How to liquidate a company in the UAE?
business
company liquidation
mainland
In this article:
Free zone
It is advisable to liquidate a legal entity in the UAE if you are not using it to avoid incurring maintenance costs. Company liquidation is a more complicated and time-consuming process than incorporation. Nevertheless, it is feasible to carry it out.
01
Mainland
Sole Proprietorship / Establishment — one participant
1
You must apply through the Department of Economy and Tourism website by providing the following references:
- Permission to close the company from the Ministry of Human Resources and Emiratisation.
- Permission to close the company from the General Directorate of Residency and Foreigners Affairs.
- Obtain a certificate of no debts and closure of accounts from all service providers (banks, water and electricity, etc.).
2
Obtain a certificate from the landlords of the company’s office
3
Obtain additional certificates from state authorities, in case the activity is regulated by these authorities
4
Apply online, attaching all the certificates obtained
Commercial Companies
Companies with multiple founders issuing shares, e. g:
- General Partnership
- Simple Limited Partnership
- Limited Liability Company
- Private Joint Stock Company
1
First stage
- Company’s liquidation.
- Appoint a licensed liquidator. The liquidator cannot be the company’s current auditor or someone who has already audited the company’s accounts in the five years prior to the appointment. It is common to appoint auditing or chartered accountancy firms as liquidators.
- Prepare a formal letter from the liquidator accepting his duties.
- Apply for the cancellation of the licence by completing the required form through the Department of Economy and Tourism website, whereupon the Department will issue a certificate of liquidation.
- Publish a liquidation notice in two local newspapers to notify creditors. They can make their claims within 45 days of the date of the newspapers.
2
Second stage
- Send a letter to the Department of Economy and Tourism on behalf of the liquidator and the members, 45 days after the publication of the liquidation, stating that there is no third party objection to the liquidation. The Department may also require the permission of other public authorities in order to cancel the license.
- Cancel the company card with the Ministry of Human Resources and Emiratisation.
- Cancel the visas of foreign participants sponsored by the company at the Ministry Of Residency and Foreigners Affairs office applicable to them.
- Obtain certificates from all service providers (banks, water and electricity, etc.) stating that there are no debts and close any existing accounts with them.
- Obtain lease termination certificates from the landlords of the company’s office.
- Obtain certificates from the relevant government authorities if the business is regulated.
- The liquidator must carry out an audit confirming that the company is not financially encumbered. The liquidator must be an independent auditor of the company, as stated above.
- Submit all the above documents to the Department of Economy and Tourism to obtain approval for final liquidation.
We recommend bringing all corporate documents (Business License, Certificate of Registration, Share Certificates, Memorandum of Association, Establishment card (if issued), liquidation decision) as well as documents of company members (Passports, Emirates ID) with you when dealing with state authorities.
Note that if the company has affiliated branches in other emirates, once the main company’s licence is terminated, the branch will also be terminated.
Licence freeze
It is also possible to temporarily freeze a company’s licence for a period of up to three years, subject to the payment of a special fee. The Department of Economy and Tourism can be contacted for this purpose.
What it’s for:
What it’s for:
- The company will be fined if it continues to operate but fails to renew its licence after its expiry date. A licence is automatically cancelled if it is not renewed for 5 consecutive years.
- In addition, any company member who has a company with an expired licence will not be able to renew the licence or register any other company until the issues with the first company have been resolved.
- A license freeze can stop the fines from accumulating. However, the owner of a frozen licence can start a new business by applying for a new licence in his name.
- It is only possible to apply for a licence freeze once during a company’s existence.
- Licence freezing fee of AED 2000 per annum.
- A freezing fee of AED 2000 per annum must be paid in the case of the Department of Economy and Tourism upon application, plus AED 210 for each month from the licence expiry date.
READ IN THE KNOWLEDGE BASE:
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02
Free zone
The process of terminating a company and the documents required are slightly different to those required in Mainland. However, the public authorities to be contacted are different. Usually, the procedure is triggered through the portal of the freezone in which the company is registered.
Let’s examine the liquidation using the DMCC freezone as an example:
Let’s examine the liquidation using the DMCC freezone as an example:
1
Complete the company dissolution form in the personal portal on the DMCC website. Upload the required documents:
- Decision of the shareholders' meeting on liquidation.
- A declaration of solvency.
- Decision on the appointment of a liquidator (an auditing firm licensed by the UAE authorities).
- Confirmation of appointment from the Liquidator.
- Articles of Association.
- Company certificate of incorporation.
- Share certificate.
- Documents confirming the cancellation of visas, permits from the company.
- Liquidation report from the liquidator.
- (Additionally) a liquidation permit from a third party regulator (if the company is subject to additional licensing).
- (Additionally) customs clearance (if the company is engaged in trading and manufacturing activities).
2
All visas, permanent identity cards, temporary access cards (TAC) must be cancelled.
3
Submit original documents to DMCC Client Service Centre to terminate licence.
It will be published within 14 days.
4
Upload a copy of the liquidator’s countdown on the portal and provide the original to the DMCC Client Service Center.
The liquidation will be published within 14 days.
5
The certificate of license termination and company liquidation will be issued to the applicant at the end of the process.
The original can be picked up at the DMCC Client Service Center.
03
Company redomiciliation
The issue of companies' redomiciliation is not regulated at the federal level. Some freezones allow redomiciliation amongst themselves within the UAE or from other jurisdictions into the UAE. However, there is no provision for redomiciliation from the UAE to other jurisdictions.
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