UAE Company Liquidation Process
How to Get Ready
When somebody gets into business there is a high proportionality that the business will be successful, but at the same time, there are chances the business will run into a loss. When a business does not do well in the market, the owner may decide to liquidate the company.
What Is Company Liquidation?
Company liquidation is a process wherein the business of the company is stopped, and its assets and property are distributed among the investors/creditors. This usually comes into fruition when the company is not able to pay its obligations to its partners.
Factors Contributing to the Liquidation of a Company
- Lack of expertise — investors may have vast sums of capital and resources but may not have any on hand experience, making it difficult to run a company leading to business closure.
- Lack of capital — you can have all the experience in the world, but without money, it is of no use. Without the necessary capital paying off debts, salaries, lease, etc. won’t be possible.
- Market collapse or slowdown — there is more than one factor for this ranging from recession to increasing competition. Or it is as simple as the business not being able to sell as much as it produces.
- Expired License — due to certain circumstances the owners may forget to renew their licences. If the license is not renewed for over 3 months the Authorities may terminate it.
- Relocation — in certain instances, investors consider that their product would be better suited in other regions and countries, and so they decide to wind-up their business.
No matter what the reason is closing a company in the United Arab Emirates is not as easy as just closing the door, locking it up, and saying goodbye. It is a long legal process that requires lots of clearances and approvals from the involved investors and other parties who are owed certain dues and obligations by the company.
We at My Business Consulting DMCC have written this blog to discuss certain details which investors and entrepreneurs in the UAE should know before liquidating their company, so the process goes through smoothly.
UAE Company Liquidation Checklist
Below are the things one must consider while planning to liquidate your company in the UAE.
- Corporate bank accounts: all active bank accounts of the company must be closed. The Bank account Closure Confirmation should be collected and kept as proof. It is also important to collect the Statement of Accounts for the previous financial year until account is closed, which will be used in the liquidator’s report.
- Immigration Clearance: all active company-sponsored visas must be formally cancelled. Also, all active visas under any employee sponsorship should be cancelled or put on hold.
- Appointment of a Liquidator/Auditing firm: the company must appoint a licensed and authorized firm independent of the corporate debtor. The Liquidator will do a thorough and comprehensive check on the company finances and the company as a whole. The firm may employ professionals to help them in the process.
- Company shares: the shares of the company are required to be sold or transferred to another company.
- Clearance from regulating Authority: there are certain clearances a company must attain from a regulating body it falls under. For example, if a company is in the space of trading in the UAE, the company must approach the Federal Customs Authority to obtain a clearance.
- Clearance from the Federal Tax Authority: if your company is registered with the Federal Tax Authority and has a TRN Number, the company requires to formally submit a cancellation of TRN Number from the FTA.
- Clearances from Third Party obligations: all utilities such as DU/Etisalat, DEWA, Cooling, Empost for PO BOX, and any office facilities of the company must be cleared. Companies working in a rented place must clear all pending dues with the landlord and obtain a clearance paper.
- Public announcement of de-registration: the company must run a 15-day newspaper or online publication depending on the jurisdiction the company is registered stating that the company is in the process of de-registration.
- Company’s assets: all existing and active assets, vehicles, and properties must be sold off or transferred. The Liquidator/auditing firm will require the proof of sale to add in their reports.
- Confirmation Certificate of the company License Termination and Company De-registration: the Authority where the company is registered will release the final approval after checking that the company has complied with all the points mentioned above.
Below are a few important documents that need to be prepared to initiate company liquidation process.
|All Original Company Documents
|Full packed of documents as follows:
|Bank Statement of company account(s)
|Last statement of account from the previous financial year until the closure of bank
|Original Bank Closure Letter
|A statement to disclose that the bank account has been closed without any
|Other clearances from authorities
|Applicable depending on the activity of the company
|Copy of Proof of Sale or transfer of assets
|Applicable if the company owns the following:
|Prepared by Licensed and Approved Auditing firm
|Original Passport, Emirates ID and Employment Card
|Applicable only for any employees with active Employment Visa
|Original Passport, Emirates ID
|Applicable only for any family visas sponsored by the employees
The time frame required to complete the whole procedure usually takes 1-2 months if it is done correctly. But if there are any missing or incomplete documents, it can last for a while. So, it is important to follow the above steps carefully.
|15-20 working days
|Visa Cancellation employees and family members
|4 working days
|15 calendar days
|Company De-registration Completion
|10 working days
How My Business Consulting DMCC Can Help With UAE Company Liquidation
After reading this blog so far, you may conclude that the liquidation of a company in the UAE is not an easy job as you have assumed before, it will take a lot of time and resources to reach a conclusion. However, we at My Business Consulting DMCC with our experts can help in your business closure as smooth and simple as possible. We will take full responsibility in compliance as the whole process unfolds.
At My Business Consulting DMCC, you will get the services mentioned below at a starting price of 10,000.00 AED for the entire procedure up until you receive the certificate confirming that your company liquidation process is complete.
- Expert consultation on Corporate Affairs.
- Full Preparation of required documents for companies license termination and de- registration.
- Full application for company license termination.
- Full application for company de-registration.
- Obtaining clearance from all utilities DU/Etisalat, DEWA, Cooling, Empost, and any other office facilities.
- Obtaining clearances from other Authorities, depending on the company’s activities.
- Obtaining clearances from the Federal Tax Authority.
- Assistance with the authorized signatory to sign the liquidation of the company in front of the concerned Authority.
- Coordinating with concerned Authorities regarding the publication of the companies de-registration Publication.
- Full compliance for Establishment card cancelation.
- Full compliance with the protocol necessary for the visa cancellation of active employees under the company.
- Full compliance with the required protocol for visa cancellation in the case of family visas.
- Collection of License Termination and Company De-registration Letter from the concerned Authority.
We at My Business Consulting DMCC, will ensure that your liquidation process and de-registration take place as smooth as possible. So don’t hang around the corner and wait any longer to consult our experts and they will help you to wind-up your business.
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