Number of Deregistered Entities and Measures to Ensure They Fulfil Obligations on Claims and Payments
Ministry of FinanceSpeakers
Summary
This question concerns the number of deregistered entities since 2020 and the legal measures ensuring they fulfill payment obligations to employees and contractors. Ms See Jinli Jean inquired about the accountability of directors for failed dissolution obligations, noting that approximately 247,000 entities ceased operations between 2020 and 2024. Second Minister Chee Hong Tat explained that while ACRA does not track dissolution compliance, recourse is available through mediation, specialized tribunals, or civil litigation for breach of contract. For entities without separate legal personalities, claims remain enforceable against owners after deregistration, whereas for companies and limited liability partnerships, creditors must lodge claims during the formal liquidation process. He further noted that employee salary claims are prioritized over most unsecured debts in insolvent liquidations to ensure that registered entities uphold their statutory and contractual payment obligations.
Transcript
3 Ms See Jinli Jean asked the Prime Minister and Minister for Finance (a) since 2020, how many entities from and what percentage of each sector have been deregistered from ACRA's registry annually; (b) what percentage of deregistered entities fail to fulfil all dissolution obligations including compliance orders by the Small Claims Tribunal or the Employment Claims Tribunal; (c) how are the directors of such entities made responsible and held accountable; and (d) what are the measures to ensure that registered entities provide for and uphold payment obligations to employees and contractors.
Mr Chee Hong Tat: Payment obligations between registered entities and their employees or contractors are governed by the law of contract. Employees and contractors have avenues for recourse, should such entities breach their payment obligations. Employees may submit a salary-related or wrongful dismissal claim for mediation at the Tripartite Alliance for Dispute Management.
If the dispute remains unresolved after mediation, the Employment Claims Act 2016 allows eligible employees to file a claim of up to $20,000, or $30,000 for union-assisted claims, against his or her employer in the Employment Claims Tribunals. Contractors may file a specified claim of up to $20,000 in the Small Claims Tribunals, or up to $30,000 if there is a Memorandum of Consent from both parties.
Alternatively, both employees and contractors can file a civil suit in the Courts for breach of contract. If registered entities fail to comply with an order by the Tribunals or Courts, employees and contractors may apply to Court to enforce the order as a judgment creditor.
From 2020 to 2024, there were approximately 247,000 cessations of business entities. Data on whether wound up entities have fulfilled all dissolution obligations is not captured by the Accounting and Corporate Regulatory Authority.
Employees and contractors of deregistered business entities that have not complied with their obligations, including Court orders, can seek recourse depending on the type of business entity.
For business entities that have no separate legal personalities from their owners, such as sole proprietorships, partnerships and limited partnerships, employees and contractors may continue to pursue and enforce their claims against the business owners even if the business entities have been deregistered.
For business entities that have separate legal personalities from their directors and members, such as companies, variable capital companies and limited liability partnerships, employees or contractors can lodge a claim as creditors when the entity is being wound-up or liquidated. Specifically, employees' claims on salaries will be given priority over most unsecured debts in an insolvent winding up.