Company Liquidation in Dubai, UAE
Operating a profitable business in the United Arab Emirates is a huge success. Unfortunately, many individuals fail in this venture and end up incurring more expenses than revenue. If an organization closes its operations and shuts down, then its owners may be in need of company liquidation services in Dubai, UAE. Because it is compulsory to understand the company closing requirements of the UAE government. Otherwise, this non-compliance with laws may attract heavy fines and penalties.
What is the Liquidation of a Company?
The liquidation of a company means closing its doors and ceasing all operations. A company’s liquidation occurs when it is on the verge of bankruptcy and has no money to pay its remaining debts. In this situation, all the company assets are converted into cash and distributed among the creditors, lenders, and then shareholders in order of priority. Below we will discuss all regulatory requirements and procedures for Company Liquidation in UAE.
Kinds of Company Liquidation
Liquidation of a company has two main kinds:
1. Voluntary Liquidation
When a business has insufficient cash to meet operational expenses and other credits. It is the phase where the company is at a constant loss and unable to pay bills and employee salaries. At that time, the business has no liquid funds required to maintain daily financial transactions. In these circumstances, the creditors may call for voluntary company liquidation.
2. Mandatory Liquidation
Mandatory company liquidation is always forced by the UAE government authorities. When a company violates state laws or may indulge in some criminal activities or any other serious offence. At that point, the court immediately sends a notice to the entity for a mandatory company liquidation in Dubai.
Company Liquidation Process in Dubai
Under the provisions of Federal Law No. 2 of 2015 on Commercial Companies, each business is mandated to follow the legal procedure while ceasing business & its operations in UAE. Our firm is associated with the Emirates’ top Audit Firms in Dubai to assist you in the business winding-up procedure with all regulatory requirements. Below we discuss our step-by-step process of company liquidation in Dubai, which is not fixed and can be altered based on the client’s needs.
1. Board Resolution to Authorities
First of all, a resolution for liquidating a company must be submitted to the UAE relevant authorities. The board resolution should be approved by the majority of notaries public (BOD/ owners who vote for liquidation) or a judicial order to liquidate. These attested documents guarantee a regulated liquidation.
2. Appoint a liquidator
The individual or business designated to perform liquidation is called a liquidator. In response to the letter, the official liquidator accepts the responsibility of closing the business according to UAE laws. The appointment of a liquidator is essential when the legal form of business is related to the following types:
- General Partnership
- Limited Liability Company
- Simple Limited Partnership
- Public Joint Stock Company
- Private Joint Stock Company
3. Liquidation Notice Period
The liquidator begins the process when the company liquidation certificate is issued by the Department of Economic Development. A notice period of 45 days is provided to the entity to close all business and pay off its debts. During these days, the company must perform the actions mentioned below:
- Visa cancellation & work permits for employees.
- Settle outstanding liabilities of the company.
- Clearance letter from Immigration Department.
- Pay off all utilities.
- Clear up payments to the Federal Customs Authority (FCA).
- Close the bank account with a closure letter.
- Letter from the Labor Department granting clearance.
- Approval letter from leasing entity (landlord).
- Road & Transport Authority (RTA) clearance letter for all vehicles registered with them.
4. Publish Liquidation Notice
Publishing the company liquidation notice is the most essential step of the procedure. An advertisement must be published in two UAE public newspapers. Newspapers in the local area will publish a liquidation notice in both English and Arabic.
5. Liquidation Audit Report
The liquidation audit report must be prepared by the approved liquidator or auditor in UAE. The final report along with supporting documents will be submitted to the relevant licensing authorities. This ensures that there is no claim from the third party during the 45 days notice period.
6. FTA Deregistration Application
The liquidator is obliged to submit VAT or Excise tax deregistration to the Federal Tax Authority. This tax clearance process can also be done parallel to the board resolution. The FTA deregistration is required to settle unpaid tax liabilities in the past.
7. Submit Original Documents
The Original Liquidation report and other legal Clearance Certificates are needed to submit to the relevant federal authorities in UAE.
8. Final Licence Cancellation
The final license cancellation will be issued by DED when all documents are approved by the relevant authorities. The company license, trade registration, lease agreement, formation certificate, and all other company documents will be cancelled. After this, company officials must get the required clearances from FTA. The company liquidation statement is officially announced by the appointed liquidator along with his/her signature.
Documents Needed for Company Liquidation in Dubai
It is a mandatory requirement to submit documents and information for company liquidation. The requirement is almost the same for businesses set up on the mainland as well as free zones. Our qualified team provides the best Company Liquidation Services in Dubai and prepares all your documents to comply with UAE laws. It includes
- Copy of Emirates ID
- A copy of the license
- Power of Attorney (if any)
- Passport copies of all shareholders.
- Copy of MOA
- Resolution of Shareholder
- Application form for de-registration
Why a Liquidation Audit Report is Required?
As the liquidation audit report in UAE is having all the company closing details that regulatory authorities demand. The report assures the accuracy of data provided by the company and the appropriate distribution of assets to the creditors. There are some specific regions that should submit a liquidation audit report to their relevant authorities when the business ceases its operations in the United Arab Emirates. It includes Dubai Economic Department (DED), Jebel Ali Free Zone Authority (JAFZA), Dubai Airport Free Zone Authority (DAFZA), Dubai Multi Commodities Center (DMCC), and Dubai Silicon Oasis (DSO).
BestaxCA Provides Company Liquidation Services in Dubai
BestaxCA is a professional accounting firm that offers you a comprehensive range of financial services in Dubai. This is a team of certified professionals who assist you in financial consultancy, tax advisory, and auditing services in the UAE. Our expert liquidators have vast knowledge and years of experience in all major industries. They assist you in all legal procedures needed for closing a company in the UAE.
We promise companies to complete their complex liquidation process in compliance with the regulations. We prepare your liquidation audit report and document it in a reportable time period. It is required by authorities before cancelling the trade license. You can contact us any time for Company Liquidation Services in Dubai, UAE to properly end the company operations.