Company Liquidator in UAE
Company Deregistration Services in Dubai UAE from a Legal Perspective
Winding up a company in Dubai, UAE, requires a proper legal process to be followed to achieve an orderly and compliant closure. At HHS Lawyers, we have the most experienced legal consultants who offer liquidation services to companies in Dubai and across the United Arab Emirates (UAE). Our lawyers and legal team are very experienced and have a deep knowledge of the complexities surrounding company liquidation procedures in accordance with UAE Laws and regulations. We provide comprehensive, customized services for our clients so that liquidation will be hassle-free and properly effective.
What is Company Liquidation in Dubai?
Company liquidation, also known as winding up or dissolution, is the formal process of closing down a business entity. It involves settling all outstanding debts, selling assets, and ultimately deregistering the company from the Dubai Department of Economic Development.
The process of liquidation of company in Dubai is regulated by the UAE government and involves:
- Cessation of Business Activity: All business activity is closed down, including the sale of goods or services, entering into new contracts, or further incurring debts.
- Assets Sold: Company assets, including property, equipment, and inventory, are sold for money generation.
- Outstanding debts settled: Amounts due to creditors, employees—for example, in the form of salaries, severance pay, end-of-service benefits, and government entities such as taxes and fees.
- Distribute remaining assets: At the end, after the settlement of all debts, the money is distributed to shareholders based on their ownership.
- Company Deregistration: On meeting all obligations, the trade license of the company is canceled and its registration removed from the relevant authorities.
Types of Company Liquidation in Dubai
There are two major kinds of company liquidation in Dubai, UAE:
- Voluntary Liquidation: In voluntary liquidation the members of a company decide to wind up its business on their own terms. There are many reasons that can lead to voluntary liquidation; for example, the objectives of the company have been achieved, the company is facing financial problems, or there is a change of ownership.
- Compulsory Liquidation: The compulsory liquidation takes place when a court orders a business to be wound up. It may occur due to insolvency, which is a situation where the business is unable to repay its debts to the creditors, non-compliance with laws that regulate businesses, or engagement in fraudulent activities.
Legal Framework of Company Liquidation in the UAE
In the UAE, company liquidation refers to the dissolution and closing of a business permanently. Federal Decree-Law No. 32 of 2021 on Commercial Companies, also known as the UAE Commercial Companies Law (CCL) governs company liquidation in the UAE. This law has created provisions that outline the procedures, duties, and obligations in respect of company liquidation.
Reasons for Dissolution of the Company:
The CCL offers various grounds under which a company could be dissolved, which include:
- Expiry of term: In cases where the company has been formed for a specific period of time, the expiry of such a term brings about dissolution.
- Objective termination: When an event occurs as specified in the company’s MOA, dissolution can be affected.
- Loss of assets: If the assets of the company run below the threshold value or the company is declared bankrupt, then dissolution can ensue.
- Merger: When two companies are joined, the constituent companies are dissolved into forming another one.
- Unanimous Approval of the Shareholders: All the shareholders may agree to dissolve the company.
- Court Order: A court order may affect the dissolution of a company.
Role and Responsibilities of Company Liquidator in Dubai, UAE
A company liquidator in the UAE helps to manage the orderly winding down of a business. They are either appointed by the shareholders voluntarily or by the courts in cases of compulsory liquidation.
As soon as appointed, a liquidator is responsible for:
- Inventory: The liquidator shall, immediately after his appointment, conduct an inventory check of all the assets and liabilities of the Company
- Preparation of List of Assets and Liabilities of the Company: The liquidator shall prepare a detailed list of the assets and liabilities of the Company and its balance sheet, and sign it together with the managers or the chairman of the Company.
- Keep Record: The liquidator shall keep a record to document all transactions related to liquidation.
- Debt Settlement: Paying debts and liabilities of the company.
- Asset Distribution: Distributing any remaining assets to the shareholders.
- Final Reporting: Submitting a final liquidation account to the partners or the General Assembly.
It should also be clearly understood that a company retains its legal existence to the extent necessary to administer the liquidation and all powers of the Board of Directors of the company cease once the company goes into liquidation.
Company Liquidation Process in the UAE
On dissolution, liquidation follows. CCL, from Articles 314 to 334, regulates this process, and it involves:
- Appointment of Liquidator: Shareholders, or on the order of the court, a liquidator is appointed for the winding-up process.
- Inventory and Debt Repayment: The liquidator makes an inventory of the company’s assets and liabilities. Afterward, he prepares priorities and clears the outstanding debt. The secured creditor is given priority, followed by an unsecured creditor.
- Sales of Assets: The liquidator can sell off the company’s assets for the generation of funds required for the repayment of debts and distribution.
- Distribution of Remaining Assets: The remaining assets are divided among the shareholders when the debts have been settled according to the percentage ownerships of shareholders.
- Reporting and Closure: The liquidator summarizes the liquidation process in the form of reports and obtains approvals for deregistration.
Company Liquidation Services from Court-Certified Liquidator in UAE
HHS Dubai Lawyers provides comprehensive services to accompany you through all the stages of company liquidation in Dubai:
- Initial Consultation: We start with a professional consultation to understand the situation, reason for liquidation, and desired outcome.
- Legal Documentation: We will prepare all relevant legal documents for the liquidation process, such as board resolutions, liquidation notices, and applications to the DED.
- The appointment of a liquidator: For conducting a smooth process of liquidation in the UAE, an appointed liquidator is required. Our qualified liquidators can help you with the completion of the liquidation process in compliance with the law.
- Debt management and negotiation: We do our best to pinpoint outstanding debts and manage them, negotiate settlement with creditors, and make sure that no financial obligation is left unfulfilled before the distribution of assets.
- Asset Sale and Distribution: We will help you sell off the assets of the company in a fair and transparent manner, whereby such sale proceeds are distributed in accordance with the legal structure and agreements of the company.
- Deregistration from DED: After the settlements of all debts and distribution of assets, we will help in the final step—deregistering your company from DED, thus closing down your business operation.
Who Can Be Appointed as a Liquidator?
According to Article 316 of the Federal Decree-Law No. 32 of 2021:
“Liquidation shall be conducted by one or more liquidators appointed by the partners or by resolution of the General Assembly or equivalent body. The liquidator cannot also be an auditor for the time being of the Company and shall not have audited its accounts in the 5 years immediately preceding his appointment.”
This means that:
- Audit and Accounting Firms: Liquidators are usually licensed audit and accounting firms approved by the relevant authorities.
- Chartered Accountants: Individual Charter Accountants licensed and registered can also act as liquidators.
- Free Zone Requirements: For Companies registered in Free Zones (e.g. DMCC/JAFZA/DAFZA), the appointed liquidator must be approved by the respective Free Zone Authority.
Appointment Process
The appointment of a liquidator is conducted in the following steps:
- Resolution: The partners or the General Assembly pass a resolution appointing the liquidator.
- Registration: The decision to appoint a liquidator shall be registered in the Commercial Register.
- Publication: The appointment shall be published in two local daily newspapers, one of which shall be published in Arabic, within seven days from the announcement.
Why choose HHS Lawyers and Legal Consultants for Winding up of a company
HHS Lawyers brings a wealth of experience and legal acumen to table to ensure that the company liquidation process is absolutely smooth and compliant. What sets us apart is that we:
- Expertise of the UAE Company Law: Our legal consultants are competent in the Federal Decree Law No. 32 of 2021 on Commercial Companies and the relevant bankruptcy regulations detailed in Federal Decree Law No. 9 of 2016 on Bankruptcy; this will keep us updated with the changing regulations applicable to company liquidation in Dubai.
- Tailor-Made Solution: We comprehend that each liquidation process is unique in its requirements. We go ahead and take time to understand your situation and come up with an appropriate strategy to get the desirable result.
- Experienced Team: Our team comprises qualified legal consultants having ample experience in dealing with matters related to company liquidation in Dubai.
- Efficient and Streamlined Process: We work diligently to speed up the process of liquidation, while not compromising at all on the requirements of the law.
- Clear Communication: We keep you informed throughout the process and readily address any questions or concerns you may have.
If you would like to continue with company liquidation in Dubai, UAE, or if you have any questions regarding it, please feel free to contact our legal team at HHS Lawyers and Legal Consultants. Our consultation approach remains highly confidential. We are also quick to address any issues related to safeguarding your interests while ensuring that the liquidation process is as smooth as possible from a legal perspective. Call us today to book an appointment and take the first step towards successful company liquidation.
