There comes a point in businesses when they need to close down. In UAE, it is not enough to just stop your business operations and do not renew a trade license as it gets expired to consider a business closed. A proper and legal business license deregistration with business closure, liquidation, or bankruptcy is needed to be done to consider a business to be properly closed.
Liquidation of a company is an activity in which all the company’s operations are brought to an end because the company is shut down. There can be a lot of reasons behind shutting down of the company. Most of the times, when the cash flow of the company is not smooth and the company finds it difficult to cope up with all the stresses, it goes for liquidation.
Company liquidation can also be referred to as the closing or cancellation of the company. It happens when the company is done providing its products services to its clients.
The procedure of license cancellation for the UAE based entities
A particular procedure is to be followed for the cancellation of the company’s license. When the company takes the decision of ending the provision of its products and services to the market or when the order of liquidation is imposed on it from external means, the company has to cancel its license. For license cancellation, the procedure is given below;
Company’s dissolution notices and appointing a liquidator
A meeting is conducted between all the shareholders of the company regarding the dissolution of the company.
For the attestation, the resolution made by the company regarding its dissolution needs to be authorized first by the notary public UAE. This is necessary because it authenticates the document of resolution and ensures that all the shareholders agree on the decision of liquidation.
In some cases, some of the shareholders of the company may happen to be out of the UAE. In such a case, the documents of the resolution may get attested as well as authorized from the embassy of UAE in the respective country. The documents can then be legalized from the ministry of foreign affairs (MOFA) and the ministry of justice (MoJ).
Note that if the company is registered in any of the free zones in UAE, attestation from a notary public in UAE will not be needed.
Appointing a court expert liquidator needs to be mentioned in the resolution as well with their name and address.
Note that for sole establishments, this step is not required.
Documents needed for company liquidation in Dubai
Here are the documents that are needed by the company for the process of liquidation.
- Copy of the license of the company
- Copy of memorandum of association (if there were any changes made in it, they should be there too)
- Power of attorney (if any)
- Resolution of the shareholders of the company
- Passport copies of all the shareholders
- Copy of the Emirates ID
- Application form for the deregistration of the company
- The notice period for the company’s liquidation.
Pay the initial payments and then submit the required documents to the Department of Economic Development. After the submission of the documents, a liquidation certificate will be issued to the company. It will act as evidence of the document submission. This documentary evidence will then help in the process of liquidation of the company.
After obtaining the liquidation certificate from the authorities, the company must go for advertising about its liquidation in the newspaper. For limited liability companies and some free zone companies, the requirement of putting the notice advertisement of liquidation is 45 days. Limited liability companies need to publish 4 advertisements and they should be in the Arabic language for sure.
What should the company do during the Notice Period?
There are certain tasks that the company can complete during the notice period. These may include;
- Clearance from the Department of Immigration
- Clearance from the Department of Labour
- Clearance letter from the Departments of Electricity and Water
- Clearance letter from the Telecom Authority
- Clearance letter from Landlord
- Letter of bank account closure
Last step of liquidation
Moving on towards the last step of the liquidation process, the company must submit all the following documents to the required authorities:
- Liquidation report
- Copy of advertisement given in the Newspaper
After the submission of the documents mentioned above, authorities will pay a review of the final payment and then approve it. After carrying out all the required procedures mentioned above, the company will be issued the final license cancellation certificate.
The companies can hire the best liquidators and that is for their own good. During the liquidation process, companies are usually in a very unstable state and are not ready to handle another burden of the liquidation process along with the stress of liquidation of the company.
HHS lawyers have the best liquidators in Dubai which may help you proceed with your license cancellation and all other liquidation processes very efficiently and appropriately. So, get in touch with our firm and make things easier for you to handle.