The United Arab Emirates has become a major business center around the world. It attracts companies from all over the world to come and expand their business in UAE because it offers business-friendly environment as well as tax-free zones which are extremely helpful for every business especially for new startups. Thousands of new businesses start here every single day, but not all of them succeed or grow quickly to become a large company and get huge profits. Some of the companies may earn less or do not make that profit which they expected to make so this forces the owners to make a valid decision about whether to continue or shut down the company. Companies often close due to the shifts in the economy, revised goals, or the need to recover investments.

Business owners or shareholders need to appoint liquidators in Dubai to manage the company’s closure. While the overall process is similar, specific requirements may vary depending on the rules of the licensing authority. If you are looking to close your business, continue reading to learn about the key steps, conditions, and requirements for company liquidation in Dubai and how AWA Auditors professionally handles it.

What is Company Liquidation?

Company liquidation is the official process of closing a business. It generally involves selling the assets of a company, paying any remaining debts, and distributing any remaining funds to all the shareholders with accuracy and reliability. Liquidation can begin either by the decision of the company’s owners or directors, or it can be ordered by a court if the company is unable to pay its debts. In both ways, liquidation marks the official closure of the company. This process must be handled carefully to meet all legal and financial requirements and to ensure that all those who are affected by this change are treated equally so that there are no issues in the future.

Types of Company Liquidation in UAE

Voluntary Company Liquidation

Voluntary company liquidation happens when the shareholders or directors of a company decide to close the business, even if it is doing well financially. They might do this because the company has met its goals, or because the owners want to retire or move on for other reasons. This process is usually simpler and offers more flexibility.

Compulsory Company Liquidation

Compulsory company liquidation happens when a court orders a company to close, usually because creditors believe the company cannot pay its bills. This process is stricter and involves the court making sure that creditors get as much money as possible from the company’s assets. It is a more complicated process that must follow specific legal rules.

Why Do Companies Need to Liquidate?

There are several reasons why companies need liquidation. Sometimes it may become necessary for a company. The most common reasons include:

• The company’s debts and liabilities are greater than the value of its assets.
• The company is not able to pay its debts.
• The company has not conducted any business activities for a year after being formed.
• The company was not properly registered as a public or private entity.
• The business has faced ongoing financial losses.
• The company has cash flow problems, making it hard to manage its finances.

Steps and Procedures for Liquidating a Company in the UAE

1. Create a resolution to officially close the company.
2. Appoint a licensed liquidator to handle the process.
3. Get an acceptance letter from the liquidator.
4. Have the resolution notarized by a notary public.
5. Submit the necessary documents to start the liquidation with the relevant authority.
6. Advertise the liquidation notice in a local newspaper.
7. Get immigration clearance for the company.
8. Obtain clearance from the labor department.
9. Get customs clearance.
10. Close the company’s bank accounts and get a closure certificate.
11. Get clearance from all relevant government bodies, such as RTA, the Electricity and Water Authority, the Telecommunication Authority, and the FTA.
12. Submit the final liquidation report and all clearances.
13. The authority will issue a final cancellation certificate and remove the company’s name from the commercial register.

Documents Required for a Company Liquidation in UAE

Here is a list of documents needed for company liquidation in Dubai:

• Copy of the original trade license
• Memorandum of Association (MOA)
• Power of Attorney (if any)
• Copies of all shareholders’ passports
• Copy of Emirates ID
• Shareholders’ resolution
• VAT and Corporate tax filing and deregistration
• Deregistration application form

Liquidation Notice Period

The government provides all businesses a time of up to 45 days to handle any unpaid debts or bills efficiently before closing down the company. This time duration is referred to as the notice period. Before you start the procedure of shutting down your company, it is important to settle everything related to your business as well as your employees. Similarly, gather all the required documents, and make sure you also complete the following tasks:

• Pay off any outstanding utility bills (like electricity and water)
• Clear all telecom bills (phone and internet)
• Get a bank closure letter from your bank
• Prepare a liquidation audit report
• Cancel all residency visas that were issued under your business license

When all of the documents are ready and complete, you can easily start the process of closing the company. Just remember that the process of liquidation is different for mainland companies and free zone companies.