DIFC Company 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:
- You're worried about your company's future,
- You're losing money and don't have enough money,
- You believe the Company is approaching insolvency, or
You intend to dissolve the corporation.
Types Of Company Liquidation
In the UAE, there are generally two sorts of liquidations that a business owner may come across.
1. Voluntary Liquidation
When a Company's owner/shareholders believe the Company is unsuitable for operation (due to financial collapse), they elect to close it down voluntarily.
2. Mandatory Liquidation
Mandatory Liquidation occurs when a business cannot pay its debts due to cash flow problems. Creditors who are dissatisfied with the Company's performance might ask the court to liquidate it so that they can reclaim the money owing to them.
The latter is forced on the firm whilst the former is carried out. The procedure entails assessing a company's assets before selling them to raise funds in both circumstances. After then, the money is divided among the Company's creditors.
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
The corporation must provide a shareholder/board resolution. This resolution declares the Company's intention to close down.
• Appointment of an Official Company Liquidator
The Company must hire an official liquidator to manage the whole liquidation process after the desire to liquidate has been proclaimed. The DIFC has established clear rules for who is eligible to serve as an official liquidator. Companies must employ DIFC-approved auditors or liquidators. Keep the following things in mind while choosing a company liquidator:
a. The corporation must submit a formal request letter to the liquidator requesting their services.
b. Upon acceptance, the liquidator must supply the Company with a letter of appointment declaring that they would be offering their services to the Company.
All current workers' salaries and gratuities must be paid in full.
• Reimbursement of Overdue Fees
To receive a certificate of corporate liquidation, a firm must pay any outstanding fees to the DED.
• Obtain a Certificate of Clearance
It is necessary to seek permission from appropriate service providers and landlords.
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
All visas issued under the Company's license must be cancelled, including the directors' visas.
• Letter of Permission from MOHRE
A letter of permission from the Ministry of Human Resources & Emiratization is also required.
The Company's license can then be revoked, and it can fall into official Liquidation.
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
- A letter of appointment to the Company by the appointed liquidator.
- DED issued a certificate of company liquidation.
- Documents from appropriate service providers, banks, and government agencies must be obtained.
- MOHRE's letter of approval
- Liquidation notices were issued in two different local newspapers.
- Report of the final audit
- Report of the Liquidator
What Does a Liquidator Do?
Liquidation requires the appointment and licensing of a liquidator (IP), who has various responsibilities.
Following their appointment, these skilled individuals are responsible for acting as an impartial third party to oversee the procedure from start to finish.
A company liquidator's job entails a variety of duties, including but not limited to:
- With the help of the directors, create a Statement of Affairs paper for the creditors. It is a financial statement that goes into great depth on the Company's financial situation.
- distributing surplus money and realized assets to the relevant parties
- Determine any pending claims against the Company and resolve them in the legal order of precedence.
- Satisfying rights in the order of priority established under the DIFC Insolvency Law.
How Farahat & Co. May Assist You?
Liquidation of a Company in the DIFC is both time-consuming and challenging. If you want to be sure you're meeting all of the legal criteria, talk to a seasoned company liquidator now, such as Farahat & Co. is a regulated business that is classified as an authorized financial auditor/liquidator with the Dubai International Financial Centre (DIFC). The liquidator must also be a recognized expert witness with the courts of Dubai, Abu Dhabi, and the United Arab Emirates as a licensed liquidator. You must hire trustworthy licensed company liquidators in DIFC, such as Farahat & Co., to guarantee a smooth and effective firm winding up. Get in touch with us right away for more information!