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Mainland Company Liquidation in UAE

UAE is a land of business opportunities. There are numerous prospective business sectors where investors can conduct business and grow. However, there will be instances where a business investors require the liquidation of their company in UAE due to unforeseen events or changing the business jurisdiction from the Mainland to Free Zones, etc.

Having the right know-how of the Company Winding up Procedures in the UAE will come in handy in such cases. There are a few steps to follow for Mainland Company Liquidation in UAE.

Mainland company liquidation in UAE is a process through which ailing companies close down their business operations legally in UAE. It could be due to several reasons such as a crisis or financial downturn, the companies will have to opt for liquidating their companies.

Mainland Company Liquidation – Key Highlights

Mainland Company Liquidation in UAE enables companies to stop their trade and business operations of all forms. Investors can liquidate the company by submitting a cancellation request to the Department of Economic Development of the specific Emirate.

The business authority will review the application and initiate the cancellation of the trade license accordingly.

Company Liquidation in UAE

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

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

Liquidating a UAE Mainland Company – Process Explained

For the Liquidation of Mainland company in UAE, apply for the cancellation through the Department of Economic Development and acquire all the relevant clearances from:

  • Ministry of Human Resources and Emiratisation
  • Directorate of Residency and Foreign Affairs
  • Relevant Water and Electricity Authority
  • Leasing entityCompany Liquidation in UAE Mainland

For companies with shares, the process is longer as it requires liquidating the shares, collecting debts, and paying the creditors before getting the DED approval for closing.

If your company falls under the below legal form of business. You will have to appoint a liquidator for initiating the winding up of the company in the UAE.

  • General Partnership
  • Limited Liability Company
  • Simple Limited Partnership
  • Public Joint Stock Company
  • Private Joint Stock Company

What are the Steps to Winding Up a Mainland Company in UAE?

The winding up of the company in the UAE mainland takes place in two stages:

Stage 1:

  • Notarized minutes of the shareholder meeting confirming the company liquidation and the appointment of a liquidator
  • Arrange an official letter by a registered liquidator accepting the duty
  • Apply for the company cancellation by filling the required form through DED or other approved channels
  • Receive the liquidation certificate after the submission
  • Publish the notice of liquidation in two local newspapers
  • There are 45 days from the date of issue for the debtors to submit their claims

Stage 2

  • Submit to the DED the declaration letter from the liquidator and the partners indicating no objection from any other parties during the grace period
  • Collect required approvals of other government entities to cancel a license
  • Cancel the firm card from the Ministry of Human Resource and Emiratisation
  • Cancel the foreign partner’s visa sponsored by the company at the respective General Directorate of Residency & Foreign Affairs
  • Submit all the above documents to get the approval for the final cancellation
  • Pay the cancellation fees and receive the certificate of deregistration after paying the required fees

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 on the mainland, exit UAE and re-enter on a new visa, and more.

What are the Three Major Penalties on an Expired Business License in Dubai?

Be it businesses in the mainland, free zone, or offshore in the UAE, the business license has to be renewed yearly. The business license is the official and legal documentation that proves the existence of the business entity in the UAE.

To conduct business operations in the UAE, the business has to always provide the trade license copy and number for checking its authenticity.

Non-renewals of business licenses incur penalties, so let’s examine them:

1. Monetary Penalties

On the mainland, the DED has certain fines for businesses defaulting on their license renewal. There are various ways businesses defer their trade license renewals like:

  • Business operations without the license
  • Business without a renewed trade license
  • Business with the additional office for an existing license without permissions

The penalty fees vary across the mainland and free zones. You can check the DED website or the respective free zone website for the penalty for defaulting license renewal.

2. Company Black Listing

A blacklist is initiated against a company that fails to renew its trade license. Once the company is blacklisted they are not allowed to carry out any business or transactions.

The bank accounts will come to a freeze. The company has to submit all the required documents to the government authorities for review to get them cleared off the blacklist.

3. Restrict the Expansion of Business

The non-renewal of business licenses will result in a stop in the future expansions of the businesses.

Also, even in the event of liquidation, the default in the trade license renewal will come in the way of obtaining clearance and issuing the final license cancellation certificate.

Hence small and large businesses have to keep a track of their trade license renewals to avoid any penalty, blacklisting, or spoiled reputation.

AURION’s team of professional Business Consultants will handle Company Liquidation steps in the UAE mainland 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 to know more about Winding up a Company in the UAE!

Contact Us: Aurion Business Consultants 

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