Winding up of a company, is a process where the company’s assets are seized and liquidated (converted into cash) to pay off the company’s debts and liabilities.
It ensures a fair distribution of the company’s assets amongst its stakeholders, and terminates the company’s existence once all its debts and liabilities have been paid off.
Winding up should not be confused with striking off. Striking off is another way of closing a company which is suitable for companies which are not active and do not have any assets or liabilities. If your company is insolvent, it can only be wound up and not struck off.
Pursuant to Section 344 of the Companies Act, a company, regardless of it being a private company, exempt private company, public company limited by shares, public company limited by guarantee, may apply to ACRA to strike its name off the Register.
ACRA may approve the application if there is reasonable cause to believe that the company is not carrying on business, and that the company is able to satisfy the criteria for striking off.
A company may decide to wind up its affairs voluntarily if the directors believe that the company will be able to pay its debts, in full, within 12 months after the commencement of the winding up.
A liquidator, or provisional liquidator will be appointed by the company to wind up its affairs and file the necessary notifications required under the Companies Act.
A company may decide to opt for a “creditors’ voluntary winding up” if its directors believe that it cannot continue its business due to going concern issues.
A liquidator, or provisional liquidator will be appointed by the company to wind up its affairs and file the necessary notifications required under the Companies Act.
A company may be wound up under an Order of the Court under certain circumstances e.g. the company is unable to pay its debts.
The Court may appoint a liquidator to wind up the affairs of the company. Where no liquidator is appointed by the Court, the Official Receiver shall be the liquidator of the company.
