Company Liquidation Procedure in UAE Simplified!
If you are a business owner in the United Arab Emirates (UAE) and are thinking about liquidating your company, you should be aware of the necessary steps and regulations. Even though it can be a difficult and drawn-out process, liquidation is frequently required when a company can no longer make money. You may handle the procedure quickly and easily with the assistance of knowledgeable experts, guaranteeing a favorable result for all parties.
We’ll go over the specifics of UAE company liquidation in this blog, giving you the knowledge you need to decide how to proceed with your firm.
What is Company Liquidation?
Liquidation, sometimes known as “winding up” or “closing down,” is the legal process of formally ending a business’s operations. The company’s assets are sold during liquidation, and the revenues are used to pay off debts, cover costs, and divide any leftover money among the shareholders. This procedure, which is a type of solvency procedure, is usually started when a business can no longer make ends meet or maintain operations.
UAE Company Liquidation Types:
i) Voluntary Liquidation:
A company’s shareholders are the ones who start a voluntary liquidation, sometimes referred to as shareholders liquidation. This procedure can be started for a number of reasons, including the end of the predetermined period, accomplishing the goal for which the company was formed, terminating the objects, merging with another business, experiencing ongoing losses, or being unable to pay debts. In order to stop more losses, shareholders decide to liquidate the business.
ii) Mandatory Liquidation:
Forceful liquidation, also known as compulsory liquidation, is imposed on a corporation that breaks the law or becomes bankrupt, making it more difficult for it to operate. In order to collect their debts, creditors may also lodge complaints against the business with regulatory bodies. Local government agencies intervene to compel the company to liquidate and help creditors get their money back.
General UAE Company Liquidation Checklist
i) To determine the final business day and to appoint a liquidator, a board resolution must be approved. A board resolution to liquidate is required, even in cases when the company has just one owner or shareholder. The Board Resolution must have a Notary Public’s attestation if the corporation is based in the United States.
ii) Until the account is closed, close all of the company’s open bank accounts, get a Bank Account Closure Confirmation, and gather the Statement of Accounts for the preceding fiscal year.
iii) Obtain immigration clearance and formally revoke any current employee- and company-sponsored visas.
iv) Obtaining a confirmation letter from an accredited independent firm acting as an auditing or liquidation firm, which will conduct a thorough examination of the business’s finances and general condition. To help with the process, the company could hire experts.
v) Get approval from any regulatory body that the business is subject to, such as the Federal Customs Authority for trading firms.
vi) If the business is registered with the Federal Tax Authority (FTA), formally request the cancellation of the TRN Number from the FTA.
vii) Pay off all outstanding debts and obligations to other parties, including any office space and utilities like DU/Etisalat, DEWA, cooling suppliers, RTA, RERA, and epost for PO BOX. Businesses that rent space must get clearance and pay all of their outstanding debts to the landlord.
viii) Publicize the company’s de-registration process in an Arabic and/or English 30-day newspaper or online publication, depending on the jurisdiction.
ix) Sell or transfer all current and active properties, cars, and assets, and give the liquidator/auditing company proof of sale.
x) After making sure that all of the aforementioned requirements have been met, obtain a Confirmation Certificate of the company’s License Termination and Company De-registration from the authorities where the company is registered.
Processes for UAE Limited Liability Company (LLC) Liquidation
i) Board of Directors Meeting: To announce the company’s liquidation and name a licensed liquidator, the board of directors must convene. This meeting’s minutes need to be notarized.
ii) Official Letter from Liquidator: A confirmation letter acknowledging the registered liquidator’s acceptance of the duty to liquidate the company must be provided.
iii) Application for Liquidation: To get the company’s liquidation certificate, the Department of Economic Development (DED) must receive the liquidation form and any required costs.
iv) Newspaper Ad: To announce the company’s dissolution, an ad must be published in a local Arabic newspaper.
v) Notice Period: The DED gives the company a 45-day grace period before accepting any demands for payment from creditors or customers.
vi) Final Liquidator’s Report: During the 45-day notice period, the liquidator is required to provide a letter certifying that no claims have been made by clients, creditors, or third parties, as well as a final corporate audit report.
vii) Cancellation of Visas: All visas for workers and partners must be canceled, and a No Objection Certificate (NOC) from Etisalat/Du, DEWA, the Ministry of Labor, and the Ministry of Immigration must be obtained.
viii) Final Liquidation Certificate: The DED will provide a final company liquidation certificate following receipt of all necessary paperwork.
Hire UAE's top company liquidators
You may have discovered that company liquidation in the United Arab Emirates might be a difficult and drawn-out procedure if you’re thinking about it. But because to IBR Group’s many years of expertise and stellar reputation in Dubai for offering business liquidation services, we can assist in making the procedure run as smoothly and simply as possible. Throughout the course of the UAE company liquidation process, our team of professionals assumes complete accountability for compliance. We provide a thorough Liquidator’s report or No Liability Letter as part of our services, and we get it professionally audited.