How to close a Company

There are many ways in which you can choose to close the company, some more administratively heavy than others. In bigger companies and cases where the company is insolvent (unable to pay its debts), you would have to engage a lawyer and specific people to carry out some of the duties required (Liquidator, Official Receiver, Judicial Manager).

In most cases when a company is solvent but you would like to wind up the company, most would opt for either Striking off or Members' Voluntary Winding Up, and we will expand on these 2 options below.

If you are still considering whether or not to close a company, please read Consideration in closing a company.

1. Striking Off

A company may apply to ACRA to strike off its name from the Register. ACRA may approve the application if there is reasonable cause to believe that the company is not carrying on business, and the company is able to satisfy the criteria for striking off.

Reference: Companies Act (Chapter 50) Section 344A

2. Winding Up

Members' Voluntary

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. The company will appoint a liquidator, or provisional liquidator, to wind up its affairs and file the necessary notifications required.

1. Declaration of solvency

• they have made an inquiry into the affairs of the company

• at a meeting of directors, they have formed the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months after the commencement of the winding up.

2. Declaration of statement of affairs

• the assets of the company and the total amount expected to be realised from those assets

• the liabilities of the company

• the estimated expenses of the winding up

These declarations must be made within 5 weeks immediately before the passing of the resolution for voluntary winding up; and lodged with the ACRA before the date on which the notices of the meeting at which the resolution for the winding up of the company is to be proposed are sent out.

The company in general meeting must appoint one or more liquidators for the purpose of winding up the affairs and distributing the assets of the company, and may fix the remuneration to be paid to the liquidator or liquidators.

Reference: Insolvency, Restructuring and Dissolution Act 2018 Section 160-165

Creditors' Voluntary

A company may decide to opt for a 'creditors' voluntary winding up” if its directors believe that it cannot, by reason of its liabilities, continue its business. The company will appoint a liquidator, or provisional liquidator, to wind up its affairs and file the necessary notifications required.

Reference: Insolvency, Restructuring and Dissolution Act 2018 Section 166-170

Compulsory

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. The liquidator will file the necessary notifications required

Reference: Insolvency, Restructuring and Dissolution Act 2018 Section 171-185

3. Receivership

A company may be placed under receivership, if a receiver is appointed to enforce a charge for the benefit of holders of debentures of the company.

Reference: Insolvency, Restructuring and Dissolution Act 2018 Section 186-216

4. Judicial Management

If a company, or its creditor(s), considers that the company is/will be unable to pay its debts and there is a reasonable probability of rehabilitating the company, instead of resorting to a winding up, the Court may upon an application, order that the company be placed under judicial management. A judicial manager will be appointed.

Reference: Insolvency, Restructuring and Dissolution Act 2018 Section 217-244