Mainland Company Liquidation Services
Mainland Company Liquidation in UAE
Closing a business in the UAE involves a series of legal steps to ensure all obligations are met and to avoid potential fines. Whether you’re winding down a sole proprietorship or a shareholding company, understanding the process of canceling your business license is crucial.
At Farahat & Co., we understand that the decision to liquidate a mainland company in the UAE is a significant one. Our dedicated team of experts is here to guide you through every step of the process, ensuring a smooth and compliant dissolution of your business.
Understanding the Need for License Cancellation in UAE
Canceling a business license is a critical step when shutting down operations. This ensures that government authorities are aware of the cessation, preventing the accrual of fines and penalties on an expired license. For those in a partnership or shareholding structure, it’s essential to settle all financial responsibilities to safeguard personal interests and maintain the integrity of one’s investment. Additionally, preserving your professional reputation is beneficial for any future business ventures you may consider. This proactive approach to finalizing business affairs reflects responsible management and foresight.
Closing a mainland company in the UAE is a regulated legal process that must be completed in coordination with multiple government authorities. Mainland company liquidation involves cancelling licenses, settling liabilities, addressing employee matters, and formally deregistering the business to avoid future penalties or legal exposure.
At Farahat & Co., we provide end-to-end mainland company liquidation services in the UAE, ensuring that the process is handled correctly, efficiently, and in full compliance with UAE commercial and labour laws.
Step-by-Step Process for License Cancellation of Mainland Company
The procedure for license cancellation varies based on your company’s structure:
| Company Structure | Cancellation Procedure |
| Sole Proprietorships and Establishments | – Apply for cancellation through the DED in Dubai or TAMM in Abu Dhabi. – Obtain clearances from:
|
| Shareholding Companies | – The process involves share liquidation, debt collection, and creditor payments before finalization with DED. |
Appointing a Liquidator
The appointment of a liquidator is mandatory for companies structured as:
- General Partnership
- Limited Liability Company
- Simple Limited Partnership
- Public Joint Stock Company
- Private Joint Stock Company
Freezing vs. Terminating a Trade License
Here are some aspects to compare Freezing a Trade License & Terminating a Trade License
- Definition
- Duration
- Business Activities
- Fees
- Extensions
- Future Operations
- Legal Obligations
- Governmental Approvals
| Aspect | Freezing a Trade License | Terminating a Trade License |
| Definition | Temporarily suspending business activities without closing the company. | Permanently closing the company and ceasing all business activities. |
| Duration | Can be frozen for up to three years. | Permanent closure. |
| Business Activities | No business activities can be conducted during the freeze period. | All business activities must cease upon termination. |
| Fees | A freezing fee is applicable. | Fees for cancellation and any related procedures are applicable. |
| Extensions | Cannot be extended beyond the specified freezing period of three years. | Not applicable, as the license is permanently cancelled. |
| Future Operations | The company can resume operations after the freeze period by reactivating the license. | The company cannot resume operations; a new license must be obtained for any future business activities. |
| Legal Obligations | Must meet certain conditions such as no sponsored individuals on the license. | Must settle all legal and financial obligations, such as debts and creditor payments, before termination. |
| Governmental Approvals | Requires approval from the DED and a report from the inspection division. | Requires various government approvals for cancellation, including DED, Ministry of Economy, among others. |
It’s important to note that the exact requirements may vary depending on the legal form of the company and other specific circumstances. It’s always best to consult with the company Liquidator for detailed guidance.
Steps to Liquidate a Mainland Company in UAE
Stage 1: Initiation of Liquidation
- Notarization of General Assembly Minutes: Document the decision of liquidation and the appointment of a liquidator in notarised minutes.
- Liquidator’s Official Acceptance: Obtain a formal letter from the chosen liquidator, confirming their acceptance of the role.
- Application for Cancellation: Fill out the necessary forms through the Department of Economy and Tourism (DED) or other approved channels.
- Issuance of Liquidation Certificate: Await the DED’s issuance of a liquidation certificate.
- Publication of Liquidation Notice: Publish the liquidation announcement in two local newspapers, initiating a 45-day grace period for debt claims.
Stage 2: Finalizing the Dissolution
- Declaration of No Objection: Submit a declaration letter from the liquidator and partners to the DED, confirming there were no objections during the grace period.
- Government Approvals: Acquire the necessary clearances from various government entities to proceed with the license cancellation.
- Cancellation of Firm Card: Terminate the firm card at the Ministry of Human Resources and Emiratisation.
- Visa Cancellations: Cancel any visas of foreign partners that are sponsored by the company, through the General Directorate of Residency & Foreigners Affairs.
- Submission for Final Approval: Submit all collected documents to the DED to obtain the final cancellation approval.
- Fee Determination and Payment: The DED will specify the required fees for the dissolution process.
- Certificate of Deregistration: Upon fee payment, receive the official certificate of deregistration, marking the completion of the company dissolution.
Following these steps ensures a legally compliant and orderly closure of your company in the UAE.
Professional Mainland Company Liquidation Services
Liquidating a mainland company is not simply about stopping operations. The UAE authorities require formal procedures to confirm that all financial, legal, and employment obligations have been settled before a business is officially closed.
Our liquidation services of the mainland include the following:
- Cancellation of trade licence
- Government and authority clearances
- Employee settlement and cancellation of visa
- Tax deregistration (VAT and Corporate Tax (where applicable)
- Approval from relevant departments (final approvals)
We manage your process from start to finish with less delay and with reduced compliance risk.
What Are the Reasons for Mainland Company Liquidation?
Companies decide to liquidate the Mainland Company for many and different commercial, strategic, or regulatory motives.
Common reasons include:
- Business restructuring or group reorganisation
- Sustained financial losses or cash flow challenges
- Completion of a particular project or contract
- Shareholder exit/change in ownership strategy
- Regulatory or compliance challenges
- Market changes rendering operations unviable
Whatever the reason, liquidation should follow due process of the law to have a clean and recognized closure.
Cost of Mainland Company Liquidation in the UAE
The cost of mainland company liquidation varies in the UAE.
- Principal cost components include:
- Government and licensing authority fees
- Liquidator or professional service fees
- Employee settlement expenses
- Visa cancellation charges
- VAT or Corporate Tax clearance fees, where applicable
- Newspaper Advertisement Costs (if required)
There is no fixed liquidation cost applicable to all companies. Farahat & Co. will, upon receipt, review the company’s structure, activity, and outstanding obligations to provide a clear cost breakdown upfront
Impact of Company Liquidation on Employees-UAE Mainland
One of the most sensitive areas in the liquidation of a mainland company is employee matters.
Key considerations include:
- Termination of employment contracts
- Settlement of end-of-service benefits
- Paying pending salaries, leave balance, and gratuity.
- Cancellation of employee visas and labour cards
- Compliance with the requirements of the UAE Labour Law
The liquidation authorities, therefore, cannot approve the liquidation unless all employee dues are cleared. Any improper handling of the issue may lead to disputes, fines, or delayed licence cancellation.
Our team facilitates employee settlements and visa cancellations as per UAE labor regulations.
Laws Regarding Liquidation of Mainland Company and Subsequent Responsibilities
Even after the business has ceased its operations, there are still obligations to be met until the liquidation process is finalized.
Post-liquidation obligations include
- Settling outstanding debts and liabilities
- Closing bank accounts
- Deregistering for VAT and Corporation if registered
- Maintaining accounting and company records as stipulated by law
- Processing Final Clearance Certificates from Authorities
Inadequate execution of these processes may result in future repercussions in terms of penalties being imposed on shareholders or directors.
Documents Needed in Liquidation of a mainland company in the UAE
There may be slight variations in the documents that need to be submitted based on the concerned licensing authority and type of business carried out.
Typically needed are:
- Trade Licence copy
- Memorandum of Association (MOA)
- Shareholder resolution regarding liquidation
- Copies of passport and Emirates ID of shareholders
- Documents related to employee clearance
- Bank Clearance Letter
- VAT and Tax Clearance Certificate (if applicable)
We examine and generate these documents so that submission is seamless.
Mainland Company Liquidation Procedure – Step by Step Details
In order to simplify and remove any ambiguity, we have a systematic way of liquidating the funds.
Initial Assessment and Planning
We review the company’s licence, activity, employees, visas, tax status, and liabilities to determine the correct liquidation pathway.
Appointment of Liquidator (if required)
It may depend on the concerned authority and company structure whether a registered liquidator is to be appointed.
Employee and Visa Clearance
All employment-related issues and visas will be cancelled in line with UAE Labour Laws.
Government and Authority Approvals
These are cleared from concerned departments like:
- Licensing authority
- Ministry of Human Resources and Emiratisation
- Immigration
- Tax authorities
Cancellation of trade licence
Once all the required approvals are received, the trade license in Mainland is canceled.
Why Choose Farahat & Co. for Mainland Company Liquidation?
The mainland liquidation is an operation that needs to be coordinated between various entities. We have been able to anticipate challenges even before their occurrence.
Our clients choose us over the competition because of:
- Handling complete end-to-end liquidation scenarios
- Comprehensive knowledge of UAE commercial laws and labour legislations
- Clear timeline information, budget information
- Dedicated support for shareholders and foreign investors
- Reduced risk of penalties or future claims
Our goal is to ensure a clean, compliant, and stress-free exit from the UAE mainland business framework.
Frequently Asked Questions
How do I officially dissolve a business entity registered on the mainland?
It can be said that the mainland business is officially dissolved once the trade license of the business is canceled after obtaining all the necessary clearances from the authorities, employees, and tax departments.
What is the normal time required to complete the liquidation of a mainland company?
The average duration required is between 4 to 8 weeks, depending on the organizational structure and employees of the company, along with the debts that need to be settled.
Foreign investor considerations when dissolving an enterprise in mainland China:
Foreign investors need to analyze shareholder resolutions, taxation risks, employee settlements, and deregistration to prevent future risks and charges.
What happens to the staff during the process of liquidation?
The UAE Labour Law requires employees to be terminated, their dues to be refunded, as well as the cancellation of their visas.
What is the official checklist for closing a mainland business?
Some of the key steps involved are: canceling the licence, clearing employees, tax deregistration, closing bank accounts, and obtaining approvals.
Do governments have any support schemes in place for firms in liquidation?
There are no direct support programs for liquidation, but professional advisors can guide companies through compliant closure and restructuring options.
Start Your Mainland Company Liquidation with Confidence
Improper liquidation can lead to fines, visa issues, and long-term legal risks. Professional guidance ensures that your mainland company is closed correctly and permanently.
Contact Farahat & Co. today to discuss your mainland company liquidation in the UAE and receive clear guidance tailored to your business situation.
+971 52 6922588 | Tel: +971 4 2500251 | E-mail: sales@farahatco.com
