Liquidation of a company in the UAE
Liquidation is a formal insolvency procedure in which a company ceases trading (often called winding up or liquidation), all its assets are liquidated and the proceeds from the sale of the assets are used to pay debts, cover expenses, and pay the balance to the company’s shareholders.
In liquidation, the company ceases trading and employs workers. On liquidation, the company’s business license is revoked, its name is removed from the business register and it is deemed to cease to exist. Personal loan in UAE 3000 salary
In the UAE, a company may be wound up for two main reasons
The original purpose of the company has been achieved and the company is no longer needed.
The company is deemed insolvent.
02 Types of liquidation
Voluntary liquidation – the shareholders of the company may elect to liquidate the solvent company and the directors of the insolvent company may elect to wind up the business and liquidate the assets to pay creditors.
Compulsory liquidation: if a company’s debts are not paid on time, creditors can apply to the court to wind up the company to recover their claims. The court can order the company to be wound up and its assets sold to pay the outstanding debts.
Does a company in the UAE have to be liquidated even if it has no debts?
It is advisable to formally Company Liquidation Services In Dubai even if it has no outstanding debts to creditors, rather than simply revoking its business license. Certain procedures must be followed to officially liquidate a company. Otherwise, various fines may be imposed and the company and the UAE authorities may blacklist its directors and shareholders. This may affect their ability to participate in other companies or to set up another company in the future.
What is the role of a liquidator?
A liquidator is a registered agent or UAE company, usually a chartered accountant or accountancy firm, who is appointed to act on behalf of a company and sell its assets to raise money to pay outstanding debts. The liquidator may be appointed by the shareholders or, in the case of compulsory liquidation, by the court.
The appointed liquidator issues a formal letter of acceptance at the initial stage. Once he has completed all his tasks, he prepares a statement of assets and a liquidation report, which are necessary for the winding-up procedure to be completed.
The liquidation procedure in the UAE
The liquidation procedure differs according to the following three criteria:
Type of property
Type of property
Registration area, either domestic emirate or free trade zone.
In general, the official liquidation process in Dubai, Abu Dhabi, and the rest of the UAE is as follows:
Preparation and approval by shareholders of a liquidation resolution. In the case of UAE-registered limited liability companies (LLCs), the resolution must be notarized. If the shareholders are not available in the UAE, the resolution must first be certified and validated by the relevant embassy in the UAE and then ratified by the UAE Ministry of Foreign Affairs and the Ministry of Justice. For companies in the free zone, a notary public is generally required.
Appointment of liquidator and receipt of official approval from the liquidator,
The shareholders’ resolution is forwarded to the competent licensing authority along with the necessary documents and fees, including
A copy of the company’s operating license.
A copy of the company’s articles of association
Proxies (if applicable)
Copies of Emirati passports/ID cards of all partners, owners and shareholders.
Application form for removal.
Once the provisional liquidation certificate is issued, the company can begin publishing a notice of liquidation in a public newspaper in English and Arabic (depending on the registered authority, two to four publications may be required),
A notice period of up to 45 days may be required (depending on the registered authority),
During the notice period, the following actions may be taken.
Suspension of work permits and visas for all employees and partners
Letter of acceptance from the immigration department
Certificate from the Ministry of Labor
Certificates from public utilities – water, electricity, and telecommunications
Certificate of approval from the landlord (owner)
Certificate of issuance from the Road and Transport Authority (RTA) for all registered vehicles.
Certificate of clearance issued by the Federal Customs Authority (FCA).
Bank account closure letter.
Cancellation letter and VAT declaration issued by the FTA.
At the end of the notification period, the liquidator may prepare a liquidation report.
The completed report along with all accompanying documents must be submitted to the competent authority along with the required cancellation fee.
The authority will examine the submitted documentation and, if approved, issue a “certificate of cancellation of license.”
How can Sovereign Dubai help you?
The clearance process can be time-consuming and expensive, as companies have to work with many outside parties/authorities to get everything done on time. Skipping a step or document causes unnecessary delays and complications. Sovereign offers liquidation services for all UAE entities – limited liability companies, free zone companies, and offshore companies – from full liquidation to assistance with part of the process, depending on the client’s needs.