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Does a Company Liquidation in Dubai Required An Audit Report?

Company liquidation in Dubai refers to the process of winding down a business and ceasing all activities. Liquidation of a business happens when it is insolvent and unable to repay its outstanding debts. When a firm is liquidated, all organizational assets are allocated to owners and creditors following their claim priority. The process of liquidating a business is referred to as Liquidation. The individual or corporation that executes the Liquidation is the Liquidator. The company's management appoints a liquidator.

Company Liquidation Services in Dubai:

Our liquidators can help you at every level of the corporate liquidation procedure. Farahat & Co. often serves as liquidators for various enterprises that want to shut their doors. Our liquidators begin and complete liquidations in a proper and timely way. Closing a business in the UAE may be a time-consuming and complicated process. Still, our professional and powerful liquidators simplify all legal requirements and aid you with the company liquidation process in Dubai, UAE.

Farahat & Co. offers company liquidation services in Dubai to all mainland and free zone corporations in the UAE. We provide business liquidation services to both LLCs and individual proprietorships.

Read also: Liquidation Process for A Company with No Assets

Liquidation - What Is It?

Liquidation is a term that refers to the process of closing down a firm. Simply put, company liquidation is a solvency procedure in which the assets of a business are assessed and liquidated to pay off any obligations. When a firm becomes more prominent, the liquidation process gets more complicated since more assets and liabilities must be considered. Liquidation in the UAE may also be complex since several authorities have their own set of liquidation regulations. It is critical for your business to understand the laws and regulations that apply to it.

Types of Liquidation

In Dubai, there are two kinds of business liquidation:

  • Liquidation of a business voluntarily (Voluntary Company Liquidation)
  • Compulsory Liquidation of a business (Compulsory Company Liquidation)
  1. Voluntary Company Liquidation

If a firm does not have adequate funds to operate its business or fulfill its costs, such as bills and wages, it will always be in the red. In such an event, enterprises would file for voluntary Liquidation since they lack the financial resources to compete in the UAE market.

  1. Compulsory Company Liquidation

Suppose a business breaks the law or commits a significant crime such as fraud. The government will shut down the corporation immediately, and the court mandates obligatory Liquidation. The process of Liquidation is initiated by either the corporation or its creditors. Dissatisfied creditors initiate compulsory Liquidation. When a business falls bankrupt, and its creditors are no longer prepared to wait for payment, they petition the court for intervention. In rare instances, a shareholder or director of a business may also petition the court for intervention.

Company Liquidation Process in Dubai 

The required company Liquidation Process in Dubai must be followed to be done effectively and legally.

A series of Company Liquidation processes must be followed, including filing several documents and an official notice period. Legislation governs the procedure in the United Arab Emirates. For example, LLCs are governed by Federal Law No. 2 of 2015 on commercial company law, containing articles 306 to 326.

  1. acquire appropriate documents authorizing the Liquidation

The first and most critical step is to acquire appropriate documents authorizing the Liquidation. It might be an attestation from the notary of a board decision or a court judgment allowing Liquidation.

  1. Select Liquidation Service Firm

The next step is to choose a liquidation services firm. The firm will oversee all aspects of your business's Liquidation. The government has made it essential to select an official liquidator firm in certain instances. The government requires total openness and objectivity in all actions about your company's Liquidation. That is why it is necessary to designate a liquidation services firm.

  1. Notify the licensing authorities of the Liquidation of the company.

The next step is to inform the authorities in whose jurisdiction the company's trade license has been secured that a liquidation services business has been hired. A formal application for license cancellation must be made and submitted if the relevant body is Dubai DED. After then, the Liquidation notice to be published in two UAE newspapers.

  1. Cancel all corporate documentation, including the Company License, Formation Certificate, Lease Agreement, and so on.

The next step in the liquidation process is to ensure that all of the company's workers have been legally fired, all outstanding debts have been paid, and the personnel count has been reduced to zero. Following that, you must terminate the business license and formation certificate and save the letters as documentation for future use during the liquidation process. All external cancellation approvals must be obtained, and the final trade license cancellation must be verified by a document from the license granting body.

  1. Publication of the Liquidator's Liquation Report and issuance of the Certificate of Deregistration by the Liquidator:

Once the liquidation work has been completed, the appointed Liquidator must produce a liquidation report. Following the Liquidation, the registrar of the business must receive an application for deregistration and a copy of a liquidation report. If the application is approved, the business's registered agent will provide a deregistration certificate.

However, it is to be noted that these stages apply equally to corporate Liquidation; however, the specifics may differ significantly due to the process's legal structure.

Documents Required for Company Liquidation in Dubai, United Arab Emirates

The Dubai government specifies which documents must be provided for the liquidation procedure. These documents are required for company liquidation both in free zones and on the mainland. The following documents are required:

  • A copy of the license
  • Copy of the Memorandum of Association (MOA), including any changes
  • Power of Attorney (if any)
  • Copies of all investors' passports
  • A copy of your Emirates ID
  • Investors' decision
  • Deregistration application form.

Liquidation Audit Report

The authorities demand a liquidation report of the business before canceling the trading license. A liquidation audit report will detail the company's obligations and assets. The Liquidator must have access to all financial records.

As the liquidation proceeds, all of the business's assets are converted to cash, given to creditors, or allocated to other corporate responsibilities. Specific regulations govern the distribution of assets—the liquidation audit ensures that the data is correct and complete.

The Dubai Economic Department (DED), the Jebel Ali Free Zone Authority (JAFZA), the Dubai Airport Free Zone Authority (DAFZA), the Dubai Multi Commodities Center (DMCC), and the Dubai Silicon Oasis (DSO) all require a final liquidation audit report when a business ceases operations and cancels its license in their respective regions.

How may Farahat & Co. assist you?

Farahat & co., the leading company liquidator in UAE will create a report on its Liquidation and submit it to the appropriate body in the country where the business is registered. We are a prominent auditing business in Dubai. The authorities will shut down the business and revoke the trading license. Contact us for company liquidation services or a company liquidation audit report!

Read also: How to Liquidate a Company in DIFC ?

مدير مراجعة وتدقيق حسابات محنك يتمتع بخبرة تزيد عن 5 سنوات في مجالات التدقيق. لديه براعة
واسعة في تقديم خدمات التدقيق والمراجعة. إضافة إلى ذلك ، فهو بارع في مجالات التدقيق الداخلي ،
مع الالتزام بالمعايير الدولية لإعداد التقارير المالية (IFRS) والمعايير الدولية للتدقيق. عمل سابقًا مع
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حساب ضريبة الدخل / ضريبة الشركات من خلال تحليل الدخل والنفقات.