Closing Down A Business?
Closing down a business is a big decision - It involves several steps to avoid future risk of compliance of tax liabilities. Here is all you need to know.
De-Registration and Liquidation in UAE - Overview
At times, businesses may have to de-register and close down their operations. No matter of what type of business you own in the UAE, the liquidation process entails detailed procedures to be followed, assets to be disposed off and all liabilities settled. Company liquidation process requires the assistance of experienced accountants and expert insolvency practitioners to provide the right guidance and carry out the entire process smoothly.
Reasons why the liquidation of a company may be necessary:
- The original purpose for setting up of the company is fulfilled and the entity is no longer required;
- The company is considered to be insolvent.
- For economic reasons like inability to generate profits or cash flows.
Company Liquidation Services in UAE
KPI provides company deregistration and liquidation services in UAE for all types of entities:
- Liquidation of DIFC/ADGM Firms
- Liquidation of Mainland Companies (LLC, Establishments)
- Liquidation of Free Zone Companies
- Liquidation of Off-Shore Companies
Process & Procedures of Company Liquidation in Dubai, UAE
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Mr. Mahesh Shetty
Partner – Audit & Assurance
Tel: +97144551010
Procedure of Company De-Registration and
Liquidation in UAE - A Quick Glance
De-registration and Liquidation of DIFC and ADGM firms (including companies regulated by DFSA and FSRA) involves:
- Submit a request : A formal request for Winding Up should be raised through the DIFC Portal. – It would take 1 to 2 working days to get an approval from the DIFC.
- Upload all signed resolutions : Submit signed shareholders/members resolutions and directors/managers declarations depending upon the legal structure of the firm.
- Advertisement in Newspaper : Advertise decision of Winding Up in a leading local newspaper after 15 days but before 30 days of the date of resolutions.
- Visa Cancellation : Cancel all visas in the company.
- Review: Liquidator reviews books of accounts/management accounts to ensure that all liabilities have been duly settled.
- Liquidator’s Report : Prepare and submit a liquidator’s report with the DIFC.
- Issue of Winding Up Letter : Submit all the documents through the DIFC Portal for DIFC review and approval.
Dissolving/Winding up an LLC Company involves the following major steps -
- BoD Meeting : Prepare a notarized minute of the meeting of shareholders confirming the company liquidation and the appointment of a liquidator.
- Official letter from Liquidator :Arrange an official letter by a registered liquidator accepting the appointment.
- Application for Liquidation : Submit the initial set of documents along with fees to the Department of Economic Development (DED).
- Visa Cancellation : Cancel all visas in the company
- Issuance of Liquidation Certificate : The DED will issue an initial liquidation certificate.
- Advertisement in the newspaper : Publish the notice of liquidation in two local Arabic newspapers to announce the dissolution of a company.
- Notice Period : 45 days grace period will be given to all the creditors to raise the claims against the company, if any.
- Final Cancellation: Cancel visa of all employees & partner and obtain NOC from the Ministry of Labour, Ministry of Immigration, DEWA & Etisalat/Du.
- Final Liquidator’s Report : The liquidator will submit the liquidator’s report and a letter stating that there is no claim from the third party/Client/Creditors during the 45 days grace period.
- Final Liquidation Certificate : After submitting all the documents, DED will issue a final company liquidation Certificate and determine the fees. You can receive the certificate of deregistration (cancellation) after paying the requested fees.
The general procedure of de-registering a Free Zone Company in UAE includes -
- BoD Meeting : Minutes of a meeting of the board of directors declaring to liquidate the company and appointment of regulated liquidator. This document must be attested by Notary Public.
- Official letter from liquidator : A confirmation letter from the registered liquidator stating to accept the responsibility to liquidate the company
- Application for liquidation: Submission of liquidation form along with fees to be submitted to the relevant free zone authority to get the company liquidation certificate
- Advertisement in the newspaper : Place an advertisement in free zone website/local newspaper to announce the dissolution of a company
- Visa Cancellation : Cancel visa of all employees & partner and obtain NOC from various government authorities.
- Clearance Certificates : Obtain Clearance certificates from Free zone authority (FZE/FZCo), business unite & CLD Government section.
- Final Liquidator’s report: The liquidator will submit final company liquidation report.
- Final Liquidation Certificate : After submitting all the documents, Free Zone Authority will issue a final company liquidation Certificate.
Note: Process for company liquidation may vary based on requirements of different free zones in UAE.
The general procedure of winding up an off-shore company in UAE includes -
- Shareholder’s Resolution : Pass a shareholder’s resolution for winding up of company and appointment of liquidators. Preparing declaration of solvency by the directors’ and submit to the Authority.
- Return Originals : All originals which were given to the offshore company by the Registrar must be returned.
- Advertisement in the newspaper : Authority places a liquidation advertisement.
- Liquidator’s report: The appointed liquidator reviews the books of accounts and prepares the final liquidator’s report to be submitted to the Authority.
- Deregistration Letter: Upon submission of liquidator’s final liquidators’ report, Authority will review the documents and liquidator’s report. Authority reviews all the documents and issues a Deregistration certificate upon completion of all process.
How KPI can Help You?
Over the years, we have provided the right guidance to several business owners across Dubai and UAE.
Planning
Plan all the work for an effective engagement to be performed.
Experienced Team
Our dedicated team has the right knowledge and experience in company de-registration/liquidation procedures and legal matters related to various free zones, mainland and DIFC Company Liquidation. We will take up all the cumbersome procedural work while you can focus on your other business objectives.
Complete Transparency
It is important to know from the start, how long it would take you to complete the liquidation process, how much you should budget for the same and whether or not there is a different way to transfer your business from one registration authority to another, instead of liquidating the company. Our friendly team guides you through all the steps and complex procedures with complete transparency.
Right Advice
You can depend on us for the right advice throughout the liquidation process. Our clients benefit from our right approach and methodology that poses minimum distractions in the normal work routine and environment.
Have Specific Questions?
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Frequently Asked Questions
There are two types of company liquidation:
1. Voluntary liquidation, initiated by shareholders of the company when the objectives for which the company was formed has been achieved or expiration of a defined period or for business reasons like inability to continue the operations profitably. This is also called solvent winding up.
2. Compulsory liquidation, normally initiated by the creditors of the company though the court order.
To close down a company properly and to de-register it officially, the company should undertake the following steps:
- - Notify the authorities of intention to Liquidate and de-register
- - Appoint the official liquidator
- - prepare all the necessary documents
- - Pay the requisite fees
- - Dispose off the assets
- - Settle employee dues
- - Settle creditors dues
- - Clear all the liabilities
- - Submit Liquidators report on the Statement of affairs of the Company.
Depending on the where your Company is registered - Free Zone, mainland or Off-shore, the requirements will vary
A liquidator is an officer who has been officially appointed to wind up the affairs of the company . For Mainland and Free Zone companies liquidation, it is one of the DED registered Audit Firms. For DIFC and ADGM companies , it is one who is licensed by the respective Authority (ADGM and DIFC) as Insolvency Practitioner.
Yes, Partners at KPI are DIFC Approved Insolvency Practitioners who can act as Liquidators for DIFC Licensed companies (for both regulated and non-regulated companies).
Closing down a business is not complete unless the business / company is de-registered with the concerned Authorities who have licensed / registered business. In such cases, the owners continue to be liable for statutory and tax compliance. Non-compliance may invite fines or penalties.
Depending on where your company is registered (in mainland or in free zones), the procedural requirements may vary. You can take help from professionals like official or Registered Liquidators or Insolvency practitioners to guide you through the deregistration procedure.