The process of closing a business and all associated operations is known as company liquidation in UAE. When a business is at a loss and cannot afford to pay off its outstanding debt, it goes through a process called company liquidation.
All organizational assets are divided up among creditors and shareholders during a company liquidation, according to the order of priority of claims. Liquidators are those who carry out the liquidation process. The process of closing a business is referred to as liquidation. The management of the company appoints the liquidator.
A proactive approach to liquidation can involve the firm's decision-makers anticipating losses and mitigating them through a shareholders' liquidation or a market-exit strategy. However, for businesses that are unable to pay their debts and obligations, creditors' liquidation is always required.
It is crucial to remember that the authorities in the UAE may fine and punish you if you neglect to terminate your trading license.
A liquidator is a professional responsible for handling the winding up of a company. The main tasks of a liquidator are to sell company assets, settle all outstanding debts, and then distribute the remaining funds to shareholders.
Key Responsibilities:
To provide liquidation services in UAE, The appointment of a liquidator must fulfill certain qualifications and be licensed. They should have adequate experience to ensure independence and proficiency in handling liquidation cases. A liquidator may be appointed by the partners of the company or by a court order
Hiring certified liquidation services in UAE helps businesses operate according to the rules and makes sure that the winding-up process is executed with all due process legally
Reasons for Company Liquidation in UAE
Company liquidation is never an easy choice, but sometimes that's the only way that helps a company to look ahead or wind up effectively. Let's find the top reasons why companies opt to liquidate.
Company liquidation is the official process of ending the operations of a business in UAE.
It can be done as follows:
Voluntary company liquidation in UAE happens when a company decides to close on its own, usually because it’s no longer profitable or the owners want to exit. The company’s shareholders make this decision, and a liquidator is appointed to handle the process. The liquidator sells the company’s assets, settles any debts, and distributes any remaining funds to the shareholders.
The company must follow the UAE’s Commercial Companies Law and local regulations for liquidation. They must also settle any tax obligations, including VAT and corporate taxes, with the Federal Tax Authority. Finally, the company’s financial statements must be audited and finalized before the closure can be completed.
Compulsory Company Liquidation
Compulsory liquidation of a company in UAE is when a court directs the closure of the company, usually due to the inability of the firm to pay debts or the lack of legal ability. It can be carried out by creditors or the shareholders of the company under certain circumstances. In the UAE, according to its legal system, the liquidation process is carried out with procedures outlined in the Commercial Companies Law. Liquidators are appointed for that purpose. The role of the liquidator will include selling the company's assets, settling outstanding debts, and distributing the remaining funds to shareholders. In compulsory liquidation, businesses must adhere to tax settlements and clear all financial obligations with the UAE's Federal Tax Authority.
The following is the official procedure for company liquidation in UAE:
The resolution of the shareholders to dissolve the company needs to be developed and authorized. For limited liability corporations (LLCs) registered in the UAE, the resolution must be notarized by a notary public.
The resolution must be certified at the appropriate UAE embassy, and attestation from the UAE Ministry of Foreign Affairs and Ministry of Justice is required if the shareholders are not physically present in the UAE. A notary public must notarize the documentation for most Free Zone businesses.
It is essential to hire a liquidator and obtain a formal acceptance letter from them.
The business must publish a notice of liquidation in a generally accessible publication after receiving a provisional liquidation certificate. This warning should also be issued in Arabic and English. Different notification requirements may apply based on the registered authority.
Depending on the registration jurisdiction, a notice period of up to 45 days may be necessary. The following activities are acceptable during this period:
The appointed liquidators in UAE will start working on the liquidation report as soon as the notice period ends. This report and all other related documentation must be delivered to the appropriate authority.
In addition, the required cancellation fees need to be paid. If the application is accepted, the authority will issue a 'License Cancellation Certificate' after reviewing it.
When it comes to winding up a company in UAE, there are specific documents that you need to prepare, as required by the government.
Here's a list of the essential papers you'll need for the company liquidation process in UAE:
In short, following a well-defined legal framework and administrative stages is necessary for company liquidation services in UAE. You can reduce the difficulties and complications of the liquidation process by working with GAAP Associates. They can help you navigate every step of the liquidation process with their skill, knowledge, and encompassing support, assuring an effortless, legal, and efficient liquidation strategy for your business.
Whether one is dealing with these requirements or may require a liquidation service in UAE, one must ensure all legal and financial duties for an efficient business closing process.
When looking for reliable liquidation services in UAE, choosing the right liquidator is crucial. Here’s how to make sure you’re selecting the right one:
An LLC, a branch of an LLC, an offshore company, a free zone company, or a sole establishment must cancel its licenses and distribute its assets to its creditors and shareholders following its plans for liquidation. The procedures for license cancellation and liquidation are extensive and complicated since many different documents are needed and numerous authorities are involved.
As the leading liquidators in the UAE, we offer guidance and support to businesses intending to wind up, dissolve, or liquidate in a quicker, easier, and more economical way. We will prepare the company liquidation audit report and submit it to the relevant authority where the company is registered. The authority will officially close the company and cancel the trade license after a thorough examination of the report submitted.
Get in touch with us for company liquidation services in UAE!!