Any company that decides to close down its business in the UAE needs to cancel its trade license and all other related permits. Even if the company has no assets still it is still mandatory to follow the necessary liquidation process to close down its business and cancel its business license as per UAE laws.
Non-compliance with the proper liquidation process may result in penalties and future business restrictions within the UAE.
This article outlines the complete procedure for no-asset company liquidation in Dubai, UAE.
Liquidation usually takes place when a company’s assets are sold and it ceases to meet its financial obligations. The business is completely closed down, and the company is further deregistered. The assets are sold to settle claims from different claimants, such as creditors and investors.
The liquidation process of a company with no assets still requires compliance with legal requirements. Even without assets, the company must pay off existing liabilities, cancel its trade license, and deregister with the relevant authorities to formally wind up its business operations.
At first, the company has to pass a board resolution that confirms the decision for liquidation. The resolution must be notarized and presented to the relevant authorities.
In accordance with UAE law, a licensed liquidator has to be appointed, even if the company has no assets, to manage the liquidation process. The liquidator has to submit a liquidation report confirming that the company has no remaining assets or liabilities.
For the company to be legally closed, clearance must be obtained from the following government departments:
Where there are employees, the work visa of the employees shall be canceled, and all dues (gratuity and final salary payments) shall be paid.
All the company bank accounts are to be closed, and the bank clearance certificates must be obtained.
As per the UAE law, a liquidation notice must be published in two local newspapers (English and Arabic) for 45 days to allow creditors to forward any claims against the company before it is deregistered.
The final step is to cancel the trade license with the Dubai Economic Department (DED). The trade license is canceled, and the company is thus officially deregistered.
Dubai’s Liquidation process must be conducted per UAE laws for a smooth and seamless winding up of a company. Mentioned below are the prerequisites:
This process is governed under Federal Decree-Law No. 32/2021 on Commercial Companies. As per this law, a company will be closed after following certain steps, such as identifying an appointed licensed liquidator and clearing any financial matters.
A Tax Deregistration Certificate must be obtained from the Federal Tax Authority (FTA) even if the company does not have any assets. This would indicate that there is no unpaid VAT or corporate taxes in that company, hence having a clear financial exit.
An improper liquidation of a company results in several fines, legal issues, and restrictions on future business in the UAE. Proper liquidation procedures help in avoiding all these legal issues.
Company liquidation experts in Dubai are well-versed with UAE liquidation laws. They help with drafting the necessary documents and ensure closure of business in compliance with the law.
At Farahat & Co., we help make the company liquidation process in Dubai easy and free of hassles.
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Let Farahat and Co. facilitate your company’s closing in the right way – legally, efficiently, and without hassles. Contact us today for more information.