Winding Up Of Companies In The United Arab Emirates
Winding up a company is a hectic business. Liquidating a company is not just about winding it up, there are many factors to consider. Government authorities need to be notified, licenses need to be revoked, assets need to be distributed, and the list could go on. The legal formalities involved in Company Liquidation Services In Dubai are the most challenging task.
What Is The Liquidation Of A Company?
Company liquidation is a legal bankruptcy procedure that puts an end to a company’s activities. When a company is liquidated, its assets are sold to pay debts, liabilities, and claims. In this process, commonly known as “liquidation”, when a company is wound up, its license is revoked, its name is removed from the Trade Register and the company is deemed to have ceased to exist.
There can be several reasons for liquidation, the main ones being.
The expiry of the authorization/period specified in the company’s articles of association/agreement or the achievement of the business purpose.
Loss of all or a substantial part of the legal entity’s assets.
Mergers
Consent of the members to the termination of the company’s existence by the prescribed majority, etc.
If a company is no longer able to pay its debts, the authorities may dissolve it voluntarily or compulsorily. Under UAE law, there are two types of company liquidation:
Voluntary liquidation.
There are several reasons for voluntary liquidation, such as the expiry of a certain period of time, the fulfillment of the company’s mission, the abandonment of its objectives, a merger with another company, the cessation of activities, and the company’s inability to meet its obligations.
Compulsory or statutory liquidation
The compulsory winding-up of a company is a necessary measure taken when a company has committed a serious breach of the law or is unable to continue trading. It is also triggered when customers apply to the state authorities to recover their assets. The local government then takes action to wind up the business.
Who is the liquidator?
The person in charge of the liquidation process is called the liquidator. The liquidator is appointed by the court or the company’s shareholders, depending on the type of liquidation. Immediately after his appointment, the liquidator will deliver a formal letter of approval. Once he has completed all the tasks required for the liquidation, he draws up the liquidation report and the liquidator’s report.
Withdrawal of a license
Withdrawal of the license is one of the most important steps in the winding-up procedure and the formalities vary depending on the type of company. Companies and sole traders must apply for withdrawal through AFAD. In addition, authorization must be obtained from the following entities.
Ministry of Human Resources and the UAE
Department of Residence and Foreign Affairs
The competent water and electricity authority
Financial leasing organization
What are the seven steps to be followed for dissolving a limited company in Dubai, UAE?
STEP 1: The first step in winding up a company is to file a notification with the Dubai Development Authority (DDA) stating the reason for the winding up.
STEP 2: The owners of the company must approve the board’s decision to deregister the company before the DDA.
STEP 3: Announce the liquidation of the company in a newspaper in both Arabic and English.
STEP 4: The original company license, certificate of incorporation and share certificates, lease agreement, and original Ministry of Economic Development license must be submitted to the DDA.
STEP 5: The DED gives creditors or customers 45 days to wait to see if they have any financial claims against the company. Also, cancel all employee and partner visas and obtain a NOC certificate from the Department of Labor.
STEP 6: At the end of the cancellation period, the Dubai auditor must prepare a liquidation report.
STEP 7: The completed report, together with all supporting documents and the applicable cancellation fee, must be sent to the competent authority, which will review the report and, if approved, issue a ‘certificate of cancellation of license.
What are the six steps involved in liquidating a company in a free zone in the UAE?
Almost every free zone has its own procedure for winding up companies. The most typical and common procedure for liquidating a company in a UAE free zone is as follows:
STEP 1: Minutes of the board meeting at which the winding up of the company was announced and a legal liquidator was appointed and sending a notice to the Dubai Development Authority (DDA) explaining why the company is being wound up.
STEP 2: Letter from the registered liquidator stating that he accepts responsibility for the winding up of the company and the fees to be sent to the relevant free zone authorities.
STEP 3: Publication of the liquidation of the company in Arabic and English newspapers.
STEP 4: 45 days’ notice is given by the Free Zone authorities to creditors or parties with financial claims on the company.
STEP 5: At the end of the notice period, the accountant in Dubai must prepare a liquidation report and obtain a certificate of liquidation from the Free Zone Authority (FZE/FZCo).
STEP 6: Cancel all employee and shareholder visas, obtain NOC certificates from the Ministry of Labor and the Ministry of Immigration and send all documents to the Free Zone Authority, which will issue a final liquidation certificate to the company once all documents have been verified.
When you decide to liquidate your company, there are some things you need to consider. It is wise to leave this task to a professional who provides company liquidation services.
How can Bestaxca Consultants help with company liquidation in the UAE?
Bestaxca Consultants has been providing company liquidation services for over a decade. As one of the best company liquidators in Dubai, we guarantee to guide you through the entire company liquidation process. The process of company liquidation mainly involves legal formalities and can be time-consuming and time-consuming without the help of a liquidation service provider. Our team of company liquidation experts will guide you through the entire process. We can help you as a liquidator and liquidation service provider.
Our experts will take care of the de-licensing process and the application for approval with the various authorities, and will help you obtain a liquidation report as soon as possible. Bestaxca Consultants can arrange for the revocation of the license, publication of the company’s liquidation in at least two newspapers, filing of the application documents with the Department of Economic Development (DED), receipt of shareholders’ objections, cancellation of the shareholders’ visa and liquidation of assets. We provide company liquidation services nationwide and strive to make our clients’ work easier with our expertise.
Our extensive experience in providing corporate liquidation services has enabled us to maintain relationships with government authorities and agencies, which makes our job much easier.
If you are looking for company liquidation services in Dubai or a liquidator, contact us today.
