Company liquidation in UAE may be a complex process, but working with a professional can make the process go more smoothly. Firms that decide to close down their activities in the UAE commonly apply for voluntary liquidation, which allows them to go gracefully by paying off their debts and other responsibilities. Companies must prepare for their liquidation to fulfill Economic Substance Regulations (ESR) and Ultimate Beneficial Ownership (UBO) requirements, which require the aid of experienced company liquidators in Dubai.
When compared to establishing a business, liquidating one in the UAE may be a simple procedure. However, this is a widespread misperception because the liquidation process is complicated and takes one to three months, depending on the jurisdiction and activity. You must follow several legal procedures as part of the process. The relevant government agencies in the UAE should be notified of your firm's dissolution, and permits should be revoked.
Why is the Submission of the Liquidator's Report to the Licensing Authorities necessary?
The authorities demand a Company liquidation audit report in the UAE before the trading license is revoked. The Company's debts and assets are stated in a liquidation audit report. The Company Liquidator must be given access to all financial information.
The Licensing Authority receives a declaration letter from the Liquidator and the partners in this process. It guarantees that any party raises no objections within the grace period. The next step is to Obtain appropriate government permits and cancel the company formation card at the Ministry of Human Resources and Emiratisation. The visas of the Company's foreign partners must also be terminated at the relevant General Directorate of Residency & Foreigners Affairs. To gain clearance for cancellation, all documentation must be presented, together with a charge set by the Licensing Authority.
Steps to Take Before Liquidating a Company in the UAE
Before commencing a company liquidation in the UAE, there are certain crucial aspects that every entrepreneur should consider:
Step #1: Board of Directors Resolution
The first stage of liquidating an LLC in Dubai is to notify the Company's board of directors or shareholders. According to the UAE Commercial Companies Law, if a company's losses surpass 50% of its worth, the board of directors must recommend the Company's liquidation before a general meeting. The shareholders formally begin the liquidation process by accepting a board resolution after deciding to liquidate the Company.
Step #2: Appointment of the Liquidator
Once the shareholders have agreed upon the request for liquidation, the Company shall appoint a liquidator. The appointed Company Liquidator shall evaluate and examine the Company's assets and liabilities, the number of creditors, the amount of debt owed to the Company, and the outstanding salaries of the employees. Finally, the Liquidator will prepare an audit report that will be utilized to liquidate the business by canceling the Company's licenses and other licenses for carrying out relevant operations.
Step #3: Notification of liquidation
An application for liquidation must be filed with the Department of Economic Development (DED) in Dubai, which must be notarized and signed by the Company. They will issue notices in two newspapers, one in English and one in Arabic, notifying the organization's liquidation and requesting that any claims against it be reported to the Economic Department within 45 days of the notification deadline.
Step #4:De-registration of VAT
VAT-registered enterprises must apply for deregistration to complete the liquidation procedure legally. To file for VAT Deregistration, companies closing down must get a company liquidation declaration from the government. The deregistration procedure is required when a taxable business ceases operations or when VAT registration is no longer required. When a company becomes eligible for VAT deregistration, it must apply for it within 20 business days. Failure to apply for deregistration within this deadline will result in a fine of AED 10,000.
Unfortunately, failing to file for VAT deregistration is a common error made by businesses in liquidation, causing delays in the process.
Step #5:Ultimate Beneficial Ownership (UBO) registration submission
The Ultimate Beneficial Ownership (UBO) disclosure rules have now been implemented in the United Arab Emirates. The Regulatory Authority must be notified of the Ultimate Beneficial Owner of a business in liquidation (UBO). The real beneficiary or ultimate beneficiary is someone who owns or controls 25% of the capital, whether directly or indirectly. Companies must have a Real Beneficiary Register (RBR) to comply with UBO laws. For businesses in liquidation, the Liquidator must send a valid copy of the revised UBO register to the registrar within 30 days of the Liquidator's appointment.\
Step #6: Regulations on Economic Substances (ESR)
If a company falls under a 'relevant activity,' such as a bank, an insurance company, an investment fund management firm, or a lease-finance firm. In that case, it must adhere to the Economic Substance Regulations (ESR).
The Company is subject to ESR if it engages in a Relevant Activity in the UAE while under liquidation. The Company liquidators in Dubai overseeing the winding-up process must guarantee that your firm continues to meet all of its ESR Regulations responsibilities. The official Liquidator must submit the ESR notice and the ESR Report to the Regulatory Authority if the firm is engaged in a Relevant Activity.
Step #7: Submission of Liquidator's Report to the Licensing Authorities
Submitting the Liquidator's report to the licensing authorities is the final stage in the UAE Company liquidation procedure. Before submitting the information, the Liquidator should double-check that all the Company's bank accounts have been closed and that all its employees' visas have expired. The shareholder or director's signature must be included in the financial statement if the report contains the prior fiscal year's financial statement.
Step #8:Issue of Liquidation Certificate
The Liquidator will issue a liquidation certificate after finishing the liquidation procedure and submitting the liquidation report to the relevant Licensing Authorities.
Farahat & Co. will produce and submit the company liquidation audit report to the relevant authority where the firm is registered. The firm will be officially closed, and the trading license will be revoked. Contact us if you need company liquidation services or a company liquidation audit report. We are one of Dubai's premier audit firms.