Business owners operating in Meydan Free Zone (MFZ) must follow UAE laws and MFZ guidelines when they decide to shut down their business. Company liquidation is a process where the company makes a decision to officially close its business, resolve the debt claims, and finally terminate its business license in order to fulfill the processes of liquidation.
The article explains the guidelines on company liquidation in Meydan Free Zone and the reasons for business liquidation, duties of the liquidators, and the step-by-step liquidation process. The information is provided according to the regulations of the UAE and those of the Meydan Free Zone.
What Is Company Liquidation?
Company liquidation is the process of closing down a business. In this process, the liquidator is appointed, who is responsible for settling the debt claims by selling the company’s assets, and finally dissolving the company by following the legal process. There are various reasons why a company may need to wind up its business, which may include financial losses, strategic changes, or legal requirements.
Types of Company Liquidation
- Voluntary Liquidation: In this type of liquidation, the shareholders or owners of the company decide to liquidate the company, even if the company is solvent.
- Involuntary Liquidation: In involuntary liquidation, when the company fails to pay outstanding debts, the creditors may demand the liquidation of the company.
- Compulsory Liquidation: In this type of liquidation, the liquidation order is passed by the court. It generally occurs when the business becomes insolvent and is unable to meet its payment obligations.
What Can Be the Reasons for Liquidating a Company?
Firms choose liquidation for various reasons, including;
- Financial Loss: When a company runs into financial losses and is unable to make a profit.
- Change in the business strategy: When the owners of the company choose to modify or change their business strategy by choosing a new approach.
- Partnership Disputes: When there are disputes between partners or shareholders.
- Goal completion: The main objective for which the company was established has been achieved.
- Non-renewal of license: When the company is operating without valid permits or license, or incurs penalties or is involved in fraudulent activities, this may result in company liquidation or license cancellation.
- Compulsory liquidation: When a company fails to pay the outstanding debts claim to its creditors, the court may order the liquidation of the company.
The liquidation process must be done taking into consideration all the legal requirements and necessary steps.
Who Is a Liquidator?
The MFZ, along with other authorities, appoints liquidators to perform company liquidation and to manage the process. The liquidator performs the following duties:
- The liquidator shall do all that is necessary to preserve the assets and rights of the Company and collect its receivables from third parties.
- The liquidator shall deposit the monies received into a bank for the account of the Company in liquidation immediately upon collection.
- The liquidator may repay the Company’s debts and may sell its property, whether movable or real property, at public auction or by any other means.
- The liquidator shall notify all the creditors by registered letter with acknowledgement of receipt of the commencement of the liquidation, inviting the creditors to present their claims.
- If the assets of the Company are not sufficient to settle all debts, the liquidator shall pay part of the debt, without prejudice to the rights of preferred creditors.
A licensed liquidator has to be appointed for Meydan Free Zone company liquidation procedures.
Steps to Liquidate a Company in Meydan Free Zone
1. Pass a Board Resolution
The shareholders need to validate both the liquidation decision and the selection of a licensed liquidator. The resolution needs to be notarized before submission to MFZ.
2. Appoint an Approved Liquidator
Select a liquidator who maintains registration and approval from MFZ. The liquidator will manage all legal and financial aspects of your company’s closure.
3. Cancel Employee Visas and Company Establishment Card
The company must terminate all visas that employees and partners possess through the company. Also, return the establishment card to MFZ.
4. Settle Outstanding Payments and Liabilities
All debts, together with employee salaries and supplier payments, and other obligations, need to be settled. The company needs clearance letters from banks, together with telecom providers (Du or Etisalat) and DEWA, and landlords.
5. Obtain No Objection Certificates (NOCs)
You will need NOCs from relevant authorities, such as:
- Federal Tax Authority (FTA) for VAT deregistration.
- Dubai Customs, if applicable.
- Utilities and Telecom services.
6. Publish Liquidation Notice in the Newspaper
The announcement needs to be published in both Arabic and English-language newspapers. Creditors will have 45 days to raise claims.
7. Submit Final Liquidation Report
The liquidator will create a report that confirms that all procedures are finished, that debts are paid off, and that there are no remaining liabilities.
8. Cancel Licenses and Permits
Formally cancel the company’s trade license and any other permits with MFZ.
9. Close Company Bank Accounts
All corporate bank accounts need to be closed before obtaining closure letters from the bank.
10. Return Company Documents to MFZ (Meydan Free Zone)
Return all original documents, including:
- Trade license.
- Certificate of incorporation.
- Memorandum and Articles of Association.
- Lease agreements.
Important Notes to Remember
- The law requires companies to undergo liquidation when they become inactive.
- The failure to properly liquidate a business will lead to both financial penalties and legal consequences.
- The law requires businesses to select a licensed liquidator for their operations.
- The final closure requires completion of all legal clearances, together with NOCs and documents.
How Farahat & Co. Can Assist You With Company Liquidation in Meydan Free Zone Company
At Farahat & Co, our liquidators act as licensed liquidator which holds approval from Meydan Free Zone and other UAE regulatory bodies. Our company provides complete company liquidation solutions, which include:
- Preparing all liquidation documents.
- Our liquidators handle all interactions with MFZ, FTA, banks, and other departments.
- Publishing newspaper announcements.
- The team prepares and submits the final liquidation report to the relevant authorities.
- Our team ensures complete adherence to UAE legal requirements and MFZ regulatory standards.
Our team, with more than 35 years of experience, provides a seamless company liquidation process that meets all UAE laws and MFZ regulations.
Farahat & Co. offers professional company liquidation services to businesses operating in Meydan Free Zone, Dubai.
Our experts will guide you at every step and handle all the formalities for you.
