Closing a company that’s no longer needed is more involved than simply stopping business activity and letting compliance lapse. Singapore offers two formal routes for closing a company, and deciding striking off vs winding up for your situation matters, because picking the wrong one can create real problems later, sometimes years later.
Striking off vs winding up: the two routes explained
Both routes end with the company removed from ACRA’s register, but they exist for very different situations, and using the wrong one for your circumstances can create complications well after the company appears to be closed.
Striking off: the simpler route
Striking off is the lighter-weight option, generally suited to dormant or inactive companies with no outstanding liabilities, no ongoing legal proceedings, and no assets or debts left to deal with.
To apply, the company, via its directors or company secretary, submits an application to ACRA confirming that the company:
- Has not commenced business, or has ceased trading
- Has no outstanding liabilities, debts, or dues to IRAS or other government agencies
- Has no outstanding court proceedings, whether in Singapore or elsewhere
- Has obtained consent from all directors, shareholders, and, where applicable, any charge holders
ACRA reviews the application and, if there are no objections, publishes notice of the intended striking off, generally with an objection window before the company is formally struck off the register. If a creditor or another party objects, the process pauses.
Striking off is faster and cheaper than winding up, but it only works where the company genuinely has no unresolved liabilities or disputes. Using it to sidestep debts or legal issues doesn’t actually work: the company can be restored to the register, and its officers held accountable, if it’s later found that striking off was used improperly or a creditor successfully applies for restoration.
Winding up: the formal route
Winding up, or liquidation, is the appropriate route when the company has liabilities, assets to distribute, or other complexity that striking off can’t handle. There are generally two forms relevant to private companies.
Members’ voluntary winding up is used when the company is solvent, able to pay its debts in full, but the shareholders have decided to close it down, often after selling the business or as part of a restructuring. This involves appointing a liquidator, settling all debts, distributing remaining assets to shareholders, and following a formal statutory process.
Creditors’ voluntary winding up is used when the company is insolvent, unable to pay its debts as they fall due, and the process is oriented around fairly resolving creditor claims from whatever assets remain, under the oversight of an appointed liquidator.
Winding up is more expensive and time-consuming than striking off, since it involves a licensed liquidator, formal creditor and shareholder processes, and, particularly for insolvent winding up, oversight to make sure creditors are treated fairly.
Striking Off vs Winding Up: How to Choose
The choice between striking off vs winding up usually comes down to whether the company has anything left to settle:
- Dormant company with no debts and no disputes: striking off is generally the better fit, lower cost and a faster process, with no liquidator involved
- Company with liabilities or assets to distribute: winding up is the appropriate route, higher cost and a longer process, but it properly resolves creditor and shareholder claims under a liquidator’s oversight
- Reversibility: a striking off can be reversed through restoration if a creditor objects successfully, whereas a winding up generally cannot be undone once concluded
If there’s any real doubt about whether your company has outstanding liabilities, get that resolved before applying for striking off. Attempting the simpler route when winding up was actually required tends to create more problems than it saves, and it’s worth confirming your company’s status with ACRA before deciding.
Closing a company down?
Talk to Abacuscorp about the right way to wind down your company, whether that’s a straightforward striking off or a properly managed winding up.
