Company Liquidation is a process whereby an established company undergoes certain legal processes to officiate its termination of operations and ceasing of existence. Any VAT registered company needs to go through the liquidation process to clear out pending dues and discontinuation of filing tax returns. This article particularly outlines company liquidation in SHAMS and its components.
Company Liquidation in SHAMS
The Sharjah Media City, commonly known as SHAMS, is one of the many free zones spread across the UAE and established as hubs of novel business ventures. Each free zone dedicates a set of rules and procedures for entrepreneurs while initiating their operations. While establishing a business requires time and effort, the venture fails to thrive in certain cases. Therefore, similar streamlined processes are involved in case a company decides to close down its operations. As in establishment, each free zone has exclusive processes in company liquidation too. The average time to liquidate a company in SHAMS is about 3 weeks with the cost of AED 2,000.
STEP 1: Consultation with Stakeholders
A single individual, by virtue of his authority, cannot initiate company liquidation in SHAMS. He or she needs to call a meeting of all stakeholders and prominent officials and discuss the matter. The board members look into the matter, analyze the company’s performance, and mutually decide to proceed with the process.
STEP 2: Appointment of Liquidator
Technical as the process is, only a professional and skilled liquidator can carry it out efficiently. A liquidator is a person holding the legal authority to sell a company’s assets on behalf of the liquidating company and finalize the liquidation process.
The appointment of a liquidator during company liquidation in SHAMS must be done through a certified accounting and auditing firm only.
STEP 3: Informing the Authorities
The documentation showing resolution of liquidation passed by board members, and appointment of a liquidator, must be submitted to SHAMS free zone authorities. Director or manager of the company should duly sign the resolutions. The company must also mention the name of appointed liquidator.
This process officiates the liquidation process and also informs the relevant authorities about the person involved in the process.
STEP 4: Cancelling VAT Registration
Since the company now ceases to exist, it does not need to file for VAT returns. However, the FTA may continue to issue notifications for tax filing if it the authorities do not notify it about the liquidation process. Company liquidation in SHAMS cannot initiate before cancelling VAT registration.
STEP 5: Real Beneficiary Register
The Cabinet Resolution No. (58) of 2020 on Ultimate Beneficial Ownership require the company to submit a Real Beneficiary Register within 20 days of appointment of a liquidator. The Real Beneficiary Register holds the name of the owner of the company. If there are partners or stakeholders in the company, it has to submit a Partners and Shareholders Register.
The UAE government directs company owners and appointed liquidators to retain the Real Beneficiary Register with them for 5 years after liquidation.
STEP 6: ESR Compliance
If the liquidating company performed any of the 9 actions outlined by ESR, it is compliant to submit annual ESR notification, ESR reports and other obligations. Company liquidation in SHAMS is incomplete without completing the ESR procedures. Failing to abide by ESR rules can result in heavy penalties for the company.
STEP 7: Visa Cancellation, Custom Clearance and More
Companies in the UAE issue employment visas to their expat employees. When the company dissolves, it has to cancel employment visas of its former employees. The company needs to ensure all types of custom clearances and obtain NOC from relevant authorities. The company also seeks clearance from service providers such as SEWA (Sharjah Electrical and Sewage Authority), internet service providers and other companies.
STEP 8: Public Notification
Once the liquidation process has initiated, it is the job of the appointed liquidator to publish this news in two local newspapers: one in Arabic and the other in English. This news announces the company liquidation in SHAMS and allows any person to object to the decision within 45 days of initiation of liquidation.
STEP 9: Process Completion
Finally, the liquidator completes the liquidation process and submits the report to the Registrar. The registrar then cancels the company’s trade license and removes it from its list of companies or businesses in SHAMS.
About BS Auditing
The process of company liquidation in SHAMS is a multilayered one. A prerequisite of liquidation is to hire a skilled liquidator who can efficiently carry out the process. BS Auditing of Accounts is an expert liquidation service provider with immense knowledge and skill in the liquidation process in every free zone.
Book your consultation today for a successful company liquidation process in the UAE. For detailed guidance and assistance, feel free to contact us:
- Office # 0641, Tamani Arts Offices, Business Bay, P.O. Box 111390, Dubai, UAE
- +971 4 570 7357
- +971 58 108 5690
- info@bsauditing.com
