Dubai Company License Cancellation

A Guide to Company Liquidation and Deregistration in Dubai

One of the primary reasons for liquidating a business in Dubai is when it lacks sufficient funds to carry out its daily activities and operations, fails to generate enough earnings to break even, or becomes insolvent. Another significant reason for a company's liquidation can be an instance of fraud or a violation of laws and regulations that leads to the dissolution of the company.

What is Company Liquidation in Dubai?

Company liquidation, or the cancellation of a trade license in Dubai, is the formal process of winding up a company's affairs and distributing its assets to its stakeholders.

Why is it Necessary to Formally Liquidate a Company?

There are several critical reasons why a formal license cancellation is necessary. Firstly, it is mandatory to notify government authorities that you have ceased operations to avoid accumulating fines or penalties on an expired license. Secondly, you must properly address your liabilities and responsibilities towards your creditors and partners to ensure a clean legal closure.

What are the Types of Liquidation in Dubai?

UAE law recognizes two types of company liquidation:

• Voluntary Liquidation:
• In a voluntary liquidation, the shareholders of the company decide to dissolve the company voluntarily. The process is initiated by passing a special resolution at the company's general meeting, where the shareholders agree to wind up the business. Following the resolution, the company must appoint a liquidator who will take control of its affairs and distribute its assets.
• Compulsory Liquidation:
• A compulsory liquidation is ordered by a court when it decides a company must be dissolved. For instance, a court may order liquidation if the company is bankrupt, unable to pay its debts, or has engaged in fraudulent activities. In a compulsory liquidation, a liquidator is appointed by the court to take control of the company's affairs and distribute its assets to the shareholders.

What is the Company Liquidation Process in the UAE?

The steps for cancelling a company license in Dubai must be followed by all businesses. Entrepreneurs should consider all necessary factors before initiating company liquidation in the UAE.

The formal liquidation process begins with the Liquidator and the partners sending a declaration letter to the Licensing Authority to ensure that no objections are raised during the period. After obtaining all necessary government clearances, the company's establishment card at the Ministry of Human Resources and Emiratisation must be cancelled. The visas of foreign partners must also be cancelled by contacting the relevant General Directorate of Residency and Foreigners Affairs. The Licensing Authority will then request all necessary documents and set a fee to obtain the cancellation permission.

What is the Role of a Liquidator in a Dubai Company Liquidation?

During the liquidation process, the liquidator carefully examines the company's financial situation to identify and sell any unsecured assets that can benefit creditors and shareholders. The shareholders may appoint the liquidator by resolution, or in cases of compulsory liquidation, the court may appoint them. Upon appointment, the liquidator will submit a formal acceptance letter and prepare a statement of affairs and a liquidator's report to be used in the official process.

The liquidator is responsible for the entire process, including paying off the company's debts and distributing any remaining funds to its shareholders. This requirement is applicable to legal forms such as general partnerships, limited liability companies, simple limited partnerships, and public and private joint-stock companies.

Overall, the liquidator's role is crucial in ensuring that the company's debts are paid and any remaining funds are distributed fairly and appropriately. Therefore, selecting a reliable and trustworthy liquidator is essential for a smooth and efficient process.

What is the Purpose of a Liquidation Report?

UAE authorities require a liquidation audit report to cancel the trade license of companies undergoing liquidation. This report is important as it summarizes the company's debts and assets and provides the Company Liquidator with all relevant financial information.

The liquidation report presents a clear and transparent picture of the company's financial status, including its assets, liabilities, and outstanding debts. All financial records must be submitted to the liquidator to identify any potential issues or discrepancies that may need to be addressed during the process. The report also outlines the proposed distribution of assets among stakeholders to ensure each party receives its fair share. Finally, the liquidation report ensures compliance with local laws and regulations governing the liquidation process in the UAE.

What is the Procedure for Company Liquidation in Dubai, UAE?

Specific procedures must be followed for a company's liquidation to take place. As the responsible party, we are accountable for ensuring the liquidation process is conducted in accordance with UAE laws. If you are seeking company liquidation services in Dubai, contact one of our consultants for more information on the procedure for your company's dissolution.

How can World Company Setup assist you with company liquidation services in Dubai, UAE?

World Company Setup are well-established liquidators in Dubai, offering solutions to clients across various industries. Their expertise and extensive experience in the field make them the top choice for clients seeking company liquidation services in Dubai.

• World Company Setup is committed to providing outstanding service and ensuring their clients save time, effort, and money. They make the liquidation procedure convenient for their clients by obtaining all necessary documents and approvals.
• World Company Setup's experience with government authorities allows them to expedite the process significantly, ensuring clients can complete their liquidation quickly and efficiently.
• To ensure clients receive the best possible service, World Company Setup assigns a dedicated expert consultant to assist them. Thanks to their comprehensive approach and commitment to client satisfaction, clients can trust that their liquidation needs will be handled with care and expertise.

Frequently Asked Questions

• What is the liquidation and deregistration of a company in the UAE?
• The deregistration and liquidation of a company in the UAE involves the legal process of closing a business and removing its name from the commercial register.
• Are there documents that must be submitted to file for corporate bankruptcy in Dubai?
• The documents required to file for corporate bankruptcy include a liquidation application, the company's memorandum and articles of association, and the liquidator's consent to act as a liquidator.
• What is the liquidation of a company in the UAE?
• The procedure for the liquidation of a company in the UAE means the company is legally dissolved, and its assets are distributed to its shareholders or creditors.
• What are the duties of a company liquidator in Dubai?
• The duties of a company liquidator include managing the company's assets, paying its debts, and distributing the remaining assets to shareholders or creditors.
• What is the liquidation procedure?
• The liquidation procedure involves appointing a liquidator, notifying creditors and shareholders, selling assets, paying debts, and distributing the remaining assets.
• How long does it take to liquidate a company in the UAE?
• The time required to liquidate a company in the UAE depends on the complexity of the company's assets, liabilities, and legal requirements. It generally takes some time to complete.
• How can World Company Setup help with the liquidation of a company?
• World Company Setup assists with the liquidation of a company by providing comprehensive corporate solutions, managing all necessary documents and approvals required for the process, and assigning an expert consultant to assist clients throughout.
• What happens to the branch of a firm that was established in one emirate but is controlled and dissolved by a branch in another emirate in Dubai?
• The branch of an emirate-based firm that controls another branch will be liquidated in accordance with the laws of the Emirate where it was initiated.
• Can a company with outstanding debts be deregistered in Dubai?
• A company can be deregistered if it has outstanding debts, but the liquidation process must be completed and its creditors paid before it is removed from the register.
• What are the costs of liquidation and deregistration of a company in the UAE?
• The cost of liquidation and deregistration of a company in the UAE depends on the complexity of the process, the value of the company assets, and the liquidation fees charged by the liquidator and government authorities.

Dubai Company License Cancellation