The 10 Steps to Liquidating a Business in the UAE
When would a company wish to liquidate? Typically, this will be when a corporation no longer has the liquid funds to operate on a day to day basis, creditors and other commitments of the company are no longer being paid as they should be. In light of the Covid-19 pandemic, this unfortunately will become a more common event within the UAE.
The liquidation of a company in the UAE can be compulsory, referred to as a creditor’s liquidation, or voluntary, sometimes known as a shareholder’s liquidation, although some voluntary liquidations can be controlled by the company’s creditors.
The steps to Liquidation
For a limited liability company, the shareholders will agree that there can be no point in continuing to trade considering that as they will be unable to honour the debts of the company on an ongoing basis. These are the steps that need to be taken to liquidate that company:
- Produce a board resolution for dissolution and appointment of a liquidator. The resolution will need to be attested by a Notary Public
- The company must now prepare to run down the company by:
- Paying off all creditors
- Collecting all cash from customers
- Paying all taxes owed to the FTA
- Selling off remaining inventories
- Selling the fixed assets of the business
- Paying down all outstanding loans
- Pay final salaries of remaining employees including their EOSB (if possible)
- Close all bank accounts
- Cancellation of the office lease and handover of office premises
- Obtain a liquidation letter from a qualified professional with their licence, auditor’s registration certificate and authorised signature certificate which should also be attested by the Notary Public
- Pay the fee to the appropriate licence issuing jurisdictional registrar
- It may mean that local paper advertisements in both Arabic and English
- Confirmation from the liquidator and shareholders that there is no objection or existing claim from any other third party
- Cancel the visas of employees and obtain clearance letters from the Ministry of labour & Immigration, closure of PO box, customs clearance DEWA and Etisalat/ Du
- If appropriate, deregister the company for VAT with the FTA
- Present the board resolution and a copy of the liquidation certificate to the licence issuing jurisdiction
We understand that over the coming months it is very possible there may be a very large increase in the number of failing companies throughout the UAE region, in particular in Dubai. Rethink has been supporting the SME community in Dubai for many years and although this is a difficult time for many, we are able to handle the issue of liquidation with sympathetic professionalism.
Who are we?
Re/think is a boutique accounting, regulatory and compliance, VAT advisory, audit, HR consultancy, recruitment and business advisory firm. We specialize in assisting SME clients with cost-effective, high quality services and solutions. We create value by investing in highly qualified and motivated people and working closely with leading industry partners to provide our clients a one stop shop for all of their business support.
PARTNER & DIRECTOR OF ACCOUNTING & CFO SERVICES