Company liquidation in UAE: what you should know about

Liquidation is a process of winding up a company’s financial affairs and it occurs either because the company cannot pay of its debts or its members want to end the company’s existence even when the company is solvent. Company liquidation process is an officially conducted insolvency process where assets are sold in order to clear outstanding debts. The amount that is left after paying off debts is shared by the shareholders of the company.

Steps to take before liquidating your company in the UAE

• Closure or cancellation of company utilities
• Closure of all bank accounts and clearance from the bank
• Cancel office leases.

Steps to liquate a company in UAE are:

Step 1: set a meeting with the Board of directors:minutes of meeting of board of directors declaring to liquidate the company and appointment of regulated liquidator. This document must be attested by a notary.

Step 2: prepare a confirmation letter stating intent to liquidate: A confirmation letter from registered liquidator stating to accept the responsibility to liquidate the company.

Step 3: Apply for liquidation: submission of liquidation form along with fees to be submitted to the relevant authority to get the liquidation certificate

Step 4: wait for Issuance of liquidation certificate: Relevant authorities will issue a liquidation certificate after verifying the all the reasons for liquidation.

Step 5: Publish dissolution of the company: place an advertisement in a local newspaper to announce the dissolution of a company.

Step 6: Get a Final liquidators report: the liquidator will submit a final liquidation report and a letter stating that there is no claim from third party /client/creditors.

Step 7: Obtain approvals for cancellation of visas and company license: cancel all the visas of the partners and collect all the required approvals from Government Authorities to cancel the license.

Step 8: Get the Final liquidation certificate: after submitting all the documents the relevant authority will issue a final liquidation certificate

Final process of company liquidation

After the approval of liquidation of a company in Dubai then following will take place:

• The company name is erased from the registrar
• The business license is revoked
• The final dissolution of a company is finally announced

Documents required for company liquidation in UAE

• Official corporate documents that prove the decision to liquidate the company.
• original registration certificate provided together with liquidator’s credentials
• Company’s trade license.
• Certified and signed document to appoint a liquidator

Scenarios that give rise to company liquidation in UAE

• If the majority of the shareholders decide to liquidate the company.
• If there is a court ruling to dissolve and liquidate the company
• If a company is not making enough profits enough
• When the company does not have enough funds to pay salaries to their employees or cover the debts.
• In case a company has committed any serious crime like fraud and has been found violate UAE rules or regulations. In such a scenario, the company gets a legal notice for closure.
• If the trade license has expired and has not been renewed and the company does not want to renew it.