Complete guidance on company liquidation in Dubai for mainland companies
Company liquidation is a formal insolvency procedure in which a company is wound up (also known as "winding up" or "closing" a company); all its assets are liquidated; and the proceeds from the sale of assets are used to settle debts, pay expenses, and distribute any remaining balance to the company's shareholders.
When a company is liquidated, it ceases to operate and employ people. A company's business license is revoked upon liquidation, its name is removed from the Trade Registry, and the entity is considered to have ceased to exist.
Is liquidation required in the United Arab Emirates even when there are no unpaid debts?
Even if there are no creditors to pay, it is far better to formally liquidate a company rather than simply letting your trade license expire. When a company is officially liquidated, several procedures must be followed. Ignoring these may result in various penalties, as well as the 'blacklisting' of the company, as well as its directors and shareholders, by UAE government authorities. This may affect their involvement in other businesses or their ability to establish another company in the future.
According to UAE laws, there are two forms of company liquidations: voluntary/compulsory liquidation and winding up/liquidation by the court.
Companies may choose to be liquidated voluntarily. Adopting a legally binding shareholder resolution will start this process by the company's shareholders or creditors. A firm may submit a petition for winding up with the court when its financial system fails, the company is in financial distress, and/or the company becomes insolvent and is unable to pay its debts.
Who requires a liquidator?
- You must appoint a liquidator if your organization has one of the following legal structures:
- Partnership (General and Simple Limited)
- A Limited Liability Corporation (LLC)
- Joint Stock Corporation (Public and Private)
The liquidation process will differ depending on the three criteria listed below:
- The ownership structure
- The nature of the liquidation
- The registration jurisdiction, whether mainland UAE or a free trade zone
It is to be noted that when officially liquidating a business on the Mainland, all business partners must be present in the country (or their Power of Attorney must be approved and attested to act to sign the shareholder resolution to close the company). Follow these steps after filing a cancellation request with the Department of Economic Development (DED).
- Ministry of the labour department
- Immigration department
- Water and Electricity department in UAE
- Bank Account closing
- Office tenancy termination
How to revoke your business license in the UAE?
There are two steps in the process of canceling a trade license.
Principal action
- Prepare notarized copies of the minutes from the general assembly that approved the liquidation of the company and the appointment of the liquidator.
- Create a formal letter from a licensed liquidator confirming the obligation.
- Fill out the necessary information in the form provided by DED to request cancellation.
- A certificate of company liquidation will be given by the authorities.
- Place advertising notifying readers of the company's closure in two local publications.
- The declaration provides the debtors 45 days from the day of distribution as a grace period to submit their petitions.
Subsequent Action
- Submit to DED the liquidator's and partners' declaration letter stating that no one has objected to the company's dissolution within the time frame specified.
- Obtain the necessary permission from other government parties to terminate the license.
- Cancel your enrolment with the Ministry of Human Resources and Emiratisation.
- Cancel visas issued by the General Directorate of Residency and Foreigners Affairs to business partners and employees.
- To obtain DED approval and fee structure for dissolution, you must submit all of the above documents.
Which documents will I need to provide for company liquidation?
- Your original Trade License
- Original Certificate of Registration
- Original Share Certificate
- Original Memorandum of Association (if applicable)
- Original Establishment Card
- Your company’s E-sign Card
- Original Lease Agreement
- Company Stamp
- Bank Account Closure Letter
- Corporate Account Statement
Once all of the preceding steps have been completed, you can apply for a confirmation certificate proving the company's license termination and de-registration.
How can we help you in company liquidation in Dubai, UAE?
- Drafting the Shareholders’ Resolution to liquidate the company
- Legalizing the liquidation documents
- Drafting a Power of Attorney
- Liquidating your assets
- Preparing your Liquidation Report
- Posting your liquidation advertisement in 2 local newspapers
- Canceling your Establishment Card
- Canceling your Labour Card
- Canceling your company’s visas and work permits
- Obtaining approvals from all of the relevant government authorities
- Procuring the Final Liquidation Certificate
Liquidation is a difficult process. When a board of directors opts to liquidate a company, they do so with minimum liability or minimal risk, but only if the process is carried out properly and promptly.
We, the Emirates Charted Accountants Group (ECAG), can make it smooth for you when your company undergoes liquidation. As company liquidators in Dubai, we also offer a variety of solutions to clients in various sectors due to our decade of experience and expertise in operating confidentially and handling appropriately. We are experts in preparing documents and obtaining approvals and clearances. Our experience is an assurance in itself that we can provide you with the quality service that you need. In addition, we aim to provide you with transitional solutions and help you focus on new opportunities. So, Act now.
Company Liquidation in Dubai, UAE
Call for Consultation
Mr. Ragesh Mattummal | Partner
Mob: +971 50 3578031
Email: rag@emiratesca.com
Feb 29,2024UAE Corporate Tax Registration
