The success of a business and its smooth operation hinge on several distinctive aspects, depending on the nature and size of the company. Various businesses manage to keep pace with these perspectives, but ultimately, many often fail to succeed.
It’s not wise to walk away from a struggling situation when a business is not doing well. Company closure requires a formal procedure when you step into this condition. The official process of a legal business closure is termed ‘Company Liquidation.’
The company liquidation process in UAE is a crucial phase for businesses undergoing critical changes. Here is a valuable guide to help you walk through essential steps.
We share helpful tips and information in this paper to prevent issues and requirements, ensuring the process goes smoothly. If your business is about to close, going through a restructuring or merger, or facing regulatory changes. It’s necessary to gain a solid grasp of the UAE regulations and the company liquidation procedure to avoid further complications.
Company Liquidation- An Introduction
What is company liquidation? Liquidation revolves around closing a company. Simply said, corporate liquidation is the procedure a company uses to determine the value of its assets and subsequently sells them to pay off any financial obligations it carries.
The liquidation procedure becomes more challenging as a company expands, as it involves a greater number of assets and liabilities that need consideration. Due to the several authorities in the United Arab Emirates, each Emirate has its own set of guidelines to follow; liquidation there can be somewhat complex. Knowing the guidelines relevant to your business is rather vital.
Liquidation falls into two forms:
Obligatory and optional. When a firm is dissolved against its will to pay its debts, it is said to be undergoing mandatory liquidation—that is, creditor liquidation. Voluntary liquidation is the procedure a corporation chooses to follow on its own instead of being forced into by a third party. The firm decided to assist in debt clearing.
Streamlining the Process of UAE Company Liquidation: A Detailed Overview of the Procedure
What is the liquidation of a company? The company’s closure is officially known as the liquidation process. Let us discuss the resolution of shareholder interests for the company’s liquidation procedure.
Generally, meetings are held with the board members or shareholders here.
Let us now formally resolve to authorize the liquidation.
Typically, a registered audit or legal business gets a liquidator on board to manage everything for you.
Selecting a Liquidator:
The liquidator handles the complete procedure, including:
Compiling a liquidation report at the moment.
Attending obligations and debt.
Cooperation with regulatory authorities.
Let the Appropriate Individuals Know:
Your type of business will determine which authority you should notify about the company liquidation process in the UAE.
Mainland Enterprises:
Formally inform the Economic Development Department.
Businesses Inside Free Zones:
Formally inform the particular Free Zone Authority.
Offshore Businesses:
Contact with the offshore jurisdiction’s governing authority.mLearn further about the information required for Mainland company liquidation in Dubai.
May you have a Public Liquidation Notice?
About thirty to forty-five days, post a notice in the local newspapers. Kindly invite creditors to file their claims within this period.
Pay Attention to Your Debts:
Sort all of your outstanding bills, including loans, supplier receipts, and staff dues.
Acquire Clearance Declarations From:
Obtain clearance from utility companies. Visa terminations are handled by labor law and visa authorities. Much appreciated for closing the account.
Let us discuss license and registration cancellation.
Trade License Revocation:
Applying for business license revocation straightforwardly using the DED or Free Zone Authority.
VAT Deregistration:
Deregistering from VAT will obligate you to contact the Federal Tax Authority. Research more about what you require to understand the rules for VAT deregistration.
Make Submissions of Liquidation Reports:
The liquidator compiles an exhaustive report, including all monetary settlements coupled with asset distributions. Kindly forward this report of the company liquidation process in the UAE to the legitimate authorities for evaluation and clearance.
Get That Last Clearance:
Once all the responsibilities have been properly handled, the licensing authority distributes a last liquidation certificate, formally closing the business.
Requirements for the UAE Company Liquidation Process
Regarding the liquidation of a UAE company, you will need to compile a few records. You will be accountable for delivering these records to the relevant authorities for liquidation.
The Trade License Copy:
To proceed with the liquidation process, we require a copy of the company’s trade license in Dubai.
Passport and Visa Copies of Partners:
We require the passport copies of the partners. Additionally, copies of the partners’ visas are required.
No Objection Declaration :
You will need a No Objection Declaration from the business.
ID cards from Emirates:
Additionally, we require the Emirates ID cards of the partners.
For a flawless liquidation process, every record should be ready and comprehensive. Missing or incomplete paperwork can cause various issues and slow down processes.
Business owners specifically need to be well-versed in the paperwork required for UAE company dissolution. You will have collected certain important documentation, such as copies of the passports, the trading license for the company, the No Objection Certificate, Emirates ID cards, and so on. All of these documents are crucial to ensure that you can sell the business without any legal problems or complications.
UAE Mainland Companies Liquidation
Whether your company needs to be sold in Dubai, whatever kind it is, you must file a request for a business license revocation to proceed with closing it. It is significant since it informs the relevant government authorities about your company’s non-operation. If not, once the company’s license expires, you may be subject to penalties and taxes. While pursuing their interests and preferences, shareholding firms must also handle obligations to creditors and partners.
Requirement of a Liquidator
You might not truly require a liquidator if you have a small business or are a sole owner. In other forms of company structures, however, a liquidator is required since they oversee the complete liquidation process. They handle:
Commencing the Process of Winding Up:
Once the liquidator possesses the company’s shareholder resolution, they initiate the procedure by writing an acceptance letter.
The Posting of the Liquidation Notice:
You will discover a liquidation notice in at least two regional publications once the process begins. It is published in English and Arabic. Liquidators in Dubai can manage your publishing needs.
Compiling and Distributing the Assets of the Entity:
The liquidator oversees the collection and distribution of the firm’s assets when referred to. They will also assist with debt settlement for the company.
Arranging the Statement of Affairs:
The liquidator compiles a report combined with a statement of affairs to conclude the liquidation procedure.
Trade or Commercial License Revocation for Company Liquidation
The way you run your firm will largely determine how you cancel a license. Opening an establishment or a single proprietorship is easy. To cancel, they merely need to obtain the appropriate clearance paperwork from the MOHRE, other relevant legal agencies, and UAE leasing companies. Therefore, before it can proceed with requesting revocation, a corporation with shares must sell those shares, pay any debts, and notify its creditors.
UAE Free Zone Companies Liquidation
For free zone businesses, there are three kinds of closures:
Concluding Remarks:
It holds when a business can pay off all of its debt within six months or lacks any outstanding responsibilities.
For A Creditor, The Winding Process Entails:
It is relevant when a company chooses to wind up and subsequently calls a meeting with its creditors.
Indicating Bankruptcy:
The UAE’s commercial legislation lets the court handle this form of company liquidation process in the UAE.
You must formally inform the local authorities of the company closure in a free zone. Every free zone’s website will let you accomplish this task. A company closure application marks the end of the director’s responsibilities, authorities, and obligations as well. We’ll let the local media know once this application has been confirmed.
After this is finished, we will begin sending out the termination letters and initiate the company’s last expiration. Every free zone has unique standards for closing a business.
Requiring the termination of visas issued on behalf of your company is somewhat typical in all free zones. Before dismissing their employees, companies must provide their staff with a two-month notice period with compensation and a gratuity payout. The UAE labor law is followed here. Staff members are allowed to retain their visas as long as the company’s trade license is in effect.
Companies must gather the required NOCs from utilities and services once all arrangements have been made. Following every one of these guidelines will enable them to end the company.
How KPMPRO Can We Assist with UAE Company Liquidation?
KPMPRO is established as a liquidator for companies on the mainland and in free zones. We offer these services at a very reasonable cost, and our highly qualified staff of liquidators is ready to manage the challenging procedure for you. Our experience and what we have learned along the way enable us to perform efficiently. We can keep our rates affordable and offer feasibility for our clients. Working with you excites us!
Final Words
Selling your company in the UAE need not be daunting. Understanding the legal framework, following compliance criteria, and consulting professionals can help you guarantee a seamless and hassle-free company liquidation process in the UAE. Whether your withdrawal is motivated by market difficulties, strategy changes, or financial considerations, the secret is careful planning and execution.
