Company Deregistration & Liquidation Services In Dubai & The UAE

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UAE Company Liquidation & Deregistration

There are different ways through which a company can be closed. A company can be dissolved, de-registered, liquidated or struck off. In Dubai there are two common routes through which a business can be closed- a company can be de-registered or liquidated.

Although both serve the purpose of closing down the business, the ways, procedures, documentary requirements, time frame for both the processes are different. However, ultimately it is important that proper procedures are followed by the company to avoid legal implications and penalties.

What is Business Deregistration?

Deregistration is the process of cancelling the business or license of the company or in other words
“de-registering a company which was previously registered from the registry of the licensing authority”. De-registration is more of a practical approach formulated by the licensing authorities for companies which are solvent and have completed the objective for which they have set up.

The whole de-registration process is comparatively quicker than liquidation and basically involves the shareholders of the company carrying out a couple of procedures and steps.

Business Deregistration Process in The UAE

The Department of Economy & Tourism (DET) in the mainland and the relevant Free Zone Authority in free zones are the licensing authorities which issue the procedures and documentary requirements for the deregistration of a company in the UAE.

Mainland Company Deregistration

The DET deregistration and license cancellation process involves 2 stages. The procedures involve the execution of a resolution from the shareholders of the company resolving to close the company, appointment of a liquidator, settlement of all debts and completion or cancellation of contracts, cancellation of all employee visas, close bank accounts, cancellation of lease agreement, obtain clearance certificates from utility providers, ministries, banks, tax authorities and such similar departments and submission of the liquidation report. A notice is published in 2 local newspapers for creditors to submit their claims within 45 days.

Free Zone Company Deregistration

The relevant free zone authority (DMCC, DIFC, JAFZA etc.) issues guidelines for the de-registration of the company and this also involves shareholder resolutions, settlement of debts our outstandings, cancellation of employee visas, closure of bank accounts, clearance certificates from relevant government departments (Ministry of Human Resources and Emiratization, GDRFA, Customs, Federal Tax Authority etc.) and utility providers and submission of the liquidators report.

On completion of the relevant procedures and submission of documents, the licensing authority issues the De-registration or Cancellation Certificate- which means the Trade License issued to the company has now been cancelled.

Liquidation of a Company in The UAE

Federal Decree-Law No. 32/2021 On Commercial Companies (the Commercial Companies Law) deals with the liquidation of a company in the UAE. As per the Commercial Companies Law, liquidation can be either voluntary or compulsory (through a court order).

Voluntary liquidation is when the partners of the company agree to dissolve the company and agree on the method of liquidation, name of the liquidator, etc. The assets of the company being liquidated will be divided among all the partners upon payment of all outstandings and debts.
Compulsory liquidation is when creditors seek court intervention for the closure of the company due to financial struggles. The court can mandate liquidation of the assets of the company to settle the debts and appointment of a liquidator directly or through a resolution by the shareholders.

James Berry & Associates Licensed Liquidators

Licensed audit firms are normally appointed as liquidators. Liquidators play a responsible role and are normally required to evaluate the assets and liabilities of the company prior to making an asset sale, correspond with the creditors properly and update them on the liquidation steps being taken, distribute the assets properly to achieve payment of debts, and prepare the liquidation report confirming all procedures have clearly been complied with.

James Berry & Associates Law have years of experience with handling company de-registration and liquidation. Be it a free zone company or a mainland LLC, our lawyers are competent and experienced to handle the process in a very seamless and compliant manner. We work with regulated and experienced auditors who assist our clients with the liquidation process.

Company Deregistration & Liquidation FAQs

How long does the liquidation process take in the UAE?

The liquidation process can vary for each licensing jurisdiction. However, a period of 2-3 months must be at least estimated for the process, especially since there is a 45-day waiting period for creditors to submit any claims.

Can I liquidate a company with outstanding debts?

Normally all outstanding debts of a company has to be settled prior to liquidation.

What are the costs involved in liquidation and deregistration?

Although the costs for liquidation and deregistration vary for each licensing jurisdiction, the company should anticipate costs for appointment of liquidator, settling employee benefits, any outstandings, licensing authority fees, newspaper publication and any other associated costs.

What happens if a company is not deregistered properly?

If a company is not deregistered properly, the shareholder(s) are still liable for any debts, financial obligations, liabilities, and fines imposed by the licensing authorities. You may also need to watch out for possible legal action by creditors and also anticipate an impact on any future business in the UAE.

Are the procedures different for free zone companies?

Yes, the procedures are slightly different for free zone companies. However, requirements like shareholder resolutions, cancellation of employee visas, closure of bank accounts, clearance certificates from relevant government departments and utility providers, and submission of the liquidator’s report, etc., remain the same.

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