A Guide to Voluntary Liquidation in the UAE

Business liquidation in UAE process overview

Let’s face it, running a business in the UAE is exciting, but sometimes even the most thrilling ventures need to close their curtains. Voluntary liquidation could be your ticket to a smooth goodbye if you’re contemplating an exit strategy.

What is Voluntary Liquidation?

Think of it as an organised way to shut down your company. Unlike a forced closure, you, the shareholder, are in control. You can decide when to pack up, sell your assets, and settle your dues.

Why Choose Voluntary Liquidation?

  • Avoid the Drama: Dodge the stress of a court-ordered closure and potential personal liability for directors.
  • Do it Right: Ensure a clean exit by following a legal framework that protects your interests.
  • Leave a Legacy: Maintain a positive business reputation compared to a forced shutdown.

The Process of Voluntary Liquidation in the UAE

The following are the key steps in a voluntary liquidation process for businesses in the UAE:

  1. Shareholder Resolution:

    Shareholders convene a formal meeting to discuss and vote on the company’s dissolution. A notarised resolution is drafted to document the decision and appoint a qualified liquidator.

  2. Liquidator Appointment:

    Selecting a competent liquidator is crucial. They will assume control of the company, overseeing the sale of assets, settlement of debts, and ensuring compliance with regulations.

  3. Notification & Clearances:

    The appointed liquidator notifies relevant authorities, such as the Department of Economic Development, of the liquidation. Additionally, clearances are obtained from entities like utility providers, landlords, and government departments.

  4. Asset Sale & Debt Settlement:

    The liquidator identifies and values the company’s assets (property, inventory, receivables). A strategic sale of these assets is conducted to generate maximum cash flow. The proceeds are then used to settle outstanding debts according to a specific order, prioritising secured creditors.

  5. Final Accounts & Distribution:

    The liquidator prepares final accounts, outlining the company’s financial position at the time of closure. After settling all debts and liabilities, any remaining funds are distributed to shareholders based on their ownership stake.

  6. Company Deregistration:

    Following the fulfilment of all obligations, the liquidator files for company deregistration. This results in the cancellation of the business license and the company’s removal from the commercial registry.

We Can Help with Voluntary Liquidation in the UAE

Voluntary liquidation can be a complex undertaking. Our team at Affiniax Partners possesses extensive experience in navigating this process efficiently and effectively. Contact us for a consultation and ensure a compliant and successful closure of your business. Please get in touch with Nihar Kothari at nihar@affiniax.com for more details.

+971 58 562 0168