- September 8, 2023
- Posted by: Shuraa Tax Consultant
- Category: Company Liquidation
Company liquidation in Dubai refers to the process of shutting down a business and ceasing all operations. A company liquidation may occur when a corporation is in business loss, payment defaults or when the shareholders decide to shut down operations voluntarily.
During business liquidation, all the assets of the organization are distributed to owners and creditors based on the hierarchy of claims. The process of winding down a business is termed as liquidation, and the individual or entity responsible for overseeing this process is referred to as a liquidator. The company’s management appoints the liquidator.
Shuraa Tax Consultancy provides Dubai mainland and free zone enterprises with company dissolution services. We offer company liquidation services to both LLCs and individual proprietorships.
Company Liquidation Types
In Dubai, there are two types of corporation liquidation:
Company voluntary liquidation
If the firm does not have enough money to run its operations or fulfil its expenses, such as supplier’s bills and salaries, it consistently loses money. In that circumstance, enterprises will seek voluntary company liquidation since they lack the finances to remain competitive in the UAE market.
Mandatory company liquidation
If a firm violates the authorities’ rules and regulations or commits a crime such as fraud or any other major offence or bankruptcy. The government or relevant authority will promptly shutter the entity, and as per the court’s ruling, compulsory company liquidation becomes necessary.
How to Liquidate a Business in Dubai and the UAE
The first step in de-registering a corporation is to appoint a liquidation firm. Only authorised liquidators may initiate the liquidation procedure, as government legislation defines. The organisation that provides company liquidation services assists in the closure of the company’s operations in accordance with UAE company laws. It is best to appoint a listed liquidator to avoid penalties from local authorities in the UAE.
Liquidation of a Limited Liability Company (LLC) in the UAE
The following major stages are involved in dissolving/winding up an LLC Company:
- BOD meeting: Minutes of a board of directors meeting declaring the reason for liquidation, like the company’s insolvency in case of mandatory liquidation and appointment of a regulated liquidator. For certain business structures notarised cancellation agreement is needed
. - Official liquidator’s appointment letter: A letter from the registered liquidator confirming acceptance of the responsibility to liquidate the company.
- Liquidation application: To secure a company liquidation certificate, it is essential to submit a liquidation form and the required fees to the Department of Economic Development or the relevant licensing authority.
- Publication in the newspaper: To announce the liquidation of a corporation, place an advertisement in a local Arabic newspaper.
- Notice period: The licensing authority will provide a 45-day grace period to creditors or clients with financial claims against the company.
- Visa Cancellation: Cancel all employees’ and partners’ visas and seek NOC from the Ministries of Labour, Immigration, DEWA, and Etisalat/Du
- Report of the Final Liquidator: after all cancelations the liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
- DED will issue a final company liquidation certificate after all of the documentation have been submitted.
Our best liquidators in Dubai can provide further information on how to close an LLC or a Free Zone Company in the UAE in accordance with UAE Commercial Law.
Liquidation of a Free Zone Company (FZE) in the UAE
Almost every free zone has a unique mechanism for company liquidation. The following are the most typical and general procedures for de-registration of a Free Zone Company in the UAE:
- Liquidation application: To obtain the company liquidation certificate, the liquidation form and fees must be submitted to the relevant free zone authority.
- : Notice requirement may differ from free zone to free zone.
- Clearance certificates: You should obtain it from different authorities such as KHDA, RERA (if applicable), and service providers like FZ, DEWA, SEWA, Etisalat, and banks as applicable.
- Cancellation of Visas: Cancel all employees’ and partners’ visas and receive NOC from the Ministry of Labour, Ministry of Immigration
- Report of the Final Liquidator: The liquidator will provide the final company audit report as well as a letter noting that no claims have been received from third parties/clients/creditors during the 45-day advertising period.
- Final Liquidation Certificate: Once all paperwork and liquidation report has been submitted, the Free Zone Authority will issue a final company liquidation Certificate.
Although, We provide corporation liquidation services to all UAE free zones.
Services for Business Liquidation in the UAE
In the UAE, business liquidation is when a company ends its operations and is forced to close when it can no longer sustain its services. This could happen for several reasons.
The company’s liabilities may much exceed its assets, putting it on the verge of bankruptcy. If the company cannot continue to operate, it will be closed. A firm’s liquidation may also be elective if the management has opted to close it down for reasons known to them. After liquidation, the company uses all its assets to pay off its debts. After covering liabilities and expenses, any surplus assets are sold, and the proceeds are distributed among shareholders.
Documents Required for Dubai Company Liquidation
So, According to the Dubai government, various types of papers must be given for the liquidation procedure. For the liquidation of a company in Dubai, the following documents are necessary:
- A duplicate of the licence.
- Copy of the Memorandum of Association (MOA), as amended.
- If applicable, a power of attorney.
- Copies of the passports belonging to all shareholders.
- A copy of your Emirates identification.
- Shareholders’ resolution.
- Form for requesting de-registration.
- NOC from services providers like DEWA, Etisalat / Du
- Bank account closure letter
- NOC from authority like RERA, KHDA in case of regulated business
Why is company liquidation necessary?
The ultimate option for any business team is to liquidate the company. So, this means that the company can no longer operate and must close. A firm liquidation has various advantages, including:
- Liquidation is an alternative for firms wishing to stop losing business and restart. This process ensures the proper allocation of the organization’s assets. During liquidation, the company first uses its assets to clear its outstanding debts. Any surplus funds are then distributed among the shareholders.
Why Choose Shuraa Tax Consultants for Company Liquidation in Dubai?
The company liquidation procedure can be time-consuming and costly because corporations must coordinate with a variety of external parties and authorities to complete everything on time. So, Any missing step or document can result in extra delays and issues.
With the introduction of Value Added Tax (VAT), Economic Substance Regulations (ESR), and Ultimate Beneficial Ownership (UBO) rules in recent years, the company liquidation process in the UAE has also become more complex, requiring companies to approach the winding-up process with greater caution.
Shuraa offers comprehensive corporate liquidation services for all types of UAE entities, including mainland and free zone companies. Our services cover the entire liquidation process, and we can also assist with specific aspects of the process according to the customer’s preferences and needs. Our liquidators can assist you at every level of the corporate liquidation procedure. For further information on our liquidation services, please contact Shuraa Tax Consultants Dubai. You can contact us by sending an email to info@shuraatax.com or by giving us a call at +971 508912062.