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Company Liquidation in UAE
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Company Liquidation in UAE
Company liquidation is a formal insolvency procedure in the UAE. This procedure sells a company’s assets to settle outstanding debts and expenses. The remaining balance is transferred to shareholders. The company ceases business and employs people, revokes its business license, and removes its name from the Trade Registry, resulting in its ceased existence.
We are Business Consultancy Services provider in Dubai, UAE, and offers company liquidation services. These services ensure the sale of assets and property to creditors and shareholders of a Dubai-registered company. This process is crucial for closing an LLC, sole establishment, or Dubai free zone company.
Why is a company liquidation required?
A company liquidation is necessary in the UAE for two main reasons: 1) the original purpose of the company has been fulfilled, and the entity is no longer required, and 2) the company is considered insolvent. It is advisable to formally liquidate a company no longer in use, even if no debts are to be paid to creditors. Failure to follow procedures may result in penalties and block listing by UAE government authorities, impacting their involvement in other businesses or future company setups.
What is the role of a liquidator?
A liquidator is a UAE-registered agent or firm, typically an accounting or audit firm, appointed by shareholders or courts for compulsory liquidation. They sell a company’s assets to generate cash to discharge outstanding liabilities. Once appointed, they issue a letter of acceptance, prepare a statement of affairs, and report to finalize the liquidation process.
Company liquidation can be classified into two types:
Type of Ownership
To cancel a business license, sole establishments must apply through the Department of Economic Development and obtain clearances from various authorities. However, a liquidator must be appointed if the business is a general partnership, limited liability company, simple limited partnership, public joint stock company, or private joint stock company.
Voluntary Liquidation: Voluntary liquidation occurs when a company’s shareholders wind up due to insufficient funds to pay creditors, prioritizing them.
Compulsory Liquidation: Compulsory liquidation is a court-ordered process where a company’s assets are distributed to creditors and contributors based on claim priority. Government entities must be notified of business closures to avoid fines and penalties. In Dubai, UAE, liquidation becomes inevitable when a company lacks liquid funds, fails to pay creditors, or commits serious offenses, and the Free Zone Authority files a suit to affect operations.
Jurisdiction of registration
In UAE Free Zones, appointing a company liquidator is unnecessary. Still, closing procedures vary based on the specific Free Zone Authority. To close a company, notify the Authority, obtain No Objection Certificates, cancel employees’ visas and work permits, close bank accounts, and receive an official termination letter from the Free Zone Authority.
Company liquidation procedures in UAE
The formal process of company liquidation in the UAE involves preparing and approving shareholders’ resolutions of dissolution, which a Notary Public must attest for Limited Liability Companies (LLCs) registered in the UAE. If shareholders are unavailable, the resolution must be attested to the relevant UAE embassy, Ministry of Foreign Affairs, and Ministry of Justice.
Free Zone companies generally require attestation by a Notary Public.
The liquidator is appointed, and an official acceptance letter is collected. The shareholders’ resolution, mandatory documents, and fees are submitted to the relevant licensing authority. A notice of liquidation is published in a public newspaper in English and Arabic. A notice period of up to 45 days may be required, during which actions can be undertaken, such as canceling work permits and visas, clearing letters from various departments, and closing bank accounts.
The liquidator prepares the Liquidation Report, which is then submitted to the relevant Authority with the required cancellation fees. If approved, a ‘Licence Cancellation Certificate’ is issued.
Procedure of Liquidating the Limited Liability Company (LLC) in UAE
The procedure for liquidating a Limited Liability Company (LLC) in the UAE involves several stages. The first stage involves a Board of Directors Meeting, where the company’s liquidator is appointed and attested by a Notary Public. The liquidator then submits a confirmation letter, a liquidation form, and fees to the Department of Economic Development and advertises the dissolution in a local Arabic newspaper. A 45-day grace period is given to creditors or clients if they have any financial claims. The final liquidator’s report is submitted, and visa cancellations are made. After submitting all necessary documents, the Department of Economic Development issues a final company liquidation certificate.
Procedure of Liquidating the Free Zone Company (FZE) in UAE
The procedure for liquidating a Free Zone Company (FZE) in the UAE involves several steps. The first step is the BoD Meeting, where the board of directors declares the company’s liquidation, and a regulated liquidator is appointed. The official letter from the liquidator confirms the company’s responsibility. The application for liquidation involves submitting a liquidation form and fees to the relevant free zone authority. An advertisement in a local Arabic newspaper announces the company’s dissolution. A 45-day grace period is given by the Free Zone Authority to wait for creditors or clients. The final liquidator submits a company audit report and a letter stating no claims from third parties or clients. Clearance certificates are obtained from the Free Zone Authority, and a final liquidation certificate is issued.
We provide company liquidation services
We provide company liquidation services to all free zones in the UAE, including some of the most popular free zones.
- Dubai International Financial Center (DIFC)
- Dubai Multi Commodities Center (DMCC)
- Dubai Airport Free Zone (DAFZA)
- Dubai Internet City (DIC)
- Jebel Ali Free Zone (JAFZA)
- JAFZA Offshore
- Sharjah Airport International Free Zone (SAIF).
- Abu Dhabi twofour54 Free Zone
- Ajman Free Zone
- Creative City Fujairah
- Umm al Quwain Free Zone
- RAK Offshore
Silver Oak Auditing Firm will assist you in the following areas of company liquidation:
- Initiating the winding-up process
- Publishing the liquidation notice.
- Preparation of legal documents
- Preparation of Company board resolutions
- Liquidators appointment acceptance
- Application and submission
- Arrange a clearance letter from DEWA
- Arrange a clearance letter from Etisalat
- Arrange a clearance letter from the Municipality
- Arrange a clearance letter from the Custom
- Bank account closure and Bank No Liability Certificate
- Audit the financial statements for the liquidation of the company
- Overview of Collection & Distribution of Company Assets
- No Liability certificate
- Employees visa cancellation
- Labour card cancellation and clearance certificates
- Immigration card cancellation and clearance certificate
- Liquidation report preparation and submission
- Final cancellation letter
- Partner Visa Cancellation
Why should you choose Silver Oak Auditing and Accounting Firms for your company liquidation needs?
Because we offer a comprehensive solution that saves you time and ensures compliance.
Why choose Silver Oak Auditing and Accounting Firms? Because we understand the challenges and time-consuming nature of liquidating a company in the UAE. We assist our clients by collecting legal documents and ensuring procedural compliance, making the process as convenient as possible. By appointing Silver Oak Auditing as your company liquidator, you can receive a license cancellation certificate and free consultation, providing you with the ease and convenience you need during this process.
Company Liquidation Steps to Shut Down the UAE Company
Use the checklist below to clearly understand all the steps that should be taken to conduct the liquidation process for your company in the United Arab Emirates.
Step 1: Closing corporate bank account: All active UAE bank accounts of the company must be closed. In order to prepare the Liquidators Report, it is mandatory to obtain the Statement of Accounts for the last financial year. Additionally, you will need to get a bank account closure confirmation from the respective UAE banks to prove the account has been closed.
Step 2: Immigration clearance: All running visas under the UAE company sponsorship must be formally canceled. Also, you should cancel or put all active UAE residence visas run under any employee sponsorship (employment visa / dependent visa/family visa) on hold.
Step 3: Clearance from regulating Authority Depending on the company’s activity, clearances may be required. For example, if the company has a trading business, it must approach the Ministry of Customs and the Chamber of Commerce to obtain clearance.
Step 4: UAE company offices must be cleared from third-party liabilities, including utilities like DU/Etisalat, DEWA, and air conditioning, and rent payments must be made to landlords.
Step 5: Publication for deregistration According to the jurisdiction in which your UAE company is registered, any legal entity must publish a 15-day newspaper advertisement informing the public that the company is liquidating, which can also be published online.
Step 6: Company assets All property, vehicles, shares in other companies, etc, registered in the UAE company’s name must be sold or transferred. The auditing firm that will perform the liquidators report will require proof of transfer or evidence of the sale of actives.
Step 7: Liquidators Report The UAE company must hire a licensed and approved auditing firm to prepare the Liquidators Report.
Step 8: A confirmation certificate of the company license termination and company deregistration. The Authority where the company is registered will issue the final approval after complying with all the steps mentioned above and then release the Certificate.