ARE YOU LOOKING TO CLOSE YOUR DUBAI BUSINESS?
If you are contemplating whether you should close your business, it is recommended to complete a business evaluation by the experts. Regardless of the type of business you own in Dubai and the UAE, you must formally cancel your business licence and formally close all the associated permits etc. linked to the company. It is vital for the associated government entities to be formally informed that you will no longer be in business and will liquidate your company. The sooner you notify your licensing authority the better. This way you will avoid unnecessary fines and penalties incurred upon your trade licence if it is not renewed upon the expiry date.
It is important that as a shareholder of the company you discharge your liabilities towards creditors and partners as this will protect your interests and shares. Goodwill, business ethics and reputation must be in perspective, particularly if you decide to enter a new business venture and form a new Dubai business in the future.
PROCESS & DOCUMENTATION NEEDED TO CLOSE A DUBAI COMPANY
UAE and Dubai company closure process can be lengthy. There is a lot of paperwork, legal proceedings and dealing with several government departments and the UAE authority approvals. We recommend seeking the help and services of a well experienced Business Consultant as this will cause you less hassle, save time, and allow the ability to wind-up at a much greater speed.
The process of cancelling a business licence will depend on the structure of your company. For sole establishments, the process is much more streamlined. The first step is the cancelation via Dubai Economic Department (DED). Following on, you will need to complete the clearances from the main government departments such as:
- Ministry of Human Resources and Emiratisation (MOHRE).
- General Directorate of Residency and Foreigners Affairs (GDFRA).
- the relevant water and electricity authority.
- and the leasing entity and internet and telephone providers etc.
Whereas, companies with shares, the process takes longer. The shares of the company must be liquidated, collection of debts and payment of creditors need to be completed before finalising with the licensing authority.
Companies that are looking to close and require the appointment of a liquidator include:
- Free zone company entities.
- Limited Liability Company.
- General Partnership.
- Simple Limited Partnership.
- Public Joint Stock Company.
- Private Joint Stock Company.
WHAT ARE THE STEPS TO CLOSING A DUBAI COMPANY?
With most company types, there are normally two stages set out to complete the liquidation process.
Stage 1 – Dissolve the company and appoint a liquidator in Dubai and the UAE.
- Draft minutes of the general assembly resolution confirming the company liquidation along with the appointment of a liquidator.
- Complete the notarised resolution and ensure there are sufficient powers given to representatives to complete the company liquidation.
- Organise the official letter that will be required by a registered liquidator accepting the appointed liquidator role.
- Raise a service request for the company cancellation by filling the documentation requirements form through the Dubai Economy Department – DED, licensing authority or any other approved authorities.
- The Department of Economic Development DED or licensing department will issue a liquidation certificate.
- Newspaper advertisement must be published in English and Arabic newspapers with a notice to liquidate.
- The notice period will give the debtors a grace period of a certain number of days. Normally mainland notice period is around 45 days from the date of issue to submit their claims.
Stage 2 – Remove the company from the registrar in Dubai or the UAE.
- Lodge to licensing authority a declaration letter from the liquidator and the partners specifying no objection from any other parties during the grace period.
- Arrange documentation approvals to be completed and collected from the concerned government bodies to cancel a licence.
- Cancel company associations with the Ministry of Human Resources and Emiratisation.
- Cancel all UAE residency visas sponsored by the company at the respective General Directorate of Residency & Foreigners Affairs.
- Finalise the above documents and submit them to the relevant authority for the approval for final cancellation.
- Full payment of the liquidation fees. You will receive the certificate of deregistration (cancellation) after paying the requested fees.
WHAT ARE THE STEPS TO CLOSING A FREE ZONE COMPANY?
Since there are more than 50+ free zone types the rules and regulations may vary from free zone to free zone. Therefore, the company closure and liquidation processes and length of time it will take to complete also vary. It is important to note that certain free zones may require several months’ advance notice to vacate business facilities and to not renew the company licence. This is set out in the company’s licensing and regulations. Therefore, if a company wishes to close it must notify the free zone in advance to comply with regulations. For example, under Jebel Ali Free Zone Authority (JAFZA) should a company which to liquidate it must notify the authorities at least 3 months’ in advance prior for the office and warehouse facility and at least 6 months’ prior for plot facility.
Following on, the liquidation process will commence and follow most of or all of stage 1 and 2 as mentioned above.
Should you need any assistance regarding company restructure and liquidation in Dubai and the UAE email email@example.com or call +971 4 878 6240 for your free consultation.