Company Liquidation Services In Dubai With Bestaxca

Company liquidation in the United Arab Emirates

Liquidation is a formal insolvency procedure designed to dissolve a company (often referred to as “winding up” or “closure”).

When a company is dissolved, its activities and employment cease. When a company is dissolved, its business license is revoked, its name is removed from the register, and the company is deemed to no longer exist.

Why dissolve a company?

In the UAE, there are two main reasons why a company may need to be dissolved.

When the original purpose for which the company was established has been achieved and the company is no longer needed.

When the company becomes insolvent.

Types of liquidation

Voluntary liquidation – the shareholders of a solvent company may decide to liquidate the company, while the directors of an insolvent company may decide to liquidate the business and liquidate the assets to pay creditors.

The Company Liquidation Services In Dubai. If a company’s debts are not paid on time, creditors can apply to the court for the company to be liquidated to recover their claims. The court may decide to compulsorily liquidate the company and sell its assets to settle the remaining debts.

Does the UAE have to be liquidated even if there are no more debts?

Even if there are no debts to creditors, it is strongly recommended to formally liquidate the company rather than simply wait for the business license to expire. There are several procedures to be followed when formally dissolving a company. Failure to comply can result in various penalties and the UAE authorities can blacklist the company, its directors, and shareholders. This may affect their holdings in other companies or their ability to set up another company in the future.

What is the role of a liquidator?

A liquidator is a UAE registered agent or company (usually a chartered accountant) that acts on behalf of a company to sell assets and raise money to settle outstanding liabilities. A liquidator can be appointed by a resolution of the shareholders or, in the case of compulsory liquidation, by a court order. When a liquidator is appointed, he or she first issues a formal letter of acceptance. Once all tasks are completed, they prepare a declaration of assets and a liquidator’s report, which are necessary to complete the liquidation process.

Liquidation procedure in the United Arab Emirates

The liquidation procedure depends on three criteria

Jurisdiction of registration, i.e. whether it is a continental emirate or a free zone.

However, in general, the official liquidation procedure in Dubai, Abu Dhabi, and other parts of the UAE is as follows.

Preparation and approval of a shareholders’ resolution to wind up the company. If the company is a limited liability company (LLC) registered in the UAE, this resolution must be notarized. If the shareholders are not residents in the UAE, the request must first be approved by the relevant UAE embassy, followed by the UAE Ministry of Foreign Affairs and Ministry of Justice. Companies operating in free trade zones generally require notarized approval.

Appointment of a liquidator and receipt of an official letter of approval from the liquidator.

Submission of the shareholders’ resolution, essential documents and necessary expenses to the relevant licensing authorities.

A copy of the company’s trade license.

A copy of the commercial register.

Power of attorney (if any)

Copies of passports and/or marriage certificates of all partners, owners and shareholders.

Application form for deregistration

Once a provisional certificate of liquidation is issued, the company may publish a notice of liquidation in a public newspaper in English and Arabic (depending on the registration authority, two to four notices may be required);

A notice period of up to 45 days may be required (depending on the jurisdiction of registration);

During the notice period, the following actions may be taken.

Cancellation of work permit and visa for all employees and partners.

Letter of agreement from the Department of Immigration.

Letter of agreement from the Department of Labor

Letters of consent from utility companies – water, electricity, and telecommunications

Letters of consent from the property owner and tenant

Letter of clearance from the Road Traffic Authority (RTA) for all registered vehicles

Letter of approval from the Federal Customs Administration (FCA)

Bank account closure letter

VAT registration and VAT approval letter from the FTA

After the notice period has expired, the liquidator may prepare the liquidation report.

The completed report with all enclosed documents must then be submitted to the competent authority along with the required liquidation fee.

The authority will examine the application and, if approved, issue a “certificate of cancellation of license”.

How can Sovereign Dubai help?

The approval process can be time-consuming and expensive, as companies need to liaise with several external bodies/authorities to get everything sorted out on time. Missing a step or document leads to unnecessary delays and complications. Sovereign offers settlement services for all UAE companies – LLCs, free zone companies and offshore companies – from a full settlement to assisting with a part or parts of the process at the client’s request.