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Company Liquidation in UAE – Steps in Liquidating a Business

UAE is a land of business opportunities. There are numerous prospective business sectors where investors can conduct business and grow. On contrary, company liquidation in UAE helps ailing companies and investors to close down their business. During the event of a crisis or financial downturn the companies will have to opt for liquidating their companies.

Company Liquidation in UAE allows companies to stop their trade and business operations of all forms. Investors can liquidate the company by submitting a request to the specific authority. The business authority will cancel the trade license.

Also, they will cancel employee visas associated with the company, and terminate all related operations in UAE. The company must settle all outstanding balances, debts to suppliers, banks, etc., before closing down.

When Do Investors opt for Company Liquidation in UAE?

Investors will have to opt for Company liquidation in UAE when the company is unable to continue the daily business operations.

There can be instances where the company is facing losses due to several reasons. It could be such as client-side issues, lack of capital, etc. Also, there can be mismanagement of funds, top management strategic failures, debt, and many more to add on.

Company Liquidation in UAE

A company in UAE must close down legally. They must perform all the Company Liquidation processes the right way to avoid fines. Company Liquidation is a mandatory procedure as per the Commercial Companies Law of UAE.

Company Liquidation Procedures in UAE

Depending on the business jurisdiction -the Free Zone & Mainland, the company liquidation procedures in UAE vary. However, in general, following are the steps in the company liquidation process in UAE.

  • The Company must issue the board resolution stating the license cancellation and the reason for closing down the business
  • Obtain all the clearances from the relevant authorities (Free Zones, telephone, Emirates Post, Banks).
  • Cancel the employee visa and clear the dues for processing the trade license cancellation request.
  • Similarly, clear all the outstanding dues of the suppliers and prepare the audit report (in the mainland and few free zones)
  • Publish the Advertisement or notice in two local daily (One in Arabic) newspapers for 45 days.
  • Cancellation of the Memorandum of Associate of the company with the business jurisdiction
  • Appoint a Liquidator for mainland companies and submit the liquidation report to the authorities.

The authority will issue the license cancellation certificate after reviewing the submitted documents. The authority will provide the confirmation of the liquidation of the company and proceed with the cancellation of the trade license.

Company Liquidation in Free Zones

Company Liquidation in Free Zones follow almost similar steps as above however, there are certain procedures to follow and they are:

Submit the company liquidation request to the Free Zone Authorities. Few of the Free Zones have a time frame for notification of 2-3 months before the license cancellation date.

The application can be lodged from the Free Zone’s online portal with the help of registered Business Consultants like AURION.

Company Liquidation Process in UAE Free Zones

The company shareholders must conduct a meeting to prepare the board resolution and termination of all the business activities of the company in UAE as well as termination of all employees including the Director of the company.

After clearing the employee dues, canceling the visas, paying off the suppliers, the company is ready for closing down. Some Free Zones require an audit report for the last 1 year of the company financials to assess the current state.

liquidating company in UAE Free Zone

The auditor will prepare the required financials and the liquidation report for the company. The Free Zone will review the application and issue the company liquidation Certificate if the company is meeting all the criteria for termination.

There will be a 45 days advertisement stating the company closure notice. The company must clear all third-party dues and Free Zone deposits, refunds, etc.

Once, everything is clear the Free Zone authorities will issue the Company Licence cancellation certificate. The company will be no longer an active company and no work could be initiated by the company after obtaining the license cancellation certificate from the respective authorities.

Company Liquidation Process in UAE Mainland

 For the Company Liquidation process in the UAE Mainland, the appointment of an approved company liquidator for the company is an essential step involved. It is to conduct the audits and prepare the company liquidation report.

Along with the Board Resolution for company liquidation, the letter for appointment of company liquidator needs to be prepared by the company.

Company Liquidation in UAE Mainland

All the subsequent process follows in a similar sequence to the above-mentioned company liquidation process.

Hence, in a nutshell, Company liquidation is a mandatory procedure in UAE for companies closing down. Canceling the Trade license, the right way will help the investors to start a new business establishment in other Free Zones.

It also helps the investors to downgrade their business package, start a new company in the mainland, exit UAE and re-enter on a new visa, and more.

AURION’s team of professional Business Consultants will handle Company Liquidation steps in the UAE mainland and Free Zone depending on the investor’s specific requirements. The Team will provide end-to-end assistance in obtaining the Company License Cancellation Certificate the right way.

Connect with our expert team right away!

Contact Us: Aurion Business Consultants