Legal and financial steps

Decision to Liquidate

The decision to liquidate can arise either voluntarily by the company's shareholders or compulsorily by a court order.

Appointment of a Liquidator

Voluntary Liquidation: The company's shareholders appoint a liquidator. In a members’ voluntary winding up, the directors must make a Declaration of Solvency, affirming that the company can pay its debts in full within 12 months.

Compulsory Liquidation: In a court-ordered winding up, the court appoints a liquidator.

Liquidator’s Role

The appointed liquidator takes over the company's management. Their responsibilities include:

Ceasing the Company’s Operations: Stopping all business activities except those necessary for the winding-up process.

Asset Realization: Converting the company's assets into cash by selling them off. This may include physical assets, receivables, and intellectual property.

Settlement of Claims: Paying off creditors in an order prescribed by law. Secured creditors are typically paid first, followed by unsecured creditors, including employees for their wages and leave entitlements.

Notification and Publication

The liquidator must notify ACRA and IRAS about the liquidation. Public notice is also given, usually in a national newspaper, inviting claims against the company.

Distribution of Assets

After settling all claims, any remaining assets are distributed among the shareholders according to their rights and interests in the company.

Final Accounts and Meetings

The liquidator prepares an account of the winding-up, showing how it has been conducted and how the company's property has been disposed of.

A final general meeting of the company is called to present this account. If it’s a members’ voluntary winding up, a final meeting with creditors is also required.

Dissolution of the Company

Following these final meetings, the liquidator sends a copy of the account to ACRA within 7 days. The company is deemed dissolved three months after ACRA registers this document.

Legal and Tax Compliance

The liquidator must ensure compliance with all legal and tax obligations, including filing any outstanding tax returns and paying any due taxes.