Company liquidation in UAE is the process of legally closing down and winding up a business entity in the Emirate. This process involves several steps and requires compliance with the rules and regulations set by the relevant authorities, depending on whether your company is located on the mainland or in a free zone. Below are the general steps to liquidate a company in the UAE.
1. Decision of the board: The company’s shareholders or board of directors must pass a resolution to liquidate the company. This decision usually requires a majority vote and should be documented in the minutes of the meeting.
2. Appointment of Liquidator: In UAE, you must appoint a liquidator, which will normally be a registered liquidator approved by the Dubai Department of Economy (DED). The liquidator is responsible for overseeing the entire liquidation process.
3. Approved by creditor: Report and discharge all debts and liabilities of the company. This includes paying unpaid wages, loans, and other financial obligations. Creditors often require a No Objection Certificate (NOC).
4. Cancellation of Licenses and Permits: Cancel all permits, licenses, and registrations related to the Company. For this, it is necessary to inform the relevant authorities, for example, DED or the specific free zone authority where the company is registered.
5. Resolving Employee Matters: Ensure all employment contracts are terminated and end-of-service benefits, gratuities, or dues are paid to employees. Report the dismissal of employees to the Ministry of Human Resources and Emiratization (MOHRE).
6. Transfer of assets: If possible, sell or transfer assets of the company. The proceeds from the sale of assets must be used to pay outstanding debts and other debts.
7. Tax Office Verification: Obtain a tax certificate from the Federal Tax Administration (FTA) confirming that all tax obligations have been met.
8. Publication of intention: publish a notice of intention to liquidate the company in a local newspaper by UAE law. Its purpose is to allow creditors and other interested groups to file claims.
9. Visa Revocation: Revocation of visas of foreign workers or partners and dealing with related immigration issues.
10. Final Audit and Financial Statement: Prepare the final financial statement and have it checked by a chartered accountant. These reports must accurately reflect the financial position of the company at the time of liquidation.
11. Submit Liquidation Application: Prepare and submit liquidation to the appropriate authority such as DED or Free Zone Authority. This application contains all the necessary documents, verifications, and financial statements.
12. Request a Certificate of Expiration: Once the authorities have reviewed and approved the application, they will issue a Certificate of Expiration, which confirms that the business has officially expired.
13. Close Bank Accounts: Close the company’s bank accounts and pay what is owed.
14. Dissolution: The Company will be officially dissolved upon receipt of the Deed of Liquidation. At this point, it ceases to be a legal entity.
15. Notice to Regulatory Authorities: Notify all regulatory authorities, including the Department of Economic Development (DED) or relevant Free Zone Authority, of the completion of the liquidation process.
Specific requirements and procedures may vary according to the type of company (mainland or free zone), jurisdiction, and nature of business. It is very important to work with experienced professionals and legal advisors who are familiar with local regulations to ensure a smooth and compliant company liquidation process in the UAE. Failure to take the necessary steps can lead to legal problems and financial penalties.
