Deciding to end business operations in Dubai can be a difficult but often necessary step, especially when the business is no longer thriving. The procedure of liquidating a free zone company in Dubai may seem daunting at first, but in reality, it marks the beginning of a new adventure, whether it be within the Emirates or elsewhere in the world.
In this constantly evolving business world, having a thorough understanding of the liquidation process and its implications is crucial for any entrepreneur considering establishing a free zone company in Dubai.
What is liquidation
Liquidation means the cessation of a company’s activities in Dubai. Simply put, the liquidation process involves assessing and selling the company’s assets to repay any outstanding debts. The larger a business in Dubai, the more complex the liquidation process becomes, as more assets and liabilities need to be considered. The liquidation process in the United Arab Emirates can also be tricky because there are numerous authorities with their own rules for liquidation. Knowing the rules and regulations applicable to your free zone company is essential.
Steps Before Liquidating a Company in Dubai
Before initiating the liquidation process of a company in Dubai, it is imperative to conduct a thorough review to ensure that all the company’s fiscal, legal, and contractual obligations are met. This crucial step includes closing any active bank accounts, settling all outstanding debts and financial commitments, and terminating any existing contracts.
One of the initial steps involves canceling all residence visas associated with the company (and thus its license) that you intend to liquidate. After canceling the visas, you must proceed with the cancellation of the establishment card, which is essential for the company and allows for the creation and maintenance of residence visas for the company.
Additionally, it is essential to appoint a licensed liquidator whose role is to meticulously oversee the entire liquidation process of the company. This qualified professional is responsible for ensuring that each step is carried out in strict compliance with local and international regulations, while also safeguarding the interests of the company’s stakeholders.
Liquidation process of a Company in the United Arab Emirates
The liquidation process can vary depending on the company’s structure and the specific regulations of the free zone in which it operates.
Financial statements and the company’s audit must be conducted so that a liquidator can prepare the necessary liquidation report to cancel a business license in Dubai. Following the steps of the liquidation process meticulously is crucial to avoid any future disputes when closing a company in the UAE. It is important to note that the liquidator must be a registered accounting firm in the United Arab Emirates.
The dissolution process of a company in the UAE usually takes between two to three months, requiring the company’s license to remain valid until the final submission. If you delay initiating the liquidation process and wait for the license to expire, you may incur late penalties that can be very costly.
Liquidating a company in a Dubai free zone is a complex process that requires careful planning and a thorough understanding of the applicable regulations. By following the steps of the liquidation process and consulting with our experts, you can be assured of completing the process of closing a company within the deadlines and without complications. Contact us for assistance: support@ares-accounting.com.