There are a lot of laws that are used by the government to govern the country, and one of them is about liquidation proceedings which are stated in Federal Decree-Law No. 2 of 2015 or known as Companies Law.
A liquidation is done to a company when it is going to cease from existing. In this process, it is usually agreed upon by the stakeholders. A liquidator is needed for certain procedures to commence.
What are Liquidators and What Do They Do?
There comes a point that a company may be unsuccessful with their venture and decides to undergo a winding-up or simply liquidation. A person who is experienced in handling this kind of matter and situation is called a liquidator. It is either the owner himself or the shareholders who appoint a liquidator or the court who does for a company with a court order.
A good liquidator collects all the assets of a company and settles any outstanding debts that it has used the said assets. Any remaining assets after paying off debts will be divided for the shareholders.
A company is in a liquidation stage while the process of being liquidated is being performed by a liquidator. There is a certain procedure that should be followed, and a good liquidator can make it easier and smoother for the shareholders/owner.
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What are the Types of Liquidation?
There are two types of liquidation in the UAE. However, both still mean that a company has zero chance of recovering from its losses.
This kind of liquidation is an occurrence when an owner or shareholders of a company view their business as not being fit to run anymore. This kind of action can eliminate any risks of a forced liquidation or be receiving false accusations.
In this kind of liquidation, shareholders of a company call creditors for a meeting to decide on which liquidator they should choose.
An obligatory liquidation is when it is not in the will of an owner or shareholders to liquidate their company. This happens when a court itself orders for a company to be liquidated. More often than not, creditors are the ones who are viewed to be the ones who request for liquidation of a company. This is considered by others as risky because false accusations might arise from this.
This usually occurs when a company fails to pay creditors multiple times. Because of this, creditors can file a request for the liquidation of company in Dubai.
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What are the Liquidators’ Roles and Duties?
There are a number of roles and duties that a company liquidator should handle. In order to be successful in managing the liquidation stage of a company. A list of roles and duties are stated below:
- An inventory of a company’s assets and liabilities should be done with the help of the owner or manager. The accounts, financial records, and other important documentation should be given to a liquidator.
- A bank account can also be opened in the name of a company. That is going through a liquidation for the funds to be deposited into.
- A company that is going through a liquidation stage shall be represented by a liquidator in any litigation that may occur.
- Assets are sold by a liquidator in order to settle any debts that are outstanding in the company.
- There are specific outstanding debts that are considered to be a priority before other things. Such as employees’ salaries or any debts that may be accumulated during the liquidation stage.
- Once debts are paid, any remaining assets shall be divided for the shareholders or not at all if there is only one owner.
- In the event that the profits that are gathered from the sold assets are not enough to pay for all the outstanding debts of a company, the remaining debts shall be divided as well for all the partners to pay or for an owner to pay if there is only one person who runs a company.
- A final account with regard to the liquidation should be presented by the chosen liquidator after doing all the necessary procedure and process.
- It will also be the duty of a liquidator to request for the company to be removed from the Commercial Register.
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Top Company Liquidation in Dubai
A liquidator’s job is not easy. However, we can make it smooth for you as your company undergoes a liquidation. We know our way of preparing documents and obtaining approvals and such, for deregistration to take place easily.
Farahat & Co. has been in the liquidation industry for 35 years, making us one of the top company liquidation in Dubai. Our experience is an assurance in itself that we can provide you with the quality service that you need.
You can book a free consultation and speak with our liquidator by calling us today.