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Company Liquidation

Company Liquidation in Dubai, UAE.

Running a profitable business in the UAE is a great success. Unfortunately, many individuals fail in this endeavor and end up incurring more expenses than revenue. If an organization ceases operations and goes out of business, its owners may need to liquidate the company in Dubai, UAE. This is because it is imperative to understand the UAE government’s requirements for company closure. Otherwise, this non-compliance with the law can lead to heavy fines and penalties.

What is Company Liquidation?

Liquidation of a company means closing its doors and ceasing all activities. Winding-up occurs when a company is on the verge of bankruptcy and has no money to pay its remaining debts. In this situation, all the company’s assets are converted into cash and distributed in order of priority to creditors, lenders, and then shareholders. Below we will look at all the regulatory requirements and procedures involved in winding up a company in the UAE.

Types of company liquidation

There are two main types of company liquidation:

Voluntary liquidation

If the company has insufficient cash to cover operating expenses and other credits. This is the stage when the company is continuously making losses and is unable to pay its bills and employees’ salaries. At this time, the company does not have the liquid funds needed to carry out day-to-day financial transactions. In such circumstances, creditors may request the voluntary liquidation of the company.

Compulsory liquidation

Compulsory liquidation is always carried out by the UAE authorities. If the company is in breach of national law or is likely to engage in criminal activities or other serious misconduct. In such a case, the court will immediately send the company a notice of compulsory winding-up in Dubai.

Company Liquidation Process In Dubai

Under the provisions of Federal Law No. 2 of 2015 on Commercial Companies, every company is required to follow a legal procedure when ceasing its business and operations in the UAE.  Our firm is associated with leading Emirati audit firms in Dubai to assist you in the company liquidation procedure in compliance with all regulatory requirements. The following is a step-by-step description of our company liquidation process in Dubai, which is not fixed and may be subject to change depending on the needs of the client.

  1. Board decision for the authorities

First, a decision to wind up the company must be submitted to the relevant authorities in the UAE. The board resolution must be approved by a majority of notaries (BOD/owners who vote for the liquidation) or a court order for the liquidation. These certified documents guarantee an orderly liquidation.

  1. Appointment of liquidator

The natural person or company appointed to carry out the liquidation is called the liquidator. In response to the letter, the official liquidator takes responsibility for winding up the company in accordance with UAE law. The appointment of a liquidator is essential if the legal form of the company involves the following:

  • General Partnership
  • A limited liability company
  • A simple limited partnership
  • Public limited company
  • Private limited company

    Winding-up notification period

The liquidator starts the process when the Department of Economic Development issues the liquidation certificate. The company is given a 45-day notice period to close all transactions and pay debts. During these days, the company must take the following actions:

  • Cancellation of visas and work permits for employees
  • settle the company’s outstanding liabilities
  • Approval letter from the Immigration Department
  • Settle all utility bills
  • Settle payments to the Federal Customs Administration (FCA).
  • Close bank account with closure letter
  • Letter from the Department of Labor granting permission
  • Letter of approval from the landlord
  • Letter of approval from the Roads and Transport Authority (RTA) for all vehicles registered with it.
  1. Publication of the notice of Liquidation

The publication of the winding-up notice is the most important stage of the procedure. The notice must be published in two public newspapers in the UAE. The notice of liquidation will be published in both English and Arabic in local newspapers.

  1. Liquidation audit report

The liquidation audit report must be prepared by a liquidator or auditor approved by the UAE. The final report together with supporting documents will be submitted to the relevant licensing authorities. This ensures that no claims are received from any third party during the 45-day notification period.

  1. Application for cancellation of FTA registration

The liquidator is required to submit a VAT or excise deregistration application to the Federal Tax Authority. This deregistration process may also be carried out in parallel with the Board of Directors’ decision. The FTA deregistration application is necessary to settle past outstanding tax liabilities.

  1. Submit original documents

The original liquidation report and other legally supporting evidence must be submitted to the relevant federal authorities in the UAE.

  1. Final revocation of the license

The final license cancellation document will be issued by DED once all documents have been approved by the relevant authorities. The company license, trade registration, lease agreement, certificate of incorporation, and all other company documents will be canceled. The company’s officers must then obtain the necessary authorizations from the FTA. The liquidation notice of the company will be formally announced by the appointed liquidator together with his signature.

Documents required for the liquidation of a company in Dubai

It is mandatory to submit documents and information for the liquidation of the company. The requirements are almost the same for companies established both on the mainland and in the free zones. Our qualified team provides the best company liquidation services in Dubai and prepares all documents to comply with UAE laws. This includes

  • Copy of the Emirati identity card
  • Copy of the license
  • Power of attorney (if any)
  • Copies of passports of all shareholders.
  • Copy of MOA
  • Shareholder’s resolution
  • Application form for cancellation of registration

Why is a Liquidation audit report required?

The liquidation audit report in the UAE contains all the information required by the regulatory authorities regarding the closure of the company. The report ensures the accuracy of the data provided by the company and the appropriate distribution of assets to creditors. There are some specific regions where a winding-up audit report must be submitted to the relevant authorities when a company ceases operations in the UAE. These include the Dubai Economic Department (DED), Jebel Ali Free Zone Authority (JAFZA), Dubai Airport Free Zone Authority (DAFZA), Dubai Multi Commodity Centre (DMCC), and Dubai Silicon Oasis (DSO).

BestaxCA provides company liquidation services in Dubai

BestaxCA is a professional accounting firm offering a wide range of financial services in Dubai. It has a team of certified professionals who help provide financial advisory, tax consultancy, and audit services in the UAE. Our expert liquidators have extensive knowledge and years of experience across all major industries. They help you with all the legal procedures required to close a company in the UAE. We promise companies to complete their complex liquidation process in accordance with the regulations. We will prepare your liquidation audit report and document it within the reporting period. The authorities require it before revoking a trading license. You can contact us anytime to get the company liquidation services in Dubai, UAE, and wind up your company in an orderly manner.

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