Read on to learn more about each of the three categories:

1. Creditors’ Voluntary Liquidation of Creditors:

A Creditors’ Voluntary Liquidation (CVL) is triggered by a shareholder resolution employed by bankrupt corporations.

In this instance, the corporation becomes bankrupt, and the directors or owners begin the procedure to prevent judicial involvement or compulsory dissolution. In other words, the company declares insolvency before its creditors may take legal action against it.

2. A Members Voluntary Liquidation (MVL)

A Members Voluntary Liquidation (MVL) is a formal procedure for winding up the affairs of a solvent corporation. A solvent corporation has more assets than liabilities and can pay off all of its debts.

3. Compulsory Liquidation

Compulsory Liquidation is a term used to describe the process of liquidating a business. Compulsory liquidations are frequently started by a creditor who wants to use a court order to compel a firm that can’t pay its debts to close down.

directors will be terminated.

Step 2: Notify the Free Zone Authority Officially

The free zone must be notified of the desire to cancel, and the free zone will provide you with a cancellation form. The original signed board resolution must be provided with the cancellation notification. Subsequently, the free zone will issue a free zone termination invoice to acknowledge the cancellation request.

The free zone will begin the legal procedure of dissolving the firm once the cancellation money is received.

Step 3: NOCs & Clearances

All utilities such as DEWA and communications services (Etisalat) in the company’s name must be terminated. A clearance letter must be obtained; any commercial space in the company’s name must also be canceled, and a clearance letter received.

Step 4: Employees and Sponsorship

All visas and work permits issued in the company’s name for workers and dependents must be revoked. However, keep in mind that, under UAE labour law, a corporation must provide an employee with two months’ paid notice before terminating their contracts in a company shutdown.

Step 5: Make a Formal Announcement

A 15-day formal notification in an Arabic newspaper/gazette declaring that the firm is closing is essential. If no claims are filed or resolved, settlement documentation must be submitted to the free zone authority for a closure confirmation to be issued.

Step 6: Confirmation of Termination

The Free Zone authorities will provide the company termination certificate when all of the requirements mentioned above have been fulfilled. It’s essential to keep in mind that officially terminating a Free zone firm might take two months.

Step 7: Business Bank Accounts

The firm termination letter can be taken to the bank to terminate the corporate bank account after being issued. Any leftover bank balance will be distributed among the former firm partners unless otherwise mentioned in the board resolution.