How to Close a Dormant Company in Singapore
Dormant companies in Singapore are incorporated companies that have stopped trading or have no income. There could be several reasons for a company being dormant.
You could be giving the finishing touches to your product and, in parallel, have registered your company so as not to waste time before launching your product. Or, you could have stopped trading to wait for better market conditions than the current COVID-affected market.
Whatever the case, your company is dormant and is not trading or earning any income. This state is beneficial from the administrative point of view as such a company needs to follow reduced statutory requirements.
Whatever the case, your company is dormant and is not trading or earning any income. This state is beneficial from the administrative point of view as such a company needs to follow reduced statutory requirements.
Dormant Companies in Singapore: ACRA vs IRAS
ACRA (Accounting and Corporate Regulatory Authority) and IRAS (Inland Revenue Authority of Singapore) differ in their definition of a dormant company in Singapore. So, whether your company is dormant or not depends on which of these agencies you are dealing with.
How ACRA Defines A Dormant Company in Singapore?
As per ACRA, dormant companies in Singapore are companies that have no accounting transactions for the financial period under consideration. At the same time, ACRA allows them a limited number of transactions to enable them to bear the administrative and compliance costs.
How IRAS Defines A Dormant Company in Singapore?
As per IRAS, dormant companies in Singapore cannot earn any income. Such companies get a waiver from filing their ITR.
As the dormant company do not earn any income, it has stopped serving its purpose. Wouldn’t it be better to close it down, especially if you have decided to quit your entrepreneurial activities?
Closing Dormant Companies in Singapore?
If you want to close down your dormant company, you need to strike it off. Apply to ACRA to strike it off the companies register. You can apply to ACRA as a company director or ask your company secretary or your provider of the company secretary Singapore to file the application.
The application can be submitted via ACRA’s BizFile+ portal. You need to pay ACRA’s fees for the processing of the application. The cost may vary depending on your company’s compliance status and the complexity of the task. The fees start at S$500.
In the application, you need to mention that the company is dormant and has not opened or closed a bank account during its dormancy. ACRA may take 5 working days to process your request. The following is a list of requirements for striking off your dormant company.
Striking Off Requirements
- The company never traded since its incorporation or has since stopped trading
- It has no unpaid taxes with IRAS
- It has no liabilities or assets
- It has no current court proceedings
- It owns no debt to the government
- It has provided final accounts mentioning the date of cessation
- Its majority shareholders have agreed in writing for striking off of the company
- There are no outstanding changes with the statutory registers of the company
Processing of Application
ACRA normally takes about 5 working days to process the application. The agency may or may not approve it. On approval, ACRA notifies IRAS by sending a striking off notice. It also sends a notice to the company’s registered office and to the residential address of the company secretary and director.
If nobody raises an objection to the proceedings within a month, ACRA publishes the company name in the Final Gazette Notification. It then waits for 3 months before striking the company name off the companies register. The entire process may consume at least 5 months.
ACRA Rejects the Application
If ACRA rejects the application, the company directors need to find out what went wrong with the requirements. Take the necessary action to fulfil the strike-off requirements and reapply.
Objection to the Strike-Off Process
If someone raises an objection to the strike-off process, then ACRA withholds the application. It then informs the company to resolve the matter within 2 months. Upon resolution, the objector needs to lodge Clearance of Objection to striking off using the BizFile+ portal.
Suppose the matter remains unresolved even after the 2 months, the application lapses. And the company remains live. The winding off or striking off of the company is a serious and complex procedure. If you have decided to close your dormant company in Singapore, be prepared to hire an experienced company secretary Singapore for the task.
