Several companies that are trading in UAE at present find themselves in the position where they are insolvent. However, many still are viable businesses that are only currently suffering from cash-flow concerns short-term. However, it is high time for you to take certain steps if you’re feeling like your business won’t be able to continue operating without worsening creditors’ positions.
If you are considering placing your insolvent company into company liquidation, then we suggest you do so as the solution is most appropriate when there’s no alternative than the business ceasing trading and winding up. With a liquidation of the company in UAE, assets are realized then sold in order to pay dividends to creditors and shareholders where possible.
Advantages of undertaking company liquidation
Company liquidation is the best solution as it offers owners, creditors, associated parties, and shareholders a legal share in the liquid amount from lawfully dissolving company assets. Here are the most notable advantages of liquidation of the company in UAE:
- It serves as a company’s exit strategy by settling all the debts and liabilities of the company prior to them spiraling out of control;
- Company liquidation in UAE eliminates the cost associated in allowing an insolvent business to continue trading;
- A liquidator can handle all the processes that are involved without requiring the- presence or involvement of directors in their completion;
- Liquidation happens to assets of companies and not to the personal property of shareholders;
- All unsecured debts of business will be written off, plus there won’t be any legal action that may be taken against the business;
- As soon as the process of company liquidation has been completed, the creditors can’t pursue directors or owners for some form of payment
Requirements for UAE Company Liquidation
In order to initiate the company liquidation procedure, there are basic documents that are required of the company.
- A document that declares the intention of the company to liquidate assets and the appointment of a qualified company liquidator in UAE
- The certificate of registration and trade license of the company
- Certified copy with signatures of company liquidator and company directors attesting to the company liquidation
- A copy of the license of the company liquidator in UAE
- A letter stating the appointed company liquidator’s approval for the company liquidation
Take note: different jurisdictions in UAE may require other documents for businesses to under company liquidation.
Procedure for company liquidation and deregistration in Dubai
Read on as we have listed the steps of closing down a company in Dubai. Remember that each step is crucial in the completion of the process.
Closing the company’s corporate bank accounts
All active bank accounts of the business have to be closed. It’s important for the liquidator appointed by the company for company liquidation completion to obtain a statement of account for the previous financial year and add it to the liquidator’s report. In addition, there is also a need to obtain a confirmation of bank account closure from the banks that the company has accounts with in order to provide proof.
All visas that are under the sponsorship of the company in Dubai are to be canceled formally. Also, there is also a need to take on hold or cancel all the active residency visas that are under employee sponsorship (family or dependent visas).
Regulating authority clearance
Depending on the business’ activities, it has to require certain clearances. If the company was a trading business, then it has to approach both Chamber of Commerce and the Ministry of Customs for clearances.
All utilities, such as office space, air conditioning, DEWA, telecommunications, etc., are to be cleared. For businesses that rented offices, all dues are to be settled from the landlords in order to obtain the necessary clearances.
Company deregistration publication
Depending on the jurisdiction that the business is under, the company may have to run a newspaper publication indicating the company’s initiation of company liquidation or winding up. We suggest you consult an expert in this matter as it may be possible for you to do an online publication, depending on where the business was registered.
Transfer or sale of company assets
All shares, vehicles, properties, and other assets that are under the business’s name are to be transferred or put up for sale. The firm that will be doing the liquidators report will ask the business for proof of sale or transfer of all assets.
The business in Dubai or anywhere in the UAE has to hire an approved and licensed auditor in order to prepare the business’ liquidators report.
Issuance of certificate of company license termination
The authority that is supervising company registration of the business will release its final approval when the business has fully complied with the steps that are mentioned above. The certificate will be released, and it signifies company deregistration.
How experts can help with company liquidation
A qualified liquidator in UAE will leverage its years or even decades of experience to provide your business with assistance in company liquidation. The expert will help ensure that you are fully compliant, efficient, and accurate in implementing the company deregistration and liquidation procedure.
With the help of experts, you will receive complete guidance throughout the deregistration procedure up until you are issued a certificate that your company in UAE has been successfully liquidated and registered. Here are specific ways a qualified company liquidator in Dubai like Farahat & Co. can be of service:
- Corporate affairs consultation
- Full application for company license cancellation or termination
- Full application for company deregistration
- Review and compilation of documents that are necessary for company license cancellation and company deregistration
- Processing of all necessary clearances including cooling, DEWA, Etisalat/DU
- Coordination with authorities on company deregistration newspaper publication
- Full compliance with residency visa cancellation including for family visas and active employees
- Full compliance in the cancellation of the business’ establishment card
- Collection of company deregistration letter and license termination letter from authorities