Company Liquidation in Dubai

Running a business in the UAE offers growth opportunities, but sometimes strategic decisions lead to closing down. Liquidating a company here involves more than just stopping operations; it requires appointing a liquidator, settling debts, VAT deregistration, and approvals from key government bodies. While the process may seem complex, a structured approach ensures a smooth and confident exit.

Settle Debts & Liabilities

Seamless Exit Process

Compliance with UAE Laws

Licensed & Trusted Liquidators

Mainland Company

Free Zone Company

Offshore Company

Bank Account Opening

Visa Services

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Step-by-Step Process for Company Liquidation in the UAE

The liquidation process in the UAE can be complex, but these steps break it down into manageable tasks, including Free Zone-specific requirements:

Drafting and Approving the Shareholders’ Resolution

Call a shareholders’ meeting to draft and approve the resolution for liquidation.
For Mainland companies, the resolution must be notarized by a UAE Notary Public.
If shareholders are abroad, the resolution must be attested by the UAE embassy and the Ministry of Foreign Affairs.
For Free Zone companies, such as those in JAFZA or RAKEZ, the resolution must be submitted to the respective Free Zone authority, with special attention to any additional requirements (e.g., JAFZA requires a 3-month advance notice before liquidation begins).

Appointment of a Liquidator

Appoint a licensed liquidator to oversee the liquidation process.
Obtain a formal letter of acceptance from the liquidator and submit it to the relevant authority.
For Free Zone companies like those in DIFC or JAFZA, the liquidator must be approved by the respective Free Zone authority. DIFC companies may also need to appoint a liquidator through DIFC Courts.

Publication of the Liquidation Notice

Publish the company’s notice of liquidation in one English and one Arabic newspaper.
The notice must provide creditors with a 45-day period to submit claims.
In RAKEZ and JAFZA, companies must follow Free Zone-specific publication rules, such as submitting notices to the respective Free Zone’s official journal or approved local media.

Settling Liabilities and Clearing Debts

Prioritize settling employee dues such as salaries and gratuities.
Pay all company debts to creditors and suppliers.
Cancel ongoing contracts, including utilities and lease agreements.
In Free Zones like DIFC, employee settlements must comply with DIFC Employment Law, and special creditor communication protocols may be required.

Cancelling Employee Visas and Work Permits

Submit visa cancellations to the Immigration Department.
Cancel MOHRE labor cards and obtain clearance for all employee obligations.
Cancel visas for any sponsored dependents.
Free Zones (e.g., RAKEZ, JAFZA) often require companies to cancel employee visas directly through the Free Zone authority and secure related NOCs.

VAT Deregistration and Tax Clearance

Submit a VAT deregistration application to the Federal Tax Authority (FTA).
Ensure all VAT payments are settled and obtain the Tax Clearance Certificate.
The FTA may conduct a tax audit before issuing the certificate.
Free Zones require the same VAT deregistration process, but companies in zones like DIFC may need to undergo additional tax clearance processes specific to the Free Zone’s tax regime.

Obtaining Mandatory Clearances from Government Authorities

Get clearances from utility providers (water, electricity, telecom).
Obtain clearance from the Roads and Transport Authority (RTA) for company vehicles.
Secure clearance from the Federal Customs Authority (FCA) for trade-related businesses.
Free Zones require additional NOCs from their respective authorities (e.g., JAFZA requires clearance from its internal customs authority for companies involved in import/export).

Preparing and Submitting the Final Liquidation Report

The liquidator prepares the final report, detailing asset liquidation and debt settlement.
Submit the report to the relevant authority (e.g., Department of Economic Development or Free Zone authority).
In Free Zones like RAKEZ, the liquidator’s report must be approved by the Free Zone authority, and additional clearances from Free Zone customs and labor departments may be required.

License Cancellation, Deregistration, and Issuance of the Liquidation Certificate

Upon approval of the final liquidation report and after obtaining all required clearances, the relevant authority (e.g., DED or Free Zone Authority) will issue a License Cancellation Certificate. This certificate, also referred to as the Liquidation Certificate, serves as formal confirmation that:

The company has been legally dissolved.
All debts and liabilities have been settled.
The company is officially removed from the UAE’s commercial registry.

The issuance of the Liquidation Certificate marks the completion of the liquidation process, ensuring that the company no longer exists as a legal entity and is no longer subject to any legal or financial obligations.

Required Documents for Company Liquidation Process in the UAE

The following documents are essential to ensure a smooth and compliant process of company liquidation in Dubai:

Trade License Copy: A valid trade license or proof of renewal if expired.

Memorandum of Association (MOA): The MOA with any amendments to reflect company structure.

Shareholders’ Resolution: A notarized resolution to liquidate the company.

Power of Attorney (if applicable): If authority is delegated, a copy of the POA is required.

Shareholders’ IDs: Passport and Emirates ID copies for all shareholders.

Liquidator’s Acceptance Letter: Confirmation from the appointed liquidator.

Bank Account Closure Letter: Confirmation from the bank that accounts are closed.

Final Audit Report: An audit report detailing the company’s assets and liabilities (if applicable).

Tax Clearance Certificate: From the Federal Tax Authority to confirm VAT obligations are settled.

NOCs: From authorities such as MOHRE, Immigration, utility providers, RTA, and FCA, as applicable.

Role of a Liquidator

Asset Identification & Sale:

The liquidator evaluates and sells the company’s assets to pay off creditors.

Debt Settlement:

They negotiate and settle outstanding liabilities with creditors and suppliers.

Employee Obligations:.

Ensures all employee dues are paid, and work permits/visas are canceled.

Final Report & Deregistration:

Prepares the final liquidation report and secures the company’s deregistration from the relevant authorities.

Company Liquidation Services

Ensuring Legal Compliance:

They manage the required documentation and communication with authorities to meet UAE regulations.

Efficient Process Management:

Service providers handle the administrative burden, ensuring all steps, from notices to clearances, are completed on time.

Maximizing Asset Value:

They work to maximize returns from asset sales and negotiate favorable debt settlements with creditors.

Legal Framework for Company Liquidation in Dubai, UAE

Company liquidation in UAE follows a stringent set of legal guidelines designed to protect stakeholders and maintain the transparency of the business environment. Below is a detailed breakdown of the specific laws and procedures involved in the liquidation process.

Federal Decree Law No. 32 of 2021 on Commercial Companies

This law governs company formation and dissolution, requiring companies to appoint a registered liquidator to manage asset sales and debt settlement. Notarized shareholder resolutions are mandatory for Mainland companies like LLCs and joint stock companies, while Free Zone and offshore companies follow specific jurisdictional processes.

Bankruptcy Law (Federal Decree Law No. 9 of 2016)

This law covers insolvency and compulsory liquidation. Insolvent companies can file for bankruptcy, leading to either restructuring or liquidation, with the court appointing a liquidator to oversee asset liquidation and creditor payments.

Free Zone Authority Regulations

Each Free Zone, such as JAFZA and RAKEZ, has its own specific liquidation requirements, including advance notice, visa cancellations, and clearances. Offshore companies like RAKICC also follow distinct liquidation frameworks, including approvals from relevant authorities.

Federal Tax Authority (FTA) and VAT Deregistration

Companies registered for VAT must apply for deregistration with the FTA and settle any VAT liabilities. The FTA may conduct an audit before issuing the Tax Clearance Certificate, which is crucial for finalizing liquidation.

Employee Rights under UAE Labor Law

During liquidation, companies must settle end-of-service benefits such as unpaid wages and gratuities. Employees are prioritized over other creditors. In Free Zones, companies must comply with labor laws requiring notice or compensation for terminated employees.

UAE Commercial Transactions Law (Federal Law No. 18 of 1993)

This law regulates court-ordered liquidation in cases of severe financial distress. The court appoints a liquidator to manage asset liquidation, settle debts, and distribute any remaining funds to creditors.

Step by Step Process for Ajman Offshore Company Setup

Company Name Reservation

Choose a unique name following Ajman Free Zone rules and submit it to AFZA for approval.

Appoint a Registered Agent

Hire a UAE-registered agent to manage your application and provide a registered office address.

Document Submission

Submit all required documents, including passport copies, proof of residence, and incorporation papers.

Prepare and Sign Documents

The agent prepares the MoA and AoA, which are signed by shareholders in person or remotely.

Company Registration

The agent submits the application, and after approval, AFZA issues the Certificate of Incorporation.

Alternative Options to Liquidation in the UAE

Business Restructuring

Business restructuring in the UAE may involve reorganizing liabilities, selling non-core assets, or reducing costs, enabling streamlined operations and improved profitability under Insolvency Law (Federal Law No. 9 of 2016).

Mergers or Acquisitions

Mergers or acquisitions allow companies to survive by joining with another entity or being taken over by a more financially stable one, governed by Federal Law No. 32 of 2021 on Commercial Companies, ensuring continued operation under new ownership.

Freezing the Business License

Businesses can apply to freeze their license for up to three years, allowing them to halt operations temporarily without penalties. This option preserves the company’s legal standing and trade name, offering time to resolve financial issues without full dissolution.

Debt Restructuring

Debt restructuring involves negotiating with creditors to extend repayment terms or reduce interest rates. The Insolvency Law provides a framework for restructuring debt, helping businesses stay operational while managing their liabilities.

Seeking Investment or Strategic Partnerships

Seeking external investment or entering into strategic partnerships can provide the capital or resources needed to avoid liquidation. This approach can help cover debts and operational costs, while partnerships can open new market opportunities.

Company Liquidation Consultants in Dubai

How Leaders HUB Consultancy Can Help?

Leaders HUB Consultancy is renowned as one of the top business setup consultants in Dubai, with over 15 years of experience facilitating a wide range of businesses throughout the UAE. Our deep connections with government officials and key authorities, combined with our extensive expertise in consultancy, streamline the process of establishing your business in Dubai. Additionally, we offer comprehensive financial, legal, and corporate services to support our clients throughout their business endeavors.

We are here to provide comprehensive support for your company liquidation, from preparing your documents to completing the process. Connect with us now to begin your journey with a FREE consultation!

ASK WHAT YOU WANT TO KNOW

FAQS (Frequently Asked Questions)

Is there a minimum capital requirement for setting up an Ajman Offshore Company?

Ajman Offshore does not require a minimum paid-up capital, making it accessible and cost-effective for small and medium-sized enterprises.

Can foreigners fully own an Ajman Offshore Company?

Yes, Ajman Offshore allows 100% foreign ownership, meaning no local sponsor is required, which provides complete control over the company.

What are the tax benefits of an Ajman Offshore Company?

Ajman Offshore companies are exempt from corporate and personal income taxes, making it an attractive option for tax-efficient global business operations.

Is it mandatory to have a physical office in Ajman?

No, Ajman Offshore companies are not required to have a physical office in the UAE, which helps reduce setup and operational costs.

How long does the company formation process take?

The registration process is efficient and typically takes 2-3 working days, making it one of the fastest offshore setup options in the UAE.

Can an Ajman Offshore Company open a UAE bank account?

Yes, Ajman Offshore companies can open bank accounts in the UAE, which facilitates international transactions and smooth financial management.

What activities can an Ajman Offshore Company perforin?

Allowed activities include international trading, holding assets, consulting, and investment management. However, these companies cannot conduct business within the UAE market.

Are annual audits or compliance reports required?

No, most Ajman Offshore companies are exempt from annual audits and complex compliance requirements, reducing the administrative burden.

How is confidentiality ensured for shareholders and directors?

Ajman Offshore maintains strict confidentiality, with no public disclosure of shareholder or director information, aligning with international privacy standards

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