UAE is a fast, dynamic, and evolving business hub of the Middle East and the World. Changes are very frequent in the dynamic business environment of today. Company Liquidation in Dubai is a mandatory requirement for every company that is in distress and about to close down. Liquidating the company at the right time will also help to avoid any further fees or penalties.
The investors can easily coordinate the Company Liquidation Process in Dubai with the help of an expert Business Consultant. The following are the common causes of Company Liquidation in Dubai:
- Generating Low Revenues, or,
- Not-Performing to the mark to sustain the business competition, or
- Not able to scale up
- No Cash Flow to pay Suppliers and Loan Balances
- No Business Feasibility, and more.
Company Liquidation in Dubai
Company Liquidation in Dubai consists of certain steps that the investor must follow. Assessment of the company’s financial position is a pre-requisite before starting the process of company liquidation.
Also, the investor at this stage must review the company’s current liabilities and work out a disbursement plan. The company’s finance team must record all outstanding payments, claims, assets, etc.
The Business Consultants will manage the company liquidation process. They will assist in preparing financial documents, maintaining accounts, conducting financial audits, and preparing the debt recovery plan.
The investor must intimate all the creditors & debtors about outstanding bills and prepare the company liquidation plan accordingly.
As the final step, the company must terminate all employment contracts, business transactions, Bank accounts, utilities, and essentials. Also, the clearances from the Free Zone or Economic Department authorities must be ready.
At the same time, inform all the stakeholders, creditors & suppliers, customers, etc., about the closing of the company and settlement amount disbursement. After the settlement, file for the company license cancellation certificate.
Dubai Company Liquidation Steps
During the instance of incurring heavy financial losses, the investor is left with no option but to wind up the company. So, the investor will have to cancel the trade license first and then wind up the business operations.
Company Liquidation or Trade License Cancellation is an important process for any UAE-based business. Without winding up the business operations of a loss-making company, the investor will have to pay for the yearly renewals even if the company is at a loss.
Also, pay the fines for defaults, salary delays, bank charges for overdrafts, and more. Hence, it is advisable to close a loss-making company than to keep it running in most instances.
Company Liquidation in Dubai involves a set of processes. All the steps have to be executed with the utmost importance as they will hinder any future restart of the company in the UAE.
1. License Cancellation of Limited Liability Company in Dubai
Let us look at the steps involved in closing a Limited Liability Company in Dubai Mainland.
- The first step in winding up the company in the UAE is to cancel all the existing employment contracts and visas under the company.
- The termination must adhere to the labor laws. The right compensation and notice period have to be given to the employees.
- The board of directors must prepare a resolution and appoint a liquidator. The board resolution document must be attested from the Notary public.
- Assign an Authorized Company Liquidator to initiate the Company Closing process, coordinate the Liquidation Audit documentation, obtain required clearances, etc.
- Prepare all the documents along with the board resolution. (Trade License Copy, Auditor report, Authorized Signature Certificate. etc.)
- Cancel all the visas, & get the clearance letter from all the government agencies, immigration, DEWA, Etisalat, banks, customs, Ejari Cancellation, etc.
- Pay all outstanding debts and collections to and from the suppliers
- News Paper publication (English & Arabic) for obtaining No objection from Stakeholders, customers, creditors & suppliers.
- The copy of the advertisement, along with No Objection Certificate from Concerned authorities is to be submitted with all documents
- Submit all the required documents to the Department of Economic Department (DED) for assessment and review.
- The company liquidation certificate will be issued from the DED. There is a fee to be paid for the issuance of the certificate.
2. Company Liquidation in Dubai Free Zones
Across the Free zones the company liquidation process varies significantly, however here are the basic requirements of company liquidation in Dubai.
- A Board Resolution was issued to liquidate the company in the respective free zone
- Appoint a registered company liquidator to conduct the company closing procedure
- Initiate Visa cancellation of all employees before closing down
- A liquidation letter has to be submitted to the free zone approved auditor to prepare the closing financial statements
- Clearance Certificate from the free zone authority
- Other clearance certificates from telephone service providers
- All the fees have to be paid to the respective free zone authority to obtain the final cancellation certificate.
The Requirement of Liquidation Audit in Dubai
Liquidation Audit is a critical task every company has to initiate while closing down its operations. Auditors will assess all the company’s assets and create an inventory record.
The Audit will also help in arriving at the company’s outstanding obligations and preparing a report on the same. It will include the list of assets & liabilities and help in settling the creditors efficiently.
Lastly, the Company can proceed to a successful cancellation of the trade license. All the company’s assets will be converted to cash and distributed to the creditors or fulfilling any other company’s liabilities.
There are specific guidelines and business laws to distribute the assets and clear the company liability before closing down.
Who is Authorized to Perform Liquidation Audits in Dubai?
Audit and Accounting firms who are approved and registered by the UAE financial authorities in the mainland and Free zones are eligible to conduct liquidation audits.
The liquidation audit report has to be submitted for reference to the responding authorities for receiving the company cancellation certificate.
How Aurion Will Assist You?
Aurion Business Consultants are expert company liquidation agents in all major free zones as well as the mainland of UAE.
Our Business and legal experts will guide you throughout the company liquidation process. We assure you of a hassle-free company liquidation in Dubai or UAE.