Starting a company in Dubai is a very profitable decision for entrepreneurs all around the world. Entrepreneurs from all around the world are coming to Dubai to start their very own businesses. Dubai is booming with startup companies. However, there is also a rise in company liquidation in Dubai. There are various reasons behind the liquidation of a company.
A firm can choose to liquidate the company voluntarily or involuntarily for different reasons. Lack of finances to run the company can be a valid reason for the liquidation of a company. A company will also be required to liquidate if it commits any major crime or infraction. The company liquidation in Dubai can be a complicated and lengthy process. Company liquidation in Dubai takes quite a long time even for a knowledgeable person to liquidate a company in Dubai.
Liquidating a company in Dubai involves a formal process and should be done in accordance with the legal requirements. Here are the general steps to liquidate a company in Dubai:
Board Resolution: Obtain a board resolution from the company's shareholders or partners approving the company's dissolution and appointing a liquidator.
Appointment of a Liquidator: Appoint a liquidator who can be a director or an external party, depending on the circumstances and the company's articles of association.
Public Announcement: Publish a notice of liquidation in two local newspapers (one in Arabic and one in English) and on the Ministry of Economy's website. The notice should include the reasons for liquidation, the appointment of the liquidator, and a call for creditors to submit their claims.
Settle Debts and Liabilities: The liquidator must settle all outstanding debts, including payments to creditors, employees, and government authorities.
Asset Valuation: The liquidator should conduct an inventory and valuation of the company's assets and liabilities.
Closing Bank Accounts: Close the company's bank accounts and transfer any remaining funds to pay off debts or distribute to shareholders, as applicable.
Cancel Visas and Work Permits: If the company has employees, cancel their visas and work permits and settle any end-of-service benefits.
Tax Clearance Certificate: Obtain a tax clearance certificate from the Federal Tax Authority (FTA) confirming that all taxes have been paid.
Dissolution Application: Submit an application for company dissolution to the Department of Economic Development (DED) or the relevant free zone authority, along with the required documents and clearances.
Cancellation of Licenses and Permits: Cancel all licenses, permits, and approvals held by the company.
Settlement with Creditors: Settle all outstanding obligations with creditors and obtain no-objection certificates (NOCs) from them.
Final Audit and Financial Statements: Prepare final financial statements and have them audited, if required.
Liquidation Report: Prepare a liquidation report, including details of assets, liabilities, and how remaining assets will be distributed among shareholders or partners.
Clearance from Regulatory Authorities: Obtain clearance certificates from regulatory authorities, if applicable, such as the Real Estate Regulatory Agency (RERA) for real estate companies.
Cancel Trade License: Once all formalities are complete, the DED or free zone authority will issue a certificate of dissolution and cancel the company's trade license.
Publication of Liquidation: Publish a notice of liquidation in the official gazette and in two local newspapers.
Final Audit and Clearance: Conduct a final audit, obtain clearance certificates from various authorities, and submit these documents to the DED or free zone authority.
Cancellation of Investor Visas: Cancel any investor or partner visas associated with the company.
Distribution of Remaining Assets: Distribute the remaining assets among shareholders or partners in accordance with the company's articles of association.
Closing: Once all requirements are met, the company will be officially closed, and a liquidation certificate will be issued.
The liquidation process in Dubai can be complex and time-consuming, and it's essential to follow all legal requirements diligently. It's advisable to seek the guidance of a professional business consultant or legal expert who is well-versed in UAE's company laws to ensure a smooth and compliant liquidation process.
Source: https://www.companysetup.ae/company-liquidation-in-dubai-uae/
