The UAE is a prominent business destination offering numerous opportunities for corporate growth and development. However, sometimes business owners wish to relocate into another country, back home, or focus on a different business venture.
Additionally, not all businesses can succeed in the UAE’s dynamic and competitive market. The inability to predict market trends has caused the liquidations of a variety of businesses worldwide. Thus, some companies resort to liquidation. This concise guide will provide you with an overview of company liquidation in Dubai, UAE, shedding light on the essential steps and considerations involved, allowing you to navigate the path to closure with confidence and clarity.
What is a company liquidation?
If an LLC, a branch of an LLC, a free zone company, an offshore company, or a sole establishment ceases to operate, the firm’s licenses must be canceled and the assets must be divided amongst its shareholders and creditors accordingly. This blog will outline how you can cancel your trade license and liquidate your company in the UAE!
The liquidation and license cancellation processes are very complex and time-consuming due to the multitude of required documents and relevant authorities which partake in it. Dubai Business Advisors can advise and assist companies wishing to liquidate, dissolve, or wind-up in a simple, more affordable, and faster manner!
Why does company liquidation occur?
Liquidation is a great way to minimize the losses of a company that does not have the liquidity of funds to operate. Liquidity issues can arise from the firm’s inability to pay creditors off or from suffering a corporate crisis.
Is company liquidation mandatory?
Liquidation can be a proactive process where the decision-makers or the firm foresee losses and mitigate them through a market-exit strategy or a shareholders’ liquidation. However, liquidation is always compulsory (creditors’ liquidation) for companies unable to cover their costs and liabilities.
It is important to note that the failure to cancel your trade license could expose you to fines and penalties by the UAE’s authorities.
Company liquidation process
Liquidation involves the cancellation of your trade license, the payment of all utility bills, approvals from relevant government authorities (contact us for details), bank account closure, drafting the final audit report, canceling all of the work permits and company visas.
- LLC license cancellation involves:
- Appointing a liquidator (Dubai Business Advisors)
- Providing a notarized certificate containing the liquidator’s:
- Authorized Signature
- Auditor Registration Certificate
- Trade License Copy
- Drafting, Notarizing, and submitting the copy of the Resolution of the Board of Directors
- Canceling the work permits and visas of all of your company’s employees and partners
- Receiving approvals from your telecommunications provider (e.g. Etisalat), water and electricity authority (e.g. DEWA), and the Ministry of Labor
- Advertising your liquidation in at least 2 local Arabic newspapers
There is a time-frame of 45 days where your company must respond to any financial claims/objections from its clients or third parties. This process requires the confirmation of your liquidator and partners during the cancellation process.
- Submitting the final audit report and the original newspaper advertisement to the Department of Economic Development of your respective emirate
- Paying your outstanding fees
- Sole Establishment license cancellation involves:
- Cancel the work permits and visas of your employees
- Obtain an Establishment Card Cancellation form
- Obtain a seal and authorized signature your company on the cancellation form and submit it to the Ministry of Labor. This step is required even if you do not have an establishment card.
- Procure the company owner’s signature on the DED’s cancellation form and submit it for approval
- Pay the DED’s licensing fees
- Proceed to the Department of Protective Systems for Police approval
- Receive your Cancellation Certificate
- Take the certificate, original Establishment Card, and the request letter (in Arabic) to the Immigration Head Office
If your card is lost, the Police will provide you with a Certificate of Loss which also requires an Arabic request letter for submission to the Police Authority for processing which takes 2 days on average.
How can Dubai Business Advisors company liquidation services help you liquidate and cancel your trade license?
Company liquidation services in Dubai UAE: Liquidating a company in the United Arab Emirates (UAE) involves a series of steps and legal procedures to ensure a smooth and compliant exit. This comprehensive guide will provide you with an in-depth understanding of the company liquidation process in the UAE, outlining each step and highlighting how Adam Global can assist you throughout this journey.
Drafting the Shareholders’ Resolution to Liquidate the Company:
The first step in the liquidation process is obtaining a shareholders’ resolution, where the shareholders formally decide to liquidate the company. This resolution should include the appointment of a liquidator or a liquidation committee to oversee the process.
Legalizing the Liquidation Documents:
Once the resolution is in place, the liquidation documents, including the shareholders’ resolution, power of attorney, and liquidation agreement, need to be drafted and notarized by a notary public in the UAE. These documents will serve as the legal foundation for the liquidation process.
Drafting a Power of Attorney:
To ensure the liquidator has the necessary authority to act on behalf of the company, a power of attorney is prepared, granting the liquidator the power to carry out the necessary tasks throughout the liquidation process.
Liquidating Your Assets:
The liquidator will undertake the process of liquidating the company’s assets, which involves selling or transferring the assets to settle any outstanding debts or obligations. The liquidator must ensure fair value is obtained for the assets, taking into consideration the interests of creditors and shareholders.
Preparing Your Liquidation Report:
During the liquidation process, the liquidator is responsible for preparing a detailed liquidation report that outlines the financial position of the company, lists all assets and liabilities, and provides an account of the liquidation proceedings. This report will be submitted to the relevant authorities for review.
Posting Your Liquidation Advertisement in Local Newspapers:
To notify creditors and interested parties, an advertisement stating the company’s intent to liquidate must be published in two local newspapers, one in Arabic and one in English. This advertisement allows creditors to come forward with any claims or objections they may have.
Canceling Your Establishment Card:
The liquidation process involves canceling the company’s establishment card, which is the official identification card issued by the Ministry of Labor. This step ensures that the company is no longer recognized as an active entity.
Canceling Your Labor Card:
The labor card, which serves as an identification card for employees, must be canceled for all company employees. This includes settling any end-of-service benefits and complying with labor regulations.
Canceling Your Company’s Visas and Work Permits:
As part of the liquidation process, the company’s visas and work permits for employees must be canceled. This involves coordinating with the relevant immigration authorities and ensuring that all employees’ visa-related matters are properly handled.
Obtaining Approvals from Relevant Government Authorities:
As part of the liquidation process, the company’s visas and work permits for employees must be canceled. This involves coordinating with the relevant immigration authorities and ensuring that all employees’ visa-related matters are properly handled.
Procuring the Final Liquidation Certificate:
Once all the necessary procedures are completed, including settling debts, canceling visas, and obtaining required approvals, the liquidator can apply for the final liquidation certificate. This certificate is issued by the relevant authorities, confirming the completion of the liquidation process.
VAT Deregistration in UAE:
If the company was registered for Value Added Tax (VAT), it is essential to initiate the VAT deregistration process. This involves notifying the Federal Tax Authority (FTA) and settling any outstanding VAT liabilities before the company can be officially deregistered.
In conclusion, company liquidation in the UAE requires adherence to a well-defined legal framework and procedural steps. Engaging the services of Adam Global can alleviate the complexities and challenges associated with the liquidation process. Their expertise, knowledge, and comprehensive support can guide you through each stage of liquidation, ensuring a smooth, compliant, and efficient exit strategy for your company.
Which documents will I need to provide to for company liquidation?
- Your original Trade License
- Original Certificate of Registration
- Original Share Certificate
- Original Memorandum of Association (if applicable)
- Original Establishment Card
- Your company’s E-sign Card
- Original Lease Agreement
- Company Stamp
- Bank Account Closure Letter
- Corporate Account Statement
What is the cost structure of a company liquidation in the UAE?
Depending on the type of your business and the emirate in which it is located, the costs range from around AED 8,000-12,000. Visa cancellations cost AED 500 per Visa.
Why choose Dubai Business Advisors when liquidating your company?
- Expertise and Experience: we are a leading market entry and exit specialists since 2002, catering to international clients of all sizes with our wide range of comprehensive corporate solutions!
- Convenience: we process all of your documents and approvals saving you time, effort, and money! With us, you can liquidate your company from the comfort of your home! Our working relationships and experience with government authorities allow us to speed your liquidation process substantially!
- Commitment to our clients: our specialized consultants will serve as your point of contact for all of our services!
For assistance and consultation contact our specialist consultant by:
Phone: +971 50 911 0516
Email: [email protected]
We have a specialist in providing highly efficient liquidation services to Limited Liability Companies, branch of local/ foreign companies, Free Zone Companies & Offshore Companies including submitting newspaper ads, obtaining Audit report, obtaining clearances from government departments, cancellation of visas & obtaining final liquidation certificate.
