WHAT IS COMPANY LIQUIDATION
& WHY IS IT NECESSARY?
Company liquidation, also known as winding up or closing a company, is a formal insolvency procedure where a company ceases operations, liquidates its assets, and settles outstanding debts. At Creation Business Consultants, we provide comprehensive liquidation services for all UAE entities ensuring a seamless process while mitigating risks.
Company liquidation may be necessary for the following reasons:
- Fulfillment of Purpose: The original objectives of the company have been achieved, and the entity is no longer required.
- Insolvency: The company is unable to meet its financial obligations.
Even if a company has no outstanding debts, it must be formally liquidated rather than allowing the trade license to expire. Failure to do so may result in penalties, blacklisting of the company and its shareholders, and restrictions on future business activities.
QUICK,
STREAMLINED
& COMPLETE
COMPANY
DE-REGISTRATION
DUBAI & UAE COMPANY LIQUIDATION & DE-REGISTRATION SERVICES
Are you a business owner, company shareholder or a director of a company and considering winding up a Dubai or UAE business? Changes to the business environment and market conditions can result in your decision to wind up and close your Dubai or UAE company. This will require expert assistance to complete the process.
Our company liquidation experts will complete the entire liquidation, winding up and de-registration formalities. We ensure a hassle free, quick, straightforward, and cost-effective process that will formally bring the company to an end and provide the official closure documentation to the affairs of the company.
We have a proven track record as the region’s leading consultants, providing liquidation services and working with companies of all sizes, in all sectors, and all entity types. From onshore companies, Limited Liability Companies (LLC), professional licenced companies, Dubai free zones, North Emirate free zones, Abu Dhabi free zones, and offshore companies throughout Dubai, Abu Dhabi, Ajman, Fujairah, Ras Al-Khaimah, Sharjah, and Umm Al Quwain, we can assist.
OUR LIQUIDATION SERVICES
APPOINTMENT OF LIQUIDATOR
- Providing suitable liquidator options.
- Prepare liquidator appointment letter.
- Liaise & oversee the on-going accounting requirements.
COMPANY DOCUMENTS
- Analyse & prepare shareholder resolution & Power of Attorney (POA).
- File and complete de-registration applications.
- Publish newspaper advert to close company.
AUTHORITY CLEARANCE
- Draft No Objection Certificate (NOC) & all authority clearance letters.
- Cancel company labour, Immigration and residency visas.
- Represent the company & liaise with third parties & attend meetings.
FINAL SUBMISSION
- Provide completed liquidation documentation.
- Administer completed de-registration letters.
- Receive & issue certificate of deregistration.
COMPANY LIQUIDATION PROCESS
The general steps involved in liquidating a company in the UAE are as follows:
Prepare a Shareholders’ Resolution
Shareholders’ resolution for dissolution must be notarized. For shareholders outside the UAE, the resolution requires attestation at the UAE embassy and further authentication by UAE authorities.
Appoint a Liquidator
Assign a liquidator and obtain an official acceptance letter.
Submit the Shareholders’ Resolution
Submit the resolution and required documents to the relevant licensing authority, including:
- Trade / business license copy
- Memorandum of Association
- Powers of Attorney (if any)
- Passports and Emirates IDs of shareholders
Publish a Notice of Liquidation
Publish the liquidation notice in English and Arabic newspapers. Depending on the authority, multiple notices may be required.
Complete Clearance Procedures
During the notice period (up to 45 days), ensure the following:
- Cancel employee visas and work permits.
- Obtain clearance from relevant departments and authorities:
- Immigration
- Labor
- Utilities (water, electricity, telecoms)
- Leasing entity (landlord)
- Road and Transport Authority (if applicable)
- Federal Customs Authority (if applicable)
- Close bank accounts.
- De-register from VAT and Corporate Tax to obtain clearance from the Federal Tax Authority (FTA).
Prepare the Liquidation Report
The liquidator finalizes the Liquidation Report, which is submitted along with all supporting documents and cancellation fees to the licensing authority. Upon approval, a License Cancellation Certificate is issued.
WHEN IS THE RIGHT
TIME TO CONSIDER
COMPANY LIQUIDATION
SERVICES IN
SAUDI ARABIA?
Closing and liquidating your business can be a difficult decision and knowing the right time to decide to start the liquidation process important. Here are some key indicators that it might be time to consider professional company liquidation services in Saudi Arabia:
FINANCIAL STRAIN:
- Mounting Debts: If your company is struggling to meet its debt obligations and creditors are becoming increasingly persistent, liquidation might be necessary to avoid further financial complications.
- Sustained Losses: Experiencing consistent financial losses with no clear path to profitability can signal the need to wind down operations before further resources are depleted.
- Insolvency: If your company’s liabilities outweigh its assets, insolvency may trigger mandatory liquidation as per Saudi regulations.
OPERATIONAL CHALLENGES:
- Market Changes: Significant shifts in your industry or market that render your business model unsustainable may necessitate closure.
- Loss of Key Personnel: The departure of critical personnel, especially those with unique expertise, can leave a void difficult to fill and potentially hinder operations.
- Internal Disputes: Unresolvable conflicts among partners or shareholders can create a dysfunctional environment, making business continuation impractical.
STRATEGIC OBJECTIVES:
- Business Completion: If your company has achieved its intended purpose or fulfilled a specific project, liquidation might be the logical next step.
- Merger or Acquisition: In the event of a merger or acquisition, one of the entities involved may need to undergo liquidation.
- Retirement or Restructuring: The owner’s retirement or a desire for significant restructuring within the company could necessitate closure and re-establishment.
CLIENT CASE STUDIES
Case Study 1: Liquidation of a UAE Mainland LLC
- Challenge: A UAE mainland LLC with no outstanding debts wanted to close its operations but was unsure of the proper liquidation process. The company was concerned about potential penalties, blacklisting, and complications with its shareholders’ future business activities.
- Solution: Our team conducted a thorough review of the company’s status, ensuring all requirements were met for a smooth liquidation. We guided the client through the preparation of the shareholders’ resolution, the appointment of a licensed liquidator, and the necessary steps to cancel employee visas, utilities, and de-register from VAT. We also coordinated with the relevant authorities to ensure full compliance with the UAE’s legal framework.
- Outcome: The company successfully completed the liquidation process within the required timeframe, avoiding penalties and ensuring all legal obligations were fulfilled. The shareholders were able to close their business without any restrictions on future activities, and the company was officially deregistered from all government records.
Case Study 2: Offshore Company Liquidation in a UAE Free Zone
- Challenge: A foreign investor’s offshore company, registered in a UAE free zone, faced complications with de-registration and settling its liabilities while complying with VAT and Economic Substance Regulations (ESR). The company had accrued minor debts but needed to ensure compliance with all regulations before liquidation.
- Solution: Our team provided end-to-end support by evaluating the company’s financial status and coordinating with the relevant free zone authorities. We assisted in obtaining clearance from the Federal Tax Authority (FTA) for VAT de-registration, ensured compliance with ESR reporting, and managed the settlement of outstanding debts. We also facilitated the cancellation of employee visas and closure of the company’s bank accounts.
- Outcome: The liquidation was completed efficiently within a few months, with no penalties or legal issues. The company was fully compliant with VAT, ESR, and other regulatory requirements. The investor was able to close the business with minimal disruption to their future operations in the UAE.
WHY CHOOSE CREATION BUSINESS CONSULTANTS FOR COMPANY LIQUIDATION IN THE UAE?
At Creation Business Consultants, we simplify the liquidation process by handling all aspects of the procedure, including:
- Coordinating with Government Authorities: We handle all communication with relevant regulatory bodies, ensuring that every step of the liquidation process is carried out smoothly.
- Managing Documentation & Clearance: From notarizing the shareholders’ resolution to handling de-registration procedures, we manage all required documentation and clearance from authorities, including VAT, Corporate Tax, ESR, and UBO regulations.
- Expert Liquidator Selection: Our team assists in selecting a qualified liquidator to manage asset sales, debt settlements, and legal matters, ensuring the process is handled professionally and effectively.
- Streamlined Process: With our extensive experience and network within the UAE, we expedite the liquidation process, saving you valuable time and resources.
Our goal is to guide you through each step of the liquidation process, helping you make informed decisions while mitigating risks. Trust us to close your company smoothly and efficiently, ensuring full compliance and a hassle-free experience during this critical phase.
DUBAI & UAE COMPANY LIQUIDATION FAQS
Company liquidation is also referred to as winding up of a company. This is the process where the operation or the existence of a company is no longer required. Liquidation is to complete the company closure and the cancelation of the UAE company.
Should you decide not to renew your company trade license and want to close the company, you must follow the formal company closure process regulated by your licensing authority. Failure to renew your Dubai or UAE company trade license and not formally liquidate the company will result in the owner(s), General Manager and shareholders generating fines, breaching the rules and regulations of the governing body and potential Immigration issues.
It is recommended to seek professional expert services. This will greatly reduce time, costs and streamline the liquidation process. Creation Business Consultants experts will guide you towards the right solution and provide a quick affordable liquidation plan to handle and complete all the company closure formalities suited towards you, your partners and shareholder needs.
To begin with the following list of documents are required:
- Company trade license copy (most recent);
- Memorandum & Articles of Association (include copies of any amendments/changes);
- Power of Attorney;
- Shareholders Resolution (detailing the meeting to dissolve the company);
- Shareholders passport (some authorities will require a most recent certified copy);
- Emirates ID copy (if applicable) and
- De-registration application (Creation will complete this process with the clearance documents)
This will depend on your company licensing authority. This is a mandatory requirement for most mainland and free zone companies to publish an advert announcing the company closure. Depending on the licensing authority the advertisement must be displayed in Arabic and English and can range from 15 to 45 days’ notice of liquidation advertisement in the public newspaper.
Company liquidators have several tasks and are responsible to service and oversee any third-party processes from start to completion upon engagement. Main duties include but are not limited to:
- Allocation of resources obtained and the surplus of funds to the related parties;
- Decide if there are any outstanding claims against the company and resolve claims and;
- Provide a report declaring assets of the business and settlement of liabilities
The fees associated to complete the company closure will vary depending on onshore, free zone and offshore company and its structure. Contact a member of our team for your free consultation.
To complete and close a company will vary according to where the company is incorporated, the type of structure and business activities. Provided all documentation is in place and timeframes to complete a company closure can vary anywhere from 7 to 45 days or more.
Through careful planning and professional advice, the minimal risks connected to company liquidation in the UAE can be reduced. You can handle the company liquidation procedure easily with the assistance of professional consultants, ensuring adherence to regulations and reducing potential risks.
For an expert consultation, contact Creation Business Consultants via email [email protected] today.
Yes, even if your company has no debts, it’s still advisable to liquidate to avoid penalties, blacklisting, or complications with future business activities. Formal liquidation ensures that your company is properly closed, in accordance with UAE regulations.
Documents required for liquidation include the shareholders’ resolution, trade license, Memorandum of Association, shareholders’ passports and IDs, and any Powers of Attorney. These documents are crucial for submitting to the relevant authorities to initiate the process.
To comply with VAT and tax regulations, you must de-register for VAT, submit a final VAT return, and obtain clearance from the Federal Tax Authority (FTA). If your company is subject to corporate tax, you’ll need to ensure deregistration and finalize any outstanding tax liabilities.
All employee visas and work permits must be canceled as part of the liquidation process. Additionally, any end-of-service benefits should be settled before the company can officially close. Failure to cancel visas may result in penalties or complications.
Not properly liquidating your company can result in penalties, blacklisting of the company and its shareholders, and restrictions on future business activities in the UAE. It can also lead to complications with the authorities if the company is not formally closed.
The liquidator is responsible for selling the company’s assets to generate funds to cover outstanding liabilities. Any remaining assets after liabilities are settled will be distributed to the shareholders, depending on the company’s bylaws and financial standing.
Appointing a licensed liquidator ensures that the liquidation process is handled professionally, in compliance with UAE regulations. A licensed liquidator will manage the entire process, from asset liquidation to submitting the final reports, while avoiding legal issues and delays.
The process can be complex due to the involvement of multiple authorities and regulatory requirements, such as:
- VAT Compliance: Companies must de-register for VAT and obtain clearance.
- Economic Substance Regulations (ESR): Ensure compliance with ESR reporting requirements.
- Ultimate Beneficial Ownership (UBO): UBO filings must be up to date before liquidation.
Missing any step may lead to delays, penalties, and complications.
COMPANY LIQUIDATION MODEL
We develop and implement strategies that expedite company liquidation, de-registration and complete the company closure as soon as possible.
Expert
Consultation
Creation of
Strategy
Execute Company
Liquidation Process