We’ve written about dormant companies and how ACRA defines a dormant company. As a quick recap, a dormant company is a legal business organization that no longer does any business activity or conduct any operation. This means that a dormant company no longer purchases, sells or invests in anything. There are many reasons for a company to become dormant. The most common is that it is a single-founder company and the founder needs time to recharge or raise capital or rethink his product.
Say that you’re an entrepreneur who started a business and launched his startup’s first product, which ended up failing and not getting any traction. You decided to take a step back and rethink your business strategy. There’s nothing wrong with that. Everyone needs some time to think and reflect. But what do you have to do for your company to meet ACRA’s legal regulations? Do you still have to file annual reports?
Keeping up with ACRA’s legal regulations as a dormant company owner
Firstly, you have to declare that your company is dormant. You have to do this regardless of whether you’ve incorporated a private limited company or sole proprietorship. This is slightly different if you have a public company but that’s for another post.
You don’t have to provide any documentation but you do have to declare your company’s dormant status by logging in using SingPass on Bizfile. Bizfile is the government’s online portal for all corporate entities. You have to declare that your dormant company doesn’t own any financial assets or investments and that your business entity won’t conduct any business operation unless your dormant company status has been changed. If your business was previously GST registered, you must deregister your business.
Aside from declaring the official status of your company, doing all this frees you from filing annual reports with ACRA since your company is dormant and has no transactions in its fiscal year. If any of this confuses you, reach out to our company incorporation consultants for a free consultation to talk about your corporate entity’s status.
If you’ve done all the above, you can easily check that your company’s dormant status has been updated on Bizfile. Go to Bizfile and type in your company’s name. You should see “Dormant” under “Status”. Also, don’t forget to save screenshots and download all confirmations of your new company’s status. You may need this in the future if you wish to change your company’s status to “Live” and continue with business operations.
