Navigating The Process Of Company Liquidation In Dubai, UAE
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Company liquidation is like the official end of the road for a company. It’s the process of tying up all the loose ends, dividing up the company’s stuff, and officially closing down the business. In the UAE, there are different reasons why a company might go through this process.
It could be because they’re facing financial troubles, can’t pay their debts, their time is up, the owners want to shut it down, or sometimes they’re required to do so by the law. Nobody knows what the cause is, so it’s always important to follow the legal rules and guidelines that apply to the liquidation of a company.
It could be because they’re facing financial troubles, can’t pay their debts, their time is up, the owners want to shut it down, or sometimes they’re required to do so by the law. Nobody knows what the cause is, so it’s always important to follow the legal rules and guidelines that apply to the liquidation of a company.
Today, you will read about the process of company liquidation in Dubai. This will outline the steps involved and offer valuable insights for businesses going through the challenging phase.
Types Of Company Liquidation in Dubai:
In Dubai, when it comes to winding up a company, it can happen in a couple of different ways, depending on its legal structure and location. The two main flavors of company liquidation in Dubai are:
Voluntary Company Liquidation:
This is when the folks who own the company, known as shareholders, make the call to close up shop. There can be various reasons for this decision, like achieving the company’s original goals or running into financial trouble.
To make it official, the shareholders must appoint a liquidator. They’ll need to follow specific steps, like canceling the business license and putting a notice in the newspapers to inform everyone about the liquidation.
Compulsory Company Liquidation:
This is a bit different. It happens when the company’s creditors (the people or organizations the company owes money to) go to the courts and ask for the company to be liquidated. They’re looking to get back the money they’re owed.
This usually occurs when the company can’t pay its debts on time or gets into some serious trouble. If the court agrees, they’ll appoint a liquidator and keep an eye on the process as the company is closed down and its assets are sold off.
One more thing to keep in mind is that the rules and procedures can vary depending on whether the company is registered in the mainland or a free zone. So, there might be some differences based on your company’s location.
Steps for Company Liquidation Process in Dubai
Closing down a company in Dubai involves a well-defined process of company liquidation in the UAE; these are steps that need careful attention. Here’s a breakdown of the main steps. Read them below:
Step 1: Board Resolution and Shareholder Approval
Resolution and Approval:
The initial move is to pass a resolution at a board meeting recommending company liquidation. This decision then requires approval by the shareholders in a general assembly meeting.
The specifics of this decision, including the reason for liquidation, details of the appointed liquidator, and the plan for distributing assets among shareholders, need to be documented and recorded in the official meeting minutes.
Attestation:
The resolution must also be officially attested. The requirements for attestation vary based on the company’s legal form and location, involving a notary public or a competent authority.
Step 2: Appointment of a Liquidator
Choosing a Liquidator:
The next step involves appointing a liquidator. This individual or specialized company should be registered with the relevant authorities in Dubai.
The liquidator’s role is to ensure a fair distribution of assets and safeguard the interests of all stakeholders. Additionally, they must prepare a final audit report and a statement of affairs for the company.
Step 3: Notifying The Creditors Of The Liquidation
Debt Settlement:
When the company dissolves, it must promptly settle all its debts. The liquidator sends registered letters with acknowledgment of receipt to all creditors, informing them of the commencement of the liquidation and requesting them to submit their claims.
A notice is published in two local daily newspapers, one of which must be in Arabic. Creditors are given at least thirty days from the notice date to present their claims.
Step 4: Visa Cancelation
Cancelation of Visas:
This step involves canceling all visas and work permits issued under the company’s sponsorship. This includes visas for employees, partners, directors, and their dependents.
The visa cancelation process is conducted through the Ministry of Human Resources and Emiratisation (MOHRE) and the General Directorate of Residency and Foreigners Affairs (GDRFA). Visa holders must clear any outstanding fines or fees before departing the country.
Step 5: License Cancelation
Cancelation of Trade License:
The final stage is to cancel the company’s trade license and all associated permits. Depending on the company’s location, this process is managed through the Department of Economic Development (DED) or the relevant free zone authority.
Obtaining NOCs
To obtain the license cancelation certificate, you’ll need to secure “No Objection Certificates” (NOCs) from various government entities, including the Federal Tax Authority (FTA), Dubai Electricity and Water Authority (DEWA), Dubai Municipality, the leasing entity, the bank, and others.
Once all NOCs are in hand, DED or the respective free zone authority will issue the final license cancelation certificate. This officially marks the conclusion of the company’s liquidation process.
How BSA Can Help You With The Liquidation Process:
BSA is a trusted and licensed firm in Dubai, offering company liquidation services for various business types, including LLCs, free zone companies, and offshore companies. We provide comprehensive support, including:
- Handling necessary document preparation and submission, like board resolutions, license cancelations, and visa cancelations.
- Appointing a skilled liquidator to oversee the process and create the required reports.
- Informing relevant authorities and stakeholders about the liquidation decision.
- Settling outstanding debts, taxes, and liabilities with creditors and shareholders.
- Distribute remaining assets to shareholders and obtain the final liquidation certificate.
Final Thoughts:
Company liquidation in Dubai follows a structured process depending on the circumstances and type of entity involved. It is essential to adhere to legal guidelines throughout the procedure to ensure a smooth transition.
Whether it’s voluntary or compulsory liquidation, the steps involve passing resolutions, appointing a liquidator, notifying creditors, settling debts, canceling visas, and, ultimately, canceling the trade license. Always seek professional assistance from firms like BSA to simplify the process and ensure compliance with the regulations.
