Liquidation is a radical solution when your company is going through extreme financial difficulties. Because there are so many options available, it is always best to get the right liquidation advice to make the best decision for your company.
To assist you in making the ideal decision, our experts from Farahat & Co answer the six most frequently asked questions about company liquidation in UAE.
What Can I Expect to Get Out of a Liquidation Consultation?
- Our experts want to understand the ins and outs of your company to understand your situation. They will ask you various questions regarding your assets, the amount of debt you have as well as your income. While we understand these questions seem extremely personal, a thorough analysis of your situation is not possible without a complete picture of your financial situation.
During the consultation, our expert will analyze your current scenario and help you determine if liquidation is the ideal option for you. If yes, you will be explained the process as well as the pre-requisites.
Finally, you will be given an estimated cost for availing of the liquidation services from Farahat & Co and explained the next steps you can take to proceed.
What is a Liquidator Report and Is It Necessary?
- A liquidation report is prepared by a liquidator. It is the liquidator that takes control of the business itself, gets all the paperwork done in time, keeps involved parties informed, settles all the claims against the business, meets the directors as well as prepares the liquidator report that reasons out why the company needs to be winded up or closed down.
This report contains details about any exchanges in terms of company property and transactions or preferential payments which resulted in the company’s poor financial standing. It gives an overview of the affairs of the organization, its financial journey and whether misconduct or unlawful activity had taken place by the directors in a span of 3 years and recommends to the official legal receiver whether there is a need for any further investigations.
The authorities demand a liquidator report of the business before cancelling the trading license. Thus, this report is crucial in determining whether the company gets approval for liquidation in the UAE.
How Long Does It Take to Liquidate a Company in UAE?
- The duration required for the completion of a company liquidation process depends on several factors such as the structure of the company, the types of dealings the company was involved in before liquidation and whether any litigation will be necessary.
On average though, taking into account the notice period which is 45 days, it takes around 60-90 days to liquidate a company in the UAE.
However, in any of the cases, it is essential to realize that the way to ensure a proper liquidation is to hire a knowledgeable and reliable expert so that the paperwork and all the necessary steps are taken care of as quickly as possible. Working with a well-reputed company such as Farahat & Co is key to aiding the process.
What is the Liquidation Procedure for Closing a Company in UAE Mainland?
- One of the first steps in the liquidation of a company in UAE is to cancel your business license as this lets government authorities know that you are no longer in business. This will also ensure that you don’t incur any fines and penalties. In case, you have a shareholding company, it is absolutely crucial to discharge your liabilities to creditors and partners.
Closing a mainland company requires that all partners be available in the same country (or a Power of Attorney is approved and attested and signing of the Shareholder Resolution to close or wind up the company).
Next, an application needs to be submitted to the Department of Economy (DED), and the following steps must be carried out.
- Closing of Company Bank Account
- Immigration Clearance
- Obtaining of Clearance Letter from Ministry of Customs and Chamber of Commerce
- Paying off all Rent Dues and Getting a Clearance Letter
- Obtaining Final Bill from DEWA or ADDC
- Confirmation of Terminated Utilities
- Filing of Notification in Newspaper/Gazette Publication
- Selling or Transfer of Assets
- Liquidators Report
- Confirmation Certificate of Termination and De-Registration
- What are the Steps Involved in Free Zone Company Liquidation?
- Here are the actions required to liquidate a free zone company in the UAE:
- Shareholder Resolution or Signed Board
- An Official Notification Provided to the Free Zone Authority
- Obtaining NOC’s and Clearance Letter
- Cancelling of Employee Work Visas and Sponsorship
- Official Notification Given in Arabic Newspaper/Gazette
- Termination Certificate
- Closure of Corporate Bank Accounts
- How Do I Cancel My Business or Trade License in UAE?
- The process of cancelling a trade license in the UAE depends on the type of company. Companies in the free-zone and mainland zones have a similar process of cancelling trade licenses, however, the free-zone requires some additional clearances and documentation.
To cancel a sole proprietorship, here are the steps involved:
- Clearance from Ministry of Human Resources and Emiratization
- Clearance from Directorate of Residency and Foreign Affairs
- Clearance from Relevant Water and Electricity Authority
- Valid NOC from Ministry of Labour and Social Affairs
- Leasing Entity
Want to know how to cancel trade licenses for free zones? Read here!
Looking to Avail the Best Liquidation Services in the UAE?
Closing down a company can be an overwhelming thing as it is, but the process shouldn’t have to be. Farahat & Co brings with it years of experience and a myriad of liquidation client success stories in the UAE!
With proficient and skilled experts, you are sure to get peace of mind and a smooth liquidation experience.