Closing a consulting, design, IT or other professional services company does not close off claims about its past work. Most professional indemnity (PI) policies are “claims-made”, so once you cancel the policy, a claim made next year about work done last year may have no cover at all. Clients generally have 6 years to sue in contract or tort, and negligence claims for hidden defects can arrive later still. Before you stop trading, strike off or sell, ask a licensed insurer or broker about run-off cover, deal with known complaints, and choose an exit route that does not leave you exposed.
Why can claims arrive after the firm has closed?
Professional mistakes are often discovered long after the work is done. A faulty structural calculation shows up when cracks appear. A wrong tax treatment surfaces when the authority reviews an old return. A flawed system design fails during the client’s first peak season. The client then looks for whoever did the work.
Singapore’s Limitation Act 1959 gives claimants a generous window:
| Type of claim | General time limit | When time starts |
|---|---|---|
| Breach of contract (section 6) | 6 years | Usually from the breach, often the date the work was delivered |
| Negligence where loss shows up immediately (section 6) | 6 years | From when damage was suffered |
| Negligence causing latent (hidden) damage, not personal injury (section 24A) | 6 years from accrual or, if later, 3 years | The 3 years run from when the claimant had the knowledge needed to sue |
| Longstop for latent negligence claims (section 24B) | 15 years | From the last negligent act or omission, even if the damage is still undiscovered |
So a firm that closes in 2027 may still face claims in the 2030s about work done before it closed. Claimants usually wait to sue until they understand their loss, which can be years after the event. Our guide to professional negligence claims in Singapore sets out the limitation rules from the claimant’s side.
Why does cancelling a claims-made PI policy matter so much?
A claims-made policy responds to claims first made, and notified, while the policy is in force, about work done after its retroactive date. It does not matter when the mistake happened if the policy has lapsed when the claim arrives. That is the key difference from an “occurrence” policy, such as many public liability policies, which respond to events that happened during the policy period.
If a closing firm simply stops renewing its PI policy:
- claims made after expiry about past work are generally uninsured;
- circumstances you knew about but did not notify before expiry may be excluded by any later policy too;
- if a successor business buys a new policy, it will usually not cover a different legal entity’s past work unless the insurer agrees to that in writing.
What is run-off cover, and what does it typically include?
Run-off cover (sometimes called discontinued practice or extended reporting cover) is insurance for claims made after the firm stops trading, about work it did before. The terms are agreed with the insurer and vary, but typical features are:
- Past work only: no cover for new work after the run-off starts.
- A fixed period: often a number of years chosen with the limitation periods in mind. Some insurers offer it as an extension of the existing policy, others as a separate policy.
- One limit for the whole period: the limit of indemnity may be an aggregate for all claims during the run-off, not a fresh limit each year. Check this carefully.
- Same conditions: notification, no-admission and consent conditions still apply, and someone must still be available to notify and handle claims.
- Usual exclusions: known but unnotified circumstances, dishonesty and contractual liabilities beyond your legal liability are typically excluded.
Before you cancel anything, check whether your professional body, regulator or licence conditions say anything about cover after you cease practice, and whether client contracts require PI cover to be maintained for a set number of years after completion. We do not quote premiums: ask a licensed insurer or insurance broker regulated by the Monetary Authority of Singapore for terms.
Can you strike off a company that may still face claims?
Striking off is meant for companies with nothing left to deal with. ACRA’s criteria require, among other things, that the company has stopped trading, is not involved in legal cases in Singapore or overseas, and “owns nothing and owes nothing”, which ACRA describes as no property, debts or potential future claims. Our guide on how to strike off a Singapore company sets out the full criteria and the timeline after the 20 October 2026 changes.
For a professional firm, this means:
- if a client has complained, sent a letter of demand or started proceedings, resolve it first. Applying anyway risks a false declaration;
- if creditors or claimants see the Gazette notice, they can object, and ACRA may then not proceed with the striking off;
- if real exposure remains, ask your advisers whether a voluntary winding up, where a liquidator deals with creditors and claims, is the better route.
Striking off also does not end personal exposure. Our article on directors’ personal liability after a company is struck off explains what survives.
What happens if a client claims after the company is struck off?
A struck-off company cannot be sued while it is dissolved, but a person aggrieved by the striking off, such as a client with an arguable claim, can apply to court to restore it, generally within 6 years of the striking off. Once restored, the company is treated as having continued in existence and can be sued. The court can also give directions to put people in the position they would have been in had the company not been struck off, including directions about limitation periods.
A restored company with no assets and no insurance may be an empty shell. That is exactly when claimants look at the individuals involved: the professional who did the work, or directors who allowed the company to be struck off while a claim was pending. Run-off cover gives a restored company an insurer to defend and, where covered, pay the claim. The routes and documents for restoration are covered in our guide to restoring a struck off company.
Selling instead of closing: who keeps the liability?
| Exit route | Who carries liability for past work | PI insurance points |
|---|---|---|
| Share sale | The company stays liable, so the buyer inherits the history through the company it now owns | The buyer will want continuous cover and a retroactive date covering past work; the seller usually gives warranties and indemnities about known claims |
| Asset or business sale | The selling company keeps liability for work done before completion unless the buyer expressly takes it over | The selling company needs run-off cover before it closes; the buyer’s policy will usually only cover its own work |
| Merger into another firm | Depends on the deal documents and whether the old entity survives | Agree in writing which policy covers past work of the old firm |
| Striking off or winding up | The company, while it exists or once restored; individuals for their own wrongs | Run-off cover arranged before the policy ends |
For the wider deal mechanics, see our guide on asset sale or share sale.
Checklist before you close a professional services company
- List all projects completed in the last 15 years and note which carry long-tail risk (design, structural, valuation, tax, audit, systems).
- Collect every complaint, query or warning sign and notify them to your current PI insurer as circumstances before the policy ends.
- Ask your insurer or broker for run-off terms, including period, limit and whether the limit is aggregated.
- Check regulatory and licence conditions and client contracts for any duty to keep cover after ceasing practice.
- Decide who will keep the project files, and for how long, so a future claim can be defended.
- Name a person who will receive and notify any claim after closure.
- Resolve live disputes before applying to strike off, or consider a liquidation if exposure remains.
- If selling, negotiate who bears past claims and make sure the documents and insurance match.
Example: an engineering consultancy winds down
Example: two engineers run a small structural consultancy as a private company. They decide to retire, finish their last projects in March and plan to strike off the company by the end of the year. Their PI policy is due for renewal in June, and they intend to let it lapse.
A client has emailed about hairline cracks at one building, but no claim has been made. Before June, they notify that email to the insurer as a circumstance and obtain run-off terms for the following years. They keep the project files with a nominated former director and do not apply to strike off until the client’s concern is resolved. Three years later, a different client claims about another project. The run-off policy responds, subject to its terms, instead of the two engineers facing a restoration application and a personal claim with no insurer behind them.
What happened in real Singapore cases?
A renovation customer restores a struck-off company to sue it (2024)
In Lye Yew Cheong v Accounting and Corporate Regulatory Authority [2024] SGHC 270, a homeowner alleged delays and defects in renovation work by a contractor company, saying the flat was uninhabitable for a period. A former director applied to strike the company off in January 2023 and it was struck off in May 2023. The High Court restored the company to the register in October 2024 so that the homeowner could pursue his claim, finding that his intended claim was not hopeless and that restoration was just.
The court stops the clock for a claimant (2025)
In Vikramathithan a/l Rasu v AK Equine Pte Ltd [2025] SGHC 65, a worker wanted to sue a company that had been struck off in February 2024. His limitation period was about to expire. The High Court restored the company and directed that the period from his letter of demand until restoration would not count for limitation, describing this as the first such direction in Singapore. A struck-off company, and anyone behind it, cannot assume the claimant has run out of time.
Directors fined for false striking off declarations
ACRA publishes its prosecutions. In one case, a director was convicted on 21 November 2022 of falsely declaring in a striking off application that her company had no existing assets and liabilities when it owed a creditor $35,625. She was fined $12,000 and disqualified as a director for 5 years. In another, a director convicted on 11 March 2024 had authorised a striking off application declaring no outstanding court proceedings or liabilities, although the company had Small Claims Tribunal judgment debts and a pending lawsuit; he was fined $9,000 and disqualified for 5 years.
Frequently asked questions
Is run-off cover compulsory?
There is no general legal requirement for every business. Check your professional or licensing rules and your client contracts, which sometimes require cover for a period after completion. Otherwise it is a risk decision for the directors.
How long should run-off cover last?
There is no single answer. Many firms consider the 6-year limitation period as a minimum reference point, and longer for work with latent defect risk. Discuss it with your insurer or broker.
Can my new company’s PI policy cover my old company’s work?
Only if the insurer agrees and the policy names the old entity or its past work. Do not assume it does.
If the company is struck off, can the client sue me personally instead?
Possibly, if you personally owed the client a duty of care or committed a wrong yourself. See our article on when employees and directors are sued personally for professional negligence.
Should we keep our files after closing?
Yes. Without the project files, emails and working papers, defending a claim years later is very difficult, and the Companies Act and tax rules separately require certain records to be kept.
Official sources: ACRA, striking off a local company; ACRA, prosecution of cases in the State Courts; [2024] SGHC 270; [2025] SGHC 65; Limitation Act 1959; Companies Act 1967.
Run-off and PI cover itself should be arranged through a licensed insurer or insurance broker.
Need help closing or selling a professional services firm?
If your company, or you as a director or shareholder, is dealing with closing, striking off or selling a professional services business that may still face client claims, contact the Raffles Corporate Services team at [email protected] or on WhatsApp at +65 8501 7133 or +65 9018 0072. We will help you understand the documents and deadlines. Where your matter needs a lawyer, for example if a claim is made against your company or you are sued, we will refer you to a firm on our panel of Singapore law firms that regularly handles professional liability, restoration and insolvency matters. Raffles Corporate Services is a corporate services provider, not a law firm or insurer, and this article is general information, not legal or insurance advice.
The Raffles Corporate Services Editorial Team, Raffles Corporate Services