Company Liquidation Services in Dubai, UAE
Company Liquidation in Dubai, UAE
The company liquidation in Dubai takes a long time. Company liquidation may be a time-consuming and challenging process. Still, our knowledgeable liquidators in Dubai, UAE can simplify all legal procedures and assist you with the Liquidation of your business. In Dubai, a firm liquidation happens when it lacks the finances to carry out its daily activities and operations or lacks sufficient earnings to break even and is in debt. When a corporation commits a crime or a major infraction, such as fraud or breaking laws and regulations, it is almost guaranteed to liquidate the company.
What is a Company Liquidation?
Company liquidation in Dubai is when a free zone company or LLC company stops all activities and winds up the company, and all assets are divided among creditors and shareholders. The process of dissolving a business is known as ‘liquidation or ‘dissolution.’
Why Do Companies Need to Liquidate?
In the UAE, there are two main reasons why a corporation may need to be liquidated:
- The initial objective for forming the business has been met, and the company is no longer necessary;
- The firm is considered bankrupt.
What is the Role of a Company Liquidator in UAE?
A Company liquidator is a UAE-registered firm, generally, a chartered accounting or auditing firm tasked with selling the company’s assets to get money and pay off any outstanding debts. In compulsory liquidation, a liquidator may be chosen by shareholders by resolution or by the courts. Immediately after being appointed, the liquidator will provide a formal letter of acceptance. They will write a statement of affairs and a liquidator’s report once all of their responsibilities have been fulfilled, which are required to complete the liquidation process.
The following is a list of the roles that the liquidator should fulfill. They are as follows:
- Evaluate the company’s assets and liabilities. He shall be held accountable for any claims evaluations. He will also be in charge of distributing the remaining earnings from the sale of the company’s assets.
- From time to time, provide information to the company’s creditors.
- Supervise the collection and distribution of business assets
- Prepare the final liquidators’ report and the statement of affairs.
Types of Liquidation
- Voluntary Liquidation – A business’s shareholders may opt to liquidate a solvent corporation or the directors of an insolvent company may choose to halt further trade and liquidate its assets to pay its creditors.
- Compulsory Liquidation – If a business’s obligations are not paid on time, creditors may petition the courts to liquidate the company so that they can collect their money. To pay off existing debt, the courts may compel a corporation to liquidate and sell its assets.
Documents Required for a Company Liquidation in Dubai, UAE
The Dubai government specifies the sorts of papers that must be provided as part of the liquidation procedure. These documents are necessary for the dissolution of a corporation in both free zones and on the mainland. The following are the required documents:
- A copy of the license
- Any modifications to the Memorandum of Association (MOA).
- Power of Attorney (if any)
- All shareholders’ passport copies
- A copy of the Emirates identity
- The resolution of the shareholders
- Deregistration application
What Exactly Does “Company Liquidation Services” Entail?
A company’s Liquidation is how it seizes all of its commercial activities and must shut down. When it is determined that a firm can no longer provide its services, it must shut down. A variety of factors may contribute to this.
The company’s obligations may significantly outnumber its assets, putting it in jeopardy of going bankrupt. The firm will have to close if it cannot continue to operate. Liquidation of a firm can also be voluntary if the management has decided to close it down for reasons, they are aware of.
All of the company’s assets are used to pay off all of the company’s liabilities when the liquidation procedure is completed. If any assets remain after all of the company’s liabilities have been met, they are sold, and the proceeds are divided among the directors and shareholders.
Company Liquidation Process in Dubai, UAE
Here are the Procedures for company liquidation that all businesses should take. The procedures listed below are not set in stone and can be altered to meet the needs and requirements of the organization.
- Obtain the necessary Documents to justify the Liquidation
The first step is to collect the documents required to explain the Liquidation in the first place. It might be a notarized board decision (where most business directors/owners voted in favor of Liquidation) or a court order directing Liquidation.
- Hire a Liquidation Services firm
The next step is to retain the services of a liquidation services firm. This business will handle all aspects of your Liquidation. In some situations, the government requires the appointment of an official liquidator company. The appointment of a liquidation services firm is necessary because the government demands total openness and objectivity in all aspects of your company’s Liquidation.
- Notify Company Trade license issuing authorities of the Liquidation
Following the hiring of a liquidation services firm, the following step is to notify the authorities under whose jurisdiction the company’s trading license has been obtained. If the authority is the Dubai DED, the DED must be notified of the company’s dissolution, and a formal application for license cancellation must be filed. After that, the Liquidation notice appeared in 2 local newspapers in the UAE.
- Cancel all corporate documents such as the Company License, Formation Certificate, Lease Agreement, and so forth.
The next stage in your liquidation procedure is to make sure that all of your employees have been formally dismissed from the firm, their outstanding debts have been paid, and the staff count has been reduced to zero. Following that, you must cancel the company License and formation certificate and keep the letters as evidence for future use during the liquidation procedure.
All external cancellation permissions must be acquired, and a document from the granting body must verify the final trade license cancellation.
- Publication of Liquation Report by Liquidator and issue of Certificate of deregistration
The appointed liquidator must publish a liquidation report once the liquidation task is finished. Following the Liquidation, the company’s registrar must receive an application for deregistration of the business and a copy of the liquidation report. The registrar of the business will provide a certificate of deregistration if the application is granted.
How May Farahat & Co. Company Liquidation Services in Dubai, UAE Assist?
Firms must communicate with various external parties/authorities to organize things on time, and the liquidation process may be time-consuming and costly. Any step or Document that is missed will generate needless time and difficulty.
Farahat & Co. provides company liquidation services for all UAE entities, including LLCs, free zone businesses, and offshore companies, ranging from total Liquidation to aiding with a section or parts of the process, depending on the client’s needs.
Frequently Asked Questions
What Are the Documents Required to File Corporate Insolvency?
Documents required in filing for corporate insolvency are as follows:
- Completed cancellation form
- Notarized partnership cancellation contract
- Notarized general assembly minutes confirming company liquidation and appointment of liquidator
- Official letter from registered company liquidator accepting liquidation duty
Note: other legal documents may be required to secure the required approvals of different government agencies in canceling a business license and liquidating the business.
What Happens When a Company Goes Into Insolvency?
When a company decides to go into liquidation, all of its assets are put into auction to repay its creditors. Its name is also removed from registries and the business is closed
What Are the Duties of a Company Liquidator?
Company liquidators have numerous duties and responsibilities to successfully wind up a company, including:
- Open an account under the company’s name to deposit funds that can be reclaimed from selling off company assets
- Take inventory of company assets and liabilities
- Prioritize outstanding debts and divide assets between various shareholders
- Repay loan taken
- Represent the business in courts, if litigation is filed
- Provide a report declaring assets of the business and settlement of liabilities
