The liquidation of a company, also known as winding up, is the dissolution of its existence and distribution of its assets among its claimants.

The liquidation process of a company implies that the business will cease to operate. Several factors may lead to the closure of a company by its owners, directors, or shareholders. Liquidating assets voluntarily is normally something a businessperson would do due to insolvency, such as a company that has run out of financial resources and assets that are not exceeding its liabilities.

Closing a Business on the Mainland

When you close it, you must cancel all permits and licenses associated with your business and the business license in the United Arab Emirates. In order to protect your interests and shares as a shareholder or partner of a shareholding company, it is vital to discharge the obligations of your creditors. It is easy for enterprises and sole proprietorships to cancel since they need to request cancellation from DED and obtain all necessary clearances from:

  • Ministry of Human Resources and Emiratization
  • Directorate of Residency and Foreigners Affairs
  • The appropriate water and electricity authority
  • The leasing entity Etc.

If your Company's legal form is one of these, you'll need to appoint a liquidator:

  • General Partnership
  • Limited Liability Company
  • Simple Limited Partnership
  • Public Joint Stock Company
  • Private Joint Stock Company

Freezing a trade license

  • Freezing a license is different from terminating a permit ultimately.
  • Companies in Dubai can keep their trade licenses inactive for three years by paying a certain freezing fee. After that, however, they are unable to extend it beyond that specific period.

What are the conditions for freezing a license?

You need to provide:

  • A letter from the firm or institution requesting a temporary suspension of the license,
  • The Ministry of Human Resources and Emiratization letter certifies that no sponsored individuals are listed on the license.
  • A report from DED's inspection division

You should acquire permission from the Ministry of Economy to cancel a private shareholding company.

To cancel a public shareholding company, you need to acquire the decision of the Securities and Commodities Authority.

What are the conditions of private liquidation?

  • The license expiration date should have ended for more than two years.
  • The Emirati partner shall acknowledge his responsibility toward the Company.
  • The Company must offer supporting documents that strengthen the dissolution request, such as the escape of a partner.
  • The Company must present a letter from the Ministry of Human Resources and Emiratization that certifies that no sponsored individuals are listed on the license.

Liquidate Free Zone Companies in UAE

There are three sorts of closures, according to the DMCC website. They are as follows:

  • Summary winding-up

    A method of winding-up of a DMCC Company in which the Director(s) declare(s) that the Company's affairs are capable of being finally wound up within six (6) months from the start of the winding-up procedure.

  • Solvent winding-up

    A DMCC Company winding-up procedure in which the Directors declare that the Company's affairs are capable of being finally wound up within a year of the start of the winding-up process.

  • Insolvent voluntary winding-up

    A method of winding up a DMCC Company in which the Company's creditors participate.

    In JAFZA, you must inform the authorities three months in advance for office and warehouse facilities and six months prior for plot facility.

    You must revoke the workers' visas and work permits in all cases. According to the Dubai portal, this will necessitate collaboration with the Department of Naturalization and Residency and the Ministry of Human Resources and Emiratization.

    According to UAE labor law, employers must provide their employees a two-month paid notice before terminating their contracts. Employees can keep their resident visas until the Company's trade license expires. The corporation must remove utility and telecommunication services. Obtain a NOC from the utility provider before proceeding.

How AMCA can Help

AMCA is a legal and registered liquidator and carries out company liquidation services for all Limited Liability Companies (LLC), free zone companies, and offshore companies in UAE. We will be using our knowledge and expertise in liquidating a company and making sure to do its whole process professionally and efficiently.

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