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How to Liquidate a Company in Dubai?
For detailed information +90 542 381 3868 'Call.
Liquidation is the process of winding up a company's affairs and distributing its assets to shareholders. Liquidation can be voluntary or compulsory. In a voluntary liquidation, the company's shareholders decide to voluntarily terminate the business. In contrast, compulsory liquidation occurs when the court orders the company to be liquidated due to bankruptcy or other reasons.
Government agencies must be informed that you have ceased to conduct business; therefore, you will not be charged with accumulated fines or penalties upon the expiration of your license.
It is imperative that you address your obligations and responsibilities towards your creditors and partners and protect your interests as a shareholder company.
It would also be wise to consider your reputation and goodwill when reopening your business.
UAE law recognizes two types of company liquidation:
In a voluntary liquidation, the company's shareholders decide to liquidate the company of their own accord. This process is initiated by passing a special resolution at the company's general meeting, where the Board of Directors agrees to wind up the business. Once the resolution is passed, the company needs to appoint a liquidator who will take control of its affairs and distribute its assets to its stakeholders.
Compulsory liquidation is initiated when the court orders the company's liquidation. The 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.
Below are the steps that all businesses must follow when liquidating their company. However, every entrepreneur should consider the following important factors before undertaking a company liquidation in the UAE:
The liquidation process in the UAE consists of two phases:
Through the collection and use of assets, the liquidator pays the creditors and distributes the remaining funds to the shareholders.
You need to choose a liquidator if your company has any of the following legal forms:
As part of the liquidation, the liquidator examines your company's financial situation and identifies and sells unsecured assets to benefit creditors and shareholders. The shareholders can appoint the liquidator by resolution or, in the case of a compulsory liquidation, by court order. Once appointed, the liquidator will issue a formal acceptance letter. As part of the liquidation process, they will also prepare a statement of affairs and a liquidator's report.
UAE authorities require an audit report on the company's liquidation before canceling a company's trade license. Accordingly, a liquidation audit report specifies a company's debts and assets. Furthermore, all financial information must be provided to the Company Liquidator.
This process begins with the Liquidator and partners sending a declaration letter to the Licensing Authority. It ensures that no objections were raised during the period of unauthorized use. After obtaining the necessary government clearances, the next step will be to cancel the company establishment card at the Ministry of Human Resources and Emiratisation. The cancellation of the company's foreign partners' visas must also be requested from the relevant General Directorate of Residency and Foreigners Affairs. To get the cancellation clearance, the Licensing Authority must receive all necessary documents and set a fee.
The liquidation report summarizes a company's assets and liabilities. Also, all of the company's financial records must be submitted to the liquidator. After liquidation, cash proceeds are converted into assets, creditors are paid, or the remaining debts are covered by the company.
There is a requirement to submit the necessary documents and information regarding the company's liquidation. It is our responsibility to ensure all documents are prepared according to UAE law. For more information on the documents required for your company's liquidation, please contact one of our consultants.
How Can World Company Setup Help?
World Company Setup offers liquidation solutions to clients from a wide range of industries, thanks to its extensive experience and expertise in this field. As a company, we are known for the following:
Liquidating a company can be difficult and complicated; therefore, it is crucial to follow the correct procedures to avoid legal or financial issues. If you are a business owner based in the United Arab Emirates (UAE) and want to close your business, you may be wondering what steps you need to take to liquidate your company.
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