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Involuntary Liquidation DIFC

DIFC Liquidation

The method to undergo liquidation of a company in the United Arab Emirates (UAE) varies depending on where the firm is located. In the United Arab Emirates, each area has its own rules for corporation dissolution. As the UAE has several designated business zones and each zone is overseen by its municipal government. To effectively liquidate their firm, the business owner(s) must adhere to all applicable requirements. While this may make free zone company dissolution seem perplexing to some, it also contributes to a healthy and controlled corporate climate in which everyone may thrive.

The Dubai International Financial Centre (DIFC) established a set of guidelines for the liquidation of a company in the United Arab Emirates.

The fundamentals of liquidating a company are the same as in the rest of the globe. When a corporation goes insolvent or is ruled unsuitable for running by its shareholders, it is liquidated in the UAE. Liquidation is a method of winding down a failing business in a systematic manner. The UAE's additional requirements ensure that the Company's loose ends are tucked away in this methodical procedure.

Financial Audit And Liquidation Of Company Under DIFC

Companies based in the DIFC free zone must adhere to particular restrictions, making financial audits mandatory. The audit firms in Dubai founded in the DIFC is regulated by the DFSA (Dubai Financial Services Authority), and it is required for all companies to have their audit done.
Each financial year, a financial audit must be conducted and submitted to the authorities within four months after the end of the financial year. The financial statement audit is required because it aids in the improvement of the Company's management and serves as a check to ensure that all laws and regulations have been followed, and DIFC approved auditors must perform it.
If any of the following conditions apply, you must appoint a company liquidator by approving a resolution by all of the board directors in a board meeting:

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DIFC Liquidation

Types Of Company Liquidation

In the UAE, there are generally two sorts of liquidations that a business owner may come across.

1. Involuntary Liquidation DIFC

The Dubai International Financial Centre (DIFC), a federal financial free zone in the UAE, has enacted a comprehensive legal framework for insolvency matters through the DIFC Insolvency Law (DIFC Law No. 1 of 2019). This law provides mechanisms for both voluntary and involuntary winding-up procedures.

Involuntary liquidation within the DIFC occurs through court proceedings when a company fails to meet its financial obligations or when creditors petition for the company’s dissolution due to unpaid debts. The DIFC Insolvency Law recognizes two forms of winding up:

  1. Court-ordered (involuntary) winding up: In cases of financial distress, stakeholders can seek involuntary liquidation. The court appoints liquidators to oversee the orderly dissolution of the company, ensuring fair asset distribution among creditors.
  2. Voluntary winding up: Companies may also choose to wind up voluntarily.

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Procedure for DIFC Liquidation Of a Company In The DIFC

The first step in the liquidation of a company is to decide to do so. If it's a voluntary liquidation, the choice will be made by the Company's owner(s) or shareholders. If the Liquidation is required, the corporation will be served with a court order and obliged to begin the process.
Companies must keep the authorities informed from beginning to end. Before a company may be liquidated, the DIFC requires it to provide numerous paperwork and confirmation of permissions.

• Board Resolution for Liquidation of Company

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DIFC Company Liquidation

An Official Announcement for Liquidation of a Company Must Be Made

When all of the foregoing procedures have been met, the Company must make public notification of its intention to close down. Liquidation notices are placed in two local newspapers. After the notifications are published, there is a 45-day waiting period. Anyone who has a problem with the Company being closed down can speak up within these 45 days.
The corporation can proceed with its liquidation procedure once the 45-day time has expired and no filed claims.

• Cancellation of Visas

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company liquidation services in Dubai UAE

Required Documents List For Liquidation Of A Company In The DIFC

While under Liquidation, the DIFC requires companies to furnish a series of documentation. These papers include the following:

  • A decision of the board of directors/shareholders attested by a Notary Public
  • A letter from the corporation to the liquidator that has been chosen

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