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Guide to Voluntary Liquidation in UAE

Voluntary Liquidation in UAE is the act of closing down of a Limited Liability Company(LLC), to ensure that all the creditors are paid, all employee visas against the license are canceled, and all UAE government licenses are terminated. e Board of Directors of a corporation in the UAE has the authority to decide that voluntary liquidation is in the corporation's or larger group's best interests and may initiate voluntary liquidation proceedings to wind up and dissolve the corporation without the involvement of a court.

What is Liquidation in UAE?

Liquidation is the legal process of bringing a corporation (or a portion of a firm) to a close and redistributing the company's assets and property. Although dissolution formally refers to the ultimate stage of Liquidation, Liquidation is sometimes known as winding-up or dissolution. When customs, the authority or agency in charge of collecting and preserving customs duties in a country, decides the final calculation or ascertainment of the obligations or drawback accruing on an entry, the process of Liquidation occurs.

Types of Voluntary Liquidation in the UAE

Voluntary Liquidation in UAE refers to the choice to close a limited corporation, generally when insolvency is imminent. When a vote reaches a decision, the corporation is liquidated. Voluntary Liquidation indicates that the decision was made by the corporation rather than by the court.

  • Members' Voluntary Liquidation

A Members' Voluntary Liquidation is a process by which a solvent corporation, acting via its directors and members, resolves to wind up a firm to realize its assets and distribute the excess to its owners.

We help the board of directors prepare the Declaration of Solvency and all other procedural processes required for the General Meeting to be called. We can also help you with the appropriate paperwork. As the Liquidator, we are responsible for the sale of the assets.

  • Creditors' Voluntary Liquidation

The insolvent corporation, operating through its board, usually initiates a Creditors' Voluntary Liquidation. The Liquidator in a Creditors' Voluntary Liquidation is primarily concerned with the creditors' interests.

We help by informing the directors of their legal obligations, aiding the firm in satisfying the procedural criteria for Liquidation, accepting appointments as company liquidators, and realizing the company's assets for the benefit of all creditors.

Read also: Reasons behind the liquidation of companies in Dubai

Voluntary Liquidation Process in UAE

The following is the Voluntary Liquidation Process required for the winding of a company:

  • Availability of Shareholders in the UAE
  • Solvency certification
  • Special Resolution for Liquidation

Following are the steps of the Voluntary Liquidation Process

1. Availability of Shareholders in the UAE

To liquidate an LLC in the UAE, you must first verify that the company's shareholders or their Power of Attorney are present and allowed to approve the Shareholder Resolution to liquidate the Company.

2. Solvency certification

To show solvency, members must sign a 'Declaration of Solvency,' stating that they will be able to pay all of their obligations and dues within 12 months of the winding up. A liquidator will be appointed to provide a report on the audited account, and any creditors will need to be dealt with as a part of the closure. The declaration and any accompanying documentation must not be fraudulent or deceptive, as required by the Companies Law. If the corporation fails to pay its debts by the deadline outlined in the resolution, this will prove a false claim of solvency.

3. Special Resolution for Liquidation

For the liquidation of a company and appointment of a liquidator, a Resolution by the board or Shareholder must be approved by all shareholders of a company present in a general meeting. A board resolution must be written and notarized by a Notary Public in the UAE.

Cancellation of Trade License in UAE

The corporation will then have to apply to the Department of Economic Development to have the trade licenses revoked (DED). The following procedures must be done after filing a cancellation request with DED:

  • Obtaining approval from the Department of Labor and Immigration
  • Clearance from the Department of Labor and Immigration
  • Clearances from third parties
  • Closing of Bank account
  • Copy of newspaper Publication
  • Liquidator report
  • License Cancellation Certificate

Steps of Cancellation of Trade License in UAE

Step 1: Obtaining approval from the Department of Labor and Immigration 

All of the company's worker's and partners' employment visas must be revoked. After that, the LLC's labor and immigration files and online Dubai Naturalization and Residence Department system can be closed.

Step 2: Clearance from the Department of Labor and Immigration 

All work permits and visas for all workers and partners of the firm must be revoked. The LLC's Labor and Immigration files and the eDNRD (Dubai) systems can then be closed.

Step 3: Clearances from third parties 

All licenses, including Telecommunications, means such as Etisalat, Department of Electricity and Water (DEWA), must be closed, and final closure letters to be received from the Landlord for any tenancy contract (Ejari) and Municipality approval for the office building.

Step 4: Closing of Bank account 

Each bank must get a final closing letter in case when all bank accounts in the UAE have been closed.

Step 5: Copy of newspaper Publication

The Liquidation must be advertised in local newspapers/gazettes (at least 2). In Abu Dhabi, a Forty –Five day period is required for the advertisement. The liquidation procedure in Dubai and Abu Dhabi is submitted using the DED system.

Step 6: Liquidator report 

The Liquidator will produce audited accounts presented to the DED(Liquidation Report) as part of the liquidation of a company. During this time, any creditors must be dealt with and resolved.

Step 7: License Cancellation Certificate 

The Closure Certificate can be received after all final documentation required for the liquidation of a company has been submitted to the DED and the same has been approved.

Read also: What are the Roles and Duties of a Liquidator?

Duty of a Director in a voluntary liquidation

The directors of a corporation must provide the following information in their voluntary declaration:

  • Provide the Liquidator with information regarding the company's affairs and attend liquidation interviews as needed.
  • Take care of and give over the company's assets, including all records, bank statements, and other vital documents about assets and obligations.

Services for Liquidation of a Company

Farahat & Co. has a team of the country's company liquidators. We can walk you through the voluntary liquidation process from start to finish. Our experienced staff thoroughly investigates each case and seamlessly performs the voluntary Liquidation process in the UAE. Don't hesitate to contact us if you want additional assistance.


Shahnaz Kaushar is a senior Trademark and Intellectual Property (IP) Expert. She has handled some of the firm’s complex, high-profile cases – many involving the protection of trademark and IP rights.