Liquidations In the United Arab Emirates (Part 2)
by Tajendra Chugh | JAN 27, 2019
In my previous article, titled, Liquidations in the United Arab Emirates (Part 1), we came across the roles, and duties of a Liquidator, the necessary documents required and the different types of Liquidations in the UAE.
We now take a look at the Procedures for Liquidation.
In case of a mainland Company the following steps and documents are required for its liquidation:
- Shareholders resolution confirming the liquidation of the Company. This would usually be in the form of the minutes of the meeting which is held by the shareholders in which they decide on liquidation of the Company and appointment of the liquidators for the same.
- An acceptance letter from the liquidators accepting their appointment.
- Application for cancellation of the Company from Department of Economic Development (DED)
- Receive liquidation certificate from the Department of Economic Development (DED) once the above steps are completed.
- Once the liquidation certificate is received from the DED, the Company has to publish a notice of liquidation in two local newspapers.
- After the notice has been published, there is a notice period of 45 days for the debtors to submit their claims (if any).
- Once the notice period of 45 days is over, the Company must submit the following documents:
- A declaration stating that all parties have no objection relating to the liquidation of the Company
- An approval would be required from other government agencies for the cancellation of the Company’s license.
- The Company must then cancel its firm card with the Ministry of Human Resources and Emiratisation
- Cancellation of the foreign partner’s visas which are sponsored by the Company.
- The last step is to pay the DED fee and the company will be successfully liquidated.
Free Zone Company
In case of a free zone Company the procedure is slightly different and involves the following steps:
- Every free zone in the UAE has a portal. The Company intending to liquidate must notify the free zone by applying on the member portal.
- Once they have notified the respective free zone, they need to submit their application for termination of the Company.
- After submission of the application, they need to publish the notice in a local newspaper.
- The free zone will file a final Company termination letter and the Company will be liquidated.
- Letter to be obtained from the Labor and Immigration department that there are no visas.
Bank Accounts, Employee Contracts, Utilities and Other Services on Liquidation
In all cases, the Company will need to cancel the employees' visas and their work permits. Dubai portal explains that this requires coordination with both Department of Naturalisation and Residency and Ministry of Human Resources and Emiratisation.
As per the UAE's Labor Law, employers are required to give their employees a two-month, paid notice period before terminating their contracts. In many cases, employees can keep their residency visas until the company's trade license runs out. Then, the company needs to cancel utilities and telecommunication services and close all its bank accounts. Collect a NOC from the utilities providing company and bank closure confirmation for processing the closure.
Company liquidation can be a complicated process. However, we can assist you in case you decide to liquidate. Our procedures for preparing the required documents and completing the process shall help you liquidate your Company smoothly.
For more information, Email us at email@example.com