Company Liquidation – License Cancellation in Dubai

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Company Liquidation in Dubai is a procedure in which a limited liability company, a sole establishment, a free zone company, or an establishment terminates its operations and distributes its assets and property among its creditors and shareholders. The term "liquidation" is often used interchangeably with "winding-up" or "dissolution of a business", although technically dissolution refers to the final stage of the liquidation process. The purpose of the liquidation process is to bring the company's existence to an end and distribute its remaining assets to its creditors and shareholders in a fair and orderly manner.

 

Company Liquidation in Dubai

 

Before you shut down your company in Dubai, it's crucial to take care of several important tasks and requirements. This includes canceling the company and business name, ensuring proper payment and benefits for employees, canceling all tax registrations, and complying with any other legal obligations. It's important to note that simply selling the business may not always be the best solution to address these responsibilities.

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Types of Liquidation

 

There are two types of liquidation: compulsory and voluntary.

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1. Voluntary Liquidation: This type of liquidation occurs when the shareholders of a company choose to dissolve it due to financial difficulties and inability to pay their creditors. In this case, the creditors have priority when it comes to distributing the assets of the company.

2. Compulsory Liquidation: This type of liquidation is initiated by a court order and involves the forced dissolution of a company. The assets of the company are then distributed among creditors and contributors according to the priority of their claims. This type of liquidation is often initiated by creditors who are owed money by the company and are unable to collect it through other means.

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Company Liquidation Process

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Once the decision to liquidate the company has been made, the board of the company will convene in a special meeting to outline the process. During this meeting, a liquidator will be appointed to manage the liquidation proceedings. Any requests from creditors will also be addressed at this time.

To initiate the liquidation process, the company must provide official documentation verifying the decision to liquidate and the appointment of the liquidator. This includes the original registration certificate and the liquidator's credentials, all of which must be notarized. After these initial steps are completed, the company must also cancel any special permits or licenses it has obtained for conducting business activities in Dubai. Branches of the company operating in Dubai must also provide original documents from the parent company.

 

Documents Required for Free Zone Company Liquidation

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The following steps and documents are typically required for liquidating a company in the free zones of the UAE:

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• Board resolution for liquidation and appointment of a liquidator

• Clearance from the immigration and labor department of the free zone authority (FZA)

• Cancellation and clearance of all visas by the immigration and labor department

• Submission of a liquidation letter

• Clearance certificate from the free zone authority

• Clearance certificate (NOC) from the business unit

• CLD clearance certificate from the government section

• Original free zone company license

• Settlement of all fees and charges with the free zone

It's important to note that these requirements and procedures may vary slightly from free zone to free zone and are subject to change.

 

Documents Required for LLC Company Liquidation

 

The following documents are typically required for liquidating a limited liability company (LLC) in the UAE:

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• Notarized board resolution for liquidation and appointment of liquidators

• Letter of acceptance from the appointed liquidator

• Registration and licensing application (Form No. BR/1) from the Economic department of the Emirates

• Original license and legal documents of the company

• Release letter from the property owner

• No-objection certificates (NOCs) from the Ministry of Labor & Immigration and the Road and Transportation Authority (RTA)

• Certificate of no liabilities and closure of bank account

• Shareholders' resolutions to dissolve the business from the public notary

• Letter of company dissolution from the Economic Development Department (DED)

 

Documents Required for Dissolution of Branch

 

• Notarized resolution by the board of the parent company for liquidation of the branch office

• Original license of the branch office

• No-objection certificates (NOCs) from the bank, the Ministry of Labor & Immigration, and the Road and Transportation Authority (RTA)

 

Documents Required for Cancellation of Industrial Unit

 

The following certificates and documents are typically required to complete the liquidation of a company in the UAE:

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• Certificates indicating the cancellation of license(s) in the different Emirates

• Approved and stamped original copy of the account's liquidation by the partners and the legal liquidator

• No-objection certificate (NOC) regarding cancellation from the Ministry of Labour and Social Affairs

• Cancellation of partner(s) visa if they are sponsored by their license

• Notice of the company’s dissolution and appointment of liquidator printed in two local newspapers

• Partner’s letters indicating their agreement for the liquidation of the company

 

Company Liquidation Services

 

At Raes Associates, we understand that liquidating a business can be a stressful process, which is why we are here to offer our assistance. Our professional team provides comprehensive guidance to help you minimize legal liabilities and financial losses during the license cancellation process in Dubai. We work closely with relevant authorities to ensure a smooth and seamless completion of the liquidation process.

We offer various options for business closure, such as winding-up or statutory liquidation, or simply deregistering the business. Each option has its own legal and cost implications, which we will guide you through in detail. We can also help find a third party to purchase the liquidating company and handle all related matters.

When it comes to liquidating a business, we assist you in considering all the important aspects, including:

• Preparation for business liquidation

• Owner responsibilities

• Cost of closing down

• Insolvency and bankruptcy

• A thorough review of all compliances

If you are seeking professional advice and expertise in company liquidation, please do not hesitate to contact us. Our team will be happy to assist you.

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