When businesses reach a point where they are unable to fulfil due payments, they will go through the process of liquidation. Through liquidation, businesses convert their assets to cash, which is used to pay these debts. If you are looking to liquidate a Singapore-based company, reach out to professionals that understand the process. For instance, you can seek a qualified and legal practitioner, as well as an independent audit firm in Singapore.
To have a better guide for the liquidation process, here’s what you need to know.
Grounds for liquidation
Companies in Singapore are shut down either voluntarily or through court orders. The owners can also decide if they wish to wind up a company, but it should be clear that the company can service all of their debts in full within the next 12 months. This will require rigorous scrutiny of the company’s books, and thus, will require professional help from a reputable audit firm in Singapore.
When the company is unable to continue doing business due to the liabilities, they can opt for voluntary creditors’ dissolution. This will also require a thorough inquisition of the company’s books, done by an independent audit firm.
There are many circumstances under which a court may regard liquidation as the best option for a company, and thus, issue orders to wind up the company. The most common reason is the company’s inability to meet its financial obligations.
Guide to liquidation
In the case of compulsory liquidation, the court appoints a liquidator to manage the process. Where it chooses not to, the Official Receiver will act as the liquidator for the company. Winding up under a court-appointed liquidator can be complex in its details.
Below, we will shift our focus to the process of voluntary liquidation.
Process for voluntary liquidation
Decisions regarding voluntary liquidation can be hard to make. The company owner should seek help from an independent audit firm in Singapore before making a decision.
If a company can clear all of its debts within 12 months of initiating the wind-up process, the owners can officially shut it down. However, if the company is in debt and the owners wish to shut down, they must appoint a professional liquidator. In either circumstance, the process must include the following:
- The majority of directors have to sign a declaration of solvency and file it with ACRA
- Members of the company hold an Extraordinary General Meeting in which they uphold the above declaration by at least 75% vote
- Directors will then appoint a professional liquidator. The declaration of solvency is published in the press
- The liquidator files a copy of the resolution with ACRA, and the declaration is published in the press
- The liquidator takes over the management of the company and prioritises settling debts and tax obligations
- After winding up the affairs of the company, the liquidator presents a report with a general company meeting
- The liquidator also notifies ACRA and the official receivers, attaching all supporting documents
- Ninety days after notification to ACRA, the company can be officially shut down. However, a window of two years is allowed for any interested party to seek a court’s intervention and declare the liquidation void
During this process, there are many restrictions on how the company must conduct its businesses. If you are looking to wind up a Singapore company, reach out to a reputable firm for guidance on the grounds and the process of liquidation in Singapore.
At Ackenting Group, we provide winding up services for companies and understand the steps and processes that are needed to go through. We ensure that we can guide and assist your company through the liquidation process as the debts and payments are paid off. In addition, we also offer other essential financial services such as accounting bookkeeping services to help companies can make better financial decisions, and receive up-to-date financial records and statements.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
