Winding up a Company
There are two ways to wind up a company in Singapore – voluntary and compulsory winding up.
Voluntary winding up
A company can be liquidated voluntarily by either its members or creditors.
Members’ Voluntary Winding Up
A company may decide to wind up its affairs voluntarily if the directors believe that the company will be able to pay all its debts in full within 12 months after commencing winding up.
The quorum must be met, and the directors of the company must make a written Declaration of Solvency at directors’ meeting.
Creditors’ Voluntary Winding Up
Creditors’ voluntary winding up applies if a company’s directors believe that it cannot continue its business anymore because of liabilities. A liquidator (or provisional liquidator) will be appointed to wind up the company’s affairs and file the necessary notifications required under the Companies Act.
Compulsory Winding Up
A compulsory winding up happens under an Order of the Court under certain circumstances e.g. the company is unable to pay its debts, or when the court is of the opinion that it is just and equitable that the company is wound up. The company i.e. its creditors, shareholders, liquidator or judicial manager may initiate liquidation proceedings with the High Court under section 253 of the Companies Act. The Court may appoint a liquidator of its choosing or the Official Receiver to be the liquidator of the company.
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