It is advised that you follow each step to ensure that all components and licenses associated with the limited liability company are closed to prevent any future issues when liquidating a limited liability company formally in the UAE. If the firm is not fully liquidated and its operations are temporarily halted, penalties will continue to accrue without renewal. In case of liquidation of a company in UAE, all related permits and business licenses must be revoked. To prevent you from accruing fines and penalties on your license when it is not renewed at the time of expiration, pertinent governmental bodies must be aware that you are no longer operating. To safeguard your interests and shares in a shareholding corporation, you must release your obligations to partners and creditors.
Reasons for Company Liquidation in UAE
Company Liquidation in Dubai can be sought by shareholders or creditors and fall into two categories:
1. Compulsory Liquidation: When a partner files a case without the other partners present, the process of compulsory liquidation begins by court order, and the firm’s creditors may also request its dissolution, which results in a similar sort of liquidation.
2. Voluntary Liquidation: Shareholders’ decisions to discontinue corporate operations may result in voluntary liquidation. For the process to be started, a resolution must be enacted, and a liquidator must be chosen.
Articles 306 to 326 of Federal Law No. 2 of 2015, which outlines the steps and processes for dissolving an LLC firm, provides that a corporation may be dissolved for the following reasons:
- The expiration of its duration,
- The accomplishment of its goal, or
- The loss of all or most of its assets.
- The company has become bankrupt. A business that no longer pays its debts to other firms may be declared bankrupt. It is true even if the business is in the process of liquidation.
What is Company Liquidation?
It’s more complicated than it looks to liquidate a company. We simplify it, though. Owners of the firm must adhere to the process. Our involvement is now necessary. The method through which a business is shut down is called Company Liquidation. All partners receive equal shares of the company’s assets and property. Our knowledgeable staff will assist you in beginning the firm closure.
Read More : How to Cancel Your Trade License in Dubai Mainland.
Why Do I Have to Revoke My License in Case of Company Liquidation in UAE?
To prevent any accrued fines and penalties owing to the license when the validity term has not been renewed, the relevant government institution must be informed that you are no longer active in the company. In a joint-stock business, you must safeguard your rights and shares while making payments to partners and creditors. If you want to reopen, you should also correctly weigh your goodwill and professional reputation.
Liquidation Procedure in UAE
The following Company Liquidation procedure in the UAE must be taken into consideration:
- Passing Shareholder Resolution
- Liquidator Appointment
- Notice Period
- Visa Cancellation
Step 1. Passing shareholder resolution
Passing a shareholder resolution in a shareholders meeting announcing the shareholders’ approval to revoke the firm’s license is the first and most crucial stage in canceling the company’s trading license. If the resolution was enacted in a different nation, it must be officially attested by a public notary and other pertinent institutions. Directors must bring the issue of dissolution before a general meeting for the business to be dissolved if an LLC’s share capital is reduced by half. A fourth of the capital-holding partners may propose the dissolution of the partnership if losses reach more than half of the capital.
Step 2. Liquidator appointment
The liquidation process may be handled by one or more liquidators who the partners choose in the business or by the general meeting with the majority’s approval. A liquidator must be appointed to represent the court and all of the company’s creditors. The liquidator’s primary duty is to pay off the whole balance of the company’s debt by the sale of its tangible or intangible assets or as determined by the shareholders through the passing of a board resolution.
Step 3. Notice period
A liquidation certificate is given to the liquidating firm to continue the process when the relevant documentation sought by the competent department—the Department of Economic Development (DED) in the case of mainland LLC companies—has been submitted. DED will issue a certificate of liquidation. For any creditor to pursue their unpaid claim, a notice of dissolution is published in two Arabic newspapers and the business registry for 30 (thirty) days. Send a letter of confirmation to DED from the liquidator and the partners stating that no other parties objected within the grace period.
Step 4. Visa Cancellation
All partners and workers must have their visas canceled as the final stage in the liquidation procedure. They must also have a clearing certificate from different government agencies, including the Ministry of Labor, the Ministry of Immigration, DEWA, and Etisalat.
Why Should You Choose Farahat & Co. For Your Company Liquidation in UAE?
We at Farahat & Co. provide professional company liquidation in Dubai and throughout the UAE. Additionally, we offer liquidators to handle all the legal procedures related to Company Liquidation in UAE.
Read More : Complete Guide to Company Liquidation in UAE.