Company Liquidation in Dubai: A Complete ProcessFebruary 16, 2023
There may come a time in a company’s lifecycle when it needs to wind up its operations and shut down completely. In that case, it needs to disburse all the assets to relevant parties as it can no longer function. The process is called Liquidation, and in this piece, you will learn all you need to know about company liquidation in Dubai.
What is Company Liquidation?
Company liquidation is the process of a company shutting down all its operations because it is in grave loss, one from which recovery is impossible. The process of company liquidation in Dubai requires the said entity to sell all of its assets to pay off the debts and the money it owns to claimants.
It primarily occurs when a company is unable to pay its dues, which labels it as insolvent. The business is unregistered in a process called company deregistration, signaling the end of the company and its business. Liquidation in Dubai is seemingly similar to that of anywhere else, except for locally enforced rules and regulations, which are enforced by the UAE government. If you need help with liquidation services in Dubai, Avyanco is your ideal partner. Avyanco is UAE’s leading business consulting and auditing firm that can offer you the best liquidation services.
Company Liquidation in Dubai
If a company is being liquidated in Dubai, it halts all its operations, and the assets are sold to pay the investors and creditors. It is required when a company is no longer generating sufficient funds or is in debt to the point of no return. Also called winding-up or dissolution of business, liquidation is a difficult process that is better left in the hands of experts like Avyanco.
Liquidation Services in Dubai
Company liquidation in Dubai requires the services of approved liquidators in Dubai, who are usually accounting or auditing firms registered and certified to get the job done. They help in paying off the company’s debt by selling all their available assets. Although there may be many firms offering such services, many of them are only middle parties, outsourcing the task to third-party service providers. This creates an unnecessary buffer and makes the process complex for the creditors and shareholders.
By opting for a credible and reliable company like Avyanco, you can avail the best liquidation services in Dubai and make the entire process of liquidation very smooth.
Role of Liquidators in Dubai
Liquidators in Dubai are a vital component of company deregistration. Essentially, a liquidator is a firm registered in UAE for the purpose of selling an organization’s assets to pay off their outstanding debts. It is usually an accounting firm that is well-versed in the process. The selection of the liquidator may be done by the shareholders, or in case of compulsory liquidation, may be appointed by the court. Their roles and responsibilities include the following:
- The liquidator must evaluate all the company’s assets and liabilities, holding complete accountability for all the claim evaluations. The liquidator will also be responsible for the distribution of the monetary acquisitions acquired after all the assets of the company have been sold
- They are responsible for keeping the creditors updated with all the relevant developments in the process
- They are responsible for the management, collection, and distribution of the business assets
- At the end of it all, the liquidator will prepare a final report and a statement of affairs that will be presented to all the relevant authorities
Once the report is submitted and approved, the job of a liquidator is complete. If you are looking for approved liquidators in Dubai, look no further. Avyanco is a certified and approved liquidation service provider in UAE. Our experts can make the entire process of company deregistration and company liquidation seamless for you.
Documents Required for Company Liquidation in Dubai
Although the requirements may vary from organization to organization in terms of their registration mode, generally, company liquidation in Dubai requires the following essential documentation:
- A copy of the company’s trade license
- A copy of the company’s Association Memorandum
- For all shareholders and owners, their Emirate IDs or passport
- The form for the company’s deregistration application (vital for company deregistration)
Company Liquidation Process in Dubai
Liquidation in Dubai is a complex process that is better handled by experts, such as the ones at Avyanco, who have an in-depth understanding of the process. This is to ensure compliance and prevent a breach of regulations. So all the stages need to be met in perfect order; however, company liquidation process in Dubai may be driven by the following three conditions:
- The method of liquidation
- The structure of the company ownership
- The registration of the company in its jurisdiction
Besides the aforementioned, the main common steps followed in all company liquidation proceedings include:
- A resolution for the dissolution of the company is prepared by the shareholders
- A liquidator is nominated. For that, you need to look for liquidators in Dubai. And on top of that, you need to select from among the approved liquidators.
- A formal letter from the liquidator of their approval needs to be acquired
- The resolution presented needs to be attested by the notary public
- All the relevant documents need to be collected and submitted to the Liquidation Initiation Authority
- Acquisition of provisional liquidation certificate along with publishing a notice of liquidation in notable journals or newspapers in both English and Arabic.
- Filing of shareholders’ resolution to the applicable licensing body with relevant paperwork and payment
- Clearance of immigration along with labor and customs approval and all other relevant departments (RTA, FCA, Energy & Water, Telecom. etc.)
- Complete clearance and the submission of the final liquidation report
- The company deregistration will occur, and the final cancellation certificate will be issued, deleting the name of the company from the commercial register
Types of Liquidation
Company liquidation in Dubai can be categorized under the following two categories:
1. Voluntary Liquidation
When the shareholders of a company have no money to pay to the creditors or pay the bills and salaries of the employees, they will voluntarily opt to liquidate the company. In a voluntary liquidation, priority is given to the creditors. It is also called the shareholders’ liquidation, which may, in certain cases, be controlled by creditors, but not always.
2. Compulsory Liquidation
This type of liquidation is called creditors’ liquidation, which is proceeded by order of the court. The assets are not only distributed to creditors but also to contributors, which are based on priority claims. Compulsory liquidation may be enforced in case an organization has violated certain regulations or committed a serious offense like a fraud. The liquidation is mandatory in this case.
When Company Liquidation is Required
One of the main questions is why someone would need company liquidation services in Dubai. The answer to that is:
- The company is not relevant anymore, or it has failed to meet its purpose of inception
- The company has gone bankrupt and is unable to make the necessary payments to the creditors, employees, and other authorities
Benefits of Company Liquidation in Dubai
Company deregistration or company liquidation in Dubai may not come off as a good idea at first glance, but the process offers several perks, which include:
- By the process of company deregistration, a company can have its outstanding debts written off
- company liquidation in Dubai puts a stop to any legal action that is being taken against the company
- The employees will have the right to request payment for joblessness
- If applicable, any lease on the property or assets can be revoked
- Overall, it involves relatively low expenditure
How Avyanco Liquidation Services Works?
At Avyanco, we help our clients by handling their liquidation problems, offering them the best liquidation services in Dubai. Our highly qualified specialists will handle everything from start to finish, making the entire process a breeze for you. All the proceedings are handled in-house, and no part of the service is outsourced. With dedicated 24/7 staff to offer you assistance, we have acquired the trust of a great number of our clientele who rely on us for company liquidation.
If you want to learn more about company liquidation in Dubai, please get in touch with us today.
- Why does a business need to liquidate itself?
A business may need to liquidate itself because it is no longer profitable and incurring debt. This could be due to a number of reasons, such as poor management or other factors that may or may not be related to production. With poor income and unaffordable assets that the company is no longer able to sustain, it is only a matter of time before the organization is liquidated to pay for the lack of revenue due to constant losses.
- What is the process for liquidation in Dubai?
For company liquidation in Dubai, you need to hire registered liquidators.
- What is the process of company liquidation?
Some of the basics for a company to be liquidated include:
- Proper documentation needs to be presented for the approval of the dissolution request
- The license should be expired for two years in the least
- It is necessary to provide documentation from the Ministry of Human Resources and Emiratisation attesting that the license does not list any sponsored personnel.
- The responsibility for the dissolution must be taken by an Emirati partner for companies that have investors, stakeholders, and creditors that are non-native
- What is the dissolution process for multi-branch companies if only one branch is going bankrupt? What if they are located in different parts of the UAE
In such a case, only the branch that is going bankrupt will be closed. The location has nothing to do with liquidation or company deregistration.
- Can a company's dissolution be stopped before the payment voucher is issued?
Yes, provided that the DED's Legal Affairs Department approves.
- What will happen to the workforce in case a company is liquidated?
According to Article 123 of the UAE Labour Law, if arbitrary dismissal is determined to have occurred, the court will order the employer to pay the employee's compensation. The employees are also entitled to reimbursement from their employer for gratuities, unpaid leave during notice periods, and any other unpaid obligations.
How can Avyanco help with company liquidation in Dubai?
All forms of companies can get liquidation services from Avyanco. We offer assistance in the creation of important documents for the liquidation process, such as the Board resolution, power of attorney, audit report, liquidator's statement, and others.