What are the steps of Company Liquidation in Dubai?

The UAE is very fast and dynamic as a country in terms of its progress and business growth. Change is an inevitable part of the country. Unfortunately, liquidating a company in the UAE is a change some companies must embrace.

So, closing a company or terminating a company is a voluntary decision by the investors. The right set of steps must be followed by the company or investor who decides to shut down their business in the UAE. There could be multiple reasons for liquidating a company.

For instance, it could be due to financial difficulties, low sales, or a credit repayment delay.  So, to avoid any penalties, the business will decide to close its business operations.

What is the process of Liquidating a Dubai Company?

So, to start the process of liquidating a company in Dubai, UAE, it is best to seek the assistance of an expert Business Consultant. They will guide the investor on the right path and ensure the company is liquidated the right way.

The company’s liquidation process in Dubai across the Free Zones and the Mainland is almost similar. Both start with the assessment of the company’s current financial status.

The company owner must have a clear idea of the debts and prepare a settlement plan. To start the Company Liquidation process, the company must appoint an authorised liquidator, and the company owners must prepare the board resolution stating the reason for the company’s liquidation.  

Role of a Company Liquidator

Then, the company liquidators must take a stock of the settlements, including supplier credits, loan repayments, Free Zone payments, and get a No-Objection Certificate from the stakeholders to proceed with the company liquidation process.

Also, they will assist in preparing financial documents, maintaining accounts, conducting financial audits, and preparing the debt recovery plan.

Then, 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.

There a 30-day publication in newspapers stating the closure of the company and informing the stakeholders and related parties to claim any settlements pending from the company.

An NOC will be prepared, and then the auditor will proceed with the final submission to the respective Government Authorities or the Free Zone as per the company’s jurisdiction. Finally, the company can file for the company license cancellation certificate.

Dubai Company Liquidation Steps – Summary

• The board of directors must prepare a resolution stating the company’s closure with all shareholders’ signatures.
• An Authorised Company Liquidator is to be assigned to initiate the Company Closing process.
• 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.
• The termination must adhere to the labour laws. The right compensation and notice period have to be given to the employees.
• Coordinate the Liquidation Audit documentation, obtain required clearances, etc.
• Pay all outstanding debts and collections to and from the suppliers.
• Newspaper publication (English & Arabic) for obtaining.
• No objection from Stakeholders, customers, creditors & suppliers.
• The copy of the advertisement, along with the No Objection Certificate from the concerned authorities, is to be submitted with all documents
• Submit all the required documents to the respective Government/ Free Zone Authorities for assessment and review.
• The company liquidation certificate will be issued by the Authorities. There is a fee to be paid for the issuance of the certificate.

What is a Liquidation Audit?

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 used to fulfil any other company’s liabilities.

Who is Authorized to Perform Liquidation Audits in Dubai?

Audit and Accounting firms that 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.

There are specific guidelines and business laws to distribute the assets and clear the company liability before closing down.

Why do a Company Liquidate and stop its operations?

A company decides to liquidate and stop their business operations due to several reasons. They may incur heavy monetary loss due to contract cancellation or low business. So, they are left with no choice but to wind up the operations to not incur more losses.

So, they must cancel their trade license and terminate their business operations. The company liquidation in UAE is a mandatory process that must be executed the right way. It will give legal protection for the ailing company and hedge the company from incurring any further fines.

The investor must legally liquidate the company in Dubai, UAE and cancel its trade license. Otherwise, they will be bound to pay the trade license renewal fee, and defaults will add to the penalty.

Also, the salary delays, bank charges for overdrafts, fines from the Ministry of Economy and the Ministry of Labour, etc., on top of the loss, will all create a cascading effect on the ailing company. Hence, it is advisable to close a loss-making company rather than to keep it running in most instances.

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.

To know more about Company Cancellation in UAE, connect with our expert business setup consultants right away!