What Is a Dormant Company in Singapore? What Compliance Needs to Be Done for a Dormant Company?

The ultimate purpose of establishing a company is to operate its business and generate income. However, there are some companies which become dormant after being set up.

The concept of dormant companies is not new to most company owners in Singapore. To serve as a guide for those who are unfamiliar with the concept and a refresher for those who have prior knowledge about it, this article will explain everything one needs to know about a dormant company.

The following criteria make up a dormant company:

• There are no sales invoices during the entire period.
• Total expenses are generally less than S$1,000 in a year-end.
• The total number of transactions is less than 100 in a year.

These criteria primarily focus on sales invoices, that is whether the company has generated income or not. Second, even if a company is dormant, it will still have some transactions like a bank organization might impose monthly bank charges to keep its account active. Generally, the instance of having some transactions will be there, but there should not be a single sales transaction and other transactions are limited in number and amount.

Instead of closing a company, a business owner may keep his or her company in dormant status for the following reasons:

• The company may be temporarily put on hold for future use.
• The company owner wants to stop operating but not close the company as he or she plans to reactivate it any time.
• The company may not be generating any income, but it needs to complete some assets or contracts.
• The company may have rights exercisable over a period of time.
• The company may want to take a rest from trading and recommence when ready.