctioned or made by the liquidator. Moreover, the status of company members cannot be changed.
When you are ready to proceed ahead with the voluntary winding up Singapore process, it is good to take help from professional liquidators in the country. They can guide you better on how to close the company procedures while being able to pay off pending debts on winding up. However, if the voluntary winding-up procedures are not applicable to a company, it can go ahead with compulsory winding up by taking assistance from the court.