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Closing a Company in Dubai

Closing a Company in Dubai

Company Liquidation in Dubai

company liquidation in Dubai

UAE is always focused on building a robust business infrastructure to support business and drive economic growth.

Expats from all over the world continue to move to Dubai for a better life and better opportunities. There are immense opportunities in Dubai for business setup and to operate a successful business.

However, in the event of closing down your business or closing down and reopening a new business, etc., there are a few documentations, paperwork and legal proceedings to be initiated. It is to ensure the smooth closing of your establishment and not record any fines or late fees.

As closing the business in Dubai requires a lot of processes, documentation, attestations, and approvals from Government Authorities, it is best to initiate the closing of business in Dubai by taking the assistance of a well experienced Business Consultants to save time and effort.

Our expert team at Al Fursan Business Consultants will hand hold you throughout the company liquidation process to ensure you have a hassle-free company liquidation in Dubai.

What are the Steps in Closing down your business in Dubai?

The basic steps for closing down all types of legal forms of business in Dubai are almost the same with few variations depending on the type of business and the business jurisdictions – Mainland, Freezone, Offshore.

Close a Sole-Proprietorship in Dubai

  • Fill in the Registration & Licensing Application form through approved channels.
  • Submit the Trade Licence Copy
  • Cancel the Establishment Card at the Ministry of Human Resources and Emiratisation
  • Collect business-activity specific approvals
  • Submit the above documents via the approved channels and collect the License Cancellation Certificate.

Close a Company’s Branch in Dubai

  • Fill in the Registration & Licensing Application form via the approved channels.
  • Cancel the Establishment Card at the Ministry of Human Resources and Emiratisation
  • Submit an attested decision issued by the parent company to cancel the branch.
  • Collect business activity-specific approval (if required)
  • Approval from the Ministry of Economy to cancel the foreign company branch
  • Submission of documents via the approved channels and collect the License Cancellation Certificate

Close a Civil Works Company in Dubai

  • Fill in the Registration & Licensing Application form via the approved channels.
  • Cancel the Establishment Card at the Ministry of Human Resources and Emiratisation
  • Cancel the foreign partners' visas sponsored by the company
  • Collect business activity-specific approval (if required)
  • Prepare a Partnership Cancellation Contract authenticated by a notary public or any of the state's court.
  • Submit the above documents through approved channels and collect License Cancellation Certificate.

Close all types of Companies in Dubai

Phase 1 - Dissolve a company and appoint a liquidator in Dubai

  • Prepare notarized minutes of the Shareholder's meeting to confirm the company liquidation. Also, include the notice of appointment of a liquidator.
  • Prepare a letter issued by the liquidator accepting to liquidate the company along with the liquidator’s credentials (Business license copy, auditor’s registration certificate, a notarized signature)
  • Fill in the Registration and Licensing Application form and submit the above documents through the approved channels.
  • A legal advisor in DED will review the documents and approve the company dissolution documents and liquidator’s appointment
  • A payment voucher will be issued for company dissolution and liquidator appointment. Post payment of the fees the company dissolution documents will be issued to the company.
  • Publish a notice of liquidation in two Arabic Local Newspapers for one day, the notice should give the public a period of 45 days to submit any claims or complaints.

Phase 2- Remove a Company from the Register in Dubai

  • Prepare the company’s final report
  • Prepare a declaration letter from the liquidator and the partners indicating that no objection from any other parties during 45-days of dissolution announcement.
  • Cancel the establish card at Ministry of Human Resource and Emiratisation
  • Cancel the foreign partners; visa sponsored by the company.
  • Collect business activity-specific approvals (if required)
  • Obtain the Ministry of Economy's decision to cancel the company’s License (for private shareholding companies)
  • Obtain the Securities and Commodities Authority decision to cancel the company’s License (for public shareholding companies)
  • Submit all the above documents along with Phase-1 documents through approved channels and get the approval of DED legal advisor.
  • You will be issued with a payment voucher to pay the deregistration fees. Post-payment the certificate of deregistration will be issued to the company.

When do you require a Liquidator for cancelling your Business License?

For companies with share, the process is longer because it requires liquidating the shares, collecting the debts and paying the creditors’ before finalizing with DED.

Companies which require a liquidator for closing the business in Dubai

  • General Partnership
  • Limited Liability Company
  • Simple Limited partnership
  • Public Joint Stock Company
  • Private Joint Stock Company

Why Cancelling the License is a requirement upon closing of business in UAE?

The government authorities must be well informed that you are no longer in the business to avoid any accumulated fines and penalties on your existing license. Active Trade Licenses are to be renewed every year and defaulting that will yield fines.

For shareholding company, it is important to settle the liabilities with creditors, partners, and other stakeholders. It also helps in maintaining your goodwill, business reputation, and credibility if you want to start fresh by opening a new business.

Closing a Business in a Freezones of Dubai

There are three types of closures for Freezones companies

  • Summary Winding up- when a company has no liabilities or is able to settle the liabilities within 6 months and commence with a statement of solvency
  • Creditor winding up- Company passes a resolution for winding up and is followed by a meeting with the company’s creditors
  • Bankruptcy- Done by the Court under UAE Commercial Transaction Law No.18 of 1993.

Closing company in Dubai is more than just ceasing the operations, it includes lot of processes to finally terminate the trade license. It is mandatory in UAE to notify the Freezone authority in advance as per their requirement.

In the DMCC Freezone, the business closing application must be submitted through the member portal.

The authorities, duties, and responsibilities of the Directors of the company will be terminated as part of the cancellation of business license.

The application will be reviewed and processed. This will be followed by an announcement in a local Arabic newspaper. DMCC authorities will then file the final termination of the company and issue termination letters.

In JAFZA the companies must notify the authorities 3 months’ prior for the office and warehouse facility and 6 months’ prior for plot facility.

In all cases, the employee has to cancel the visas and work permit. The employees have to be given a two-month paid notice period before terminating their contracts.

The company must ensure, they clear all the arrears, obtain the required clearances, notify the concerned government authorities, obtain the final License Cancellation Certificate and have a smooth closure to avoid any future legal violations.

For any assistance regarding company liquidation in the UAE, talk to our consultants right away!

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