Closure of Foreign Companies, Branches and Representative Offices

Closure of a company in the UAE, be it a foreign company, branch or representative office should satisfy all formal closure and deregistration procedures, otherwise such company might be considered liable for non-compliance with the deregistration regulations of relevant company registration authorities of a particular emirate - be it mainland, free zone or offshore – and might lead to penalties as well as civil and criminal liabilities of its founders.

Today we will share the general guideline on how to properly close foreign companies, branches and representative offices in the UAE.

We deliberately decided not to get into the detailed process and steps of the closure procedure, as most of it is already mentioned in the part 11.4 (General Process of closing a company in mainland) and part 11.5 (General Process of closing a company in a free zone) and applicable here as well. Instead we want to emphasize the most important aspects related to closure of foreign companies, branches and representative offices in the UAE.

Among the four most common rules here, the following should be mentioned:

Foreign investors should follow all de-registration procedures set by the relevant registration authority of a particular emirate of the UAE;
Any foreign company, branch or representative office should undergo registration process once all 3^rd party contractual obligations, debts and liabilities are fulfilled.
Official public announcement of business closure should be printed in local federal newspapers informing any creditor of such intention
A breach of de-registration procedure might lead to liabilities and fines, and could result in calling in the bank guarantee deposit made during the establishment of a company.

In case the mother company decides to close down its foreign office in the UAE, whatever legal form it might have (branch, representative office, subsidiary, etc.), the relevant application form should be submitted to the Department of Economic development or Licensing authority of a freezone or offshore.

The resolution of the head-office containing the decision on de-registration of its office in the UAE should be issued and attested if required to do so, and submitted together with all the supporting documents in order to proceed with the closure-application procedure.

Upon successful check and verification of all supporing documents, the publication on winding up the entity should appear in at least two UAE federal newspapers. If no 3^rd party raised an objection during the period of 30 days from the publication, the relevant authority issues an instruction to the bank on bank-gurantee-deposit release made during the establishment of the company.

Prior to the start of deregistration process, the representatives of foreign company should ensure the license is valid at the time application, or otherwise late penalties might apply.

All employees of foreign company, branch or representative office should be timely informed on the intention of the head company to close down the office. All salaries of such employees should be paid and all their resident visas should be cancelled or transferred to other companies if applicable to do so. The office lease should be paid off and no outstanding bills should be pending from any utility company.

As far as timeframe is concerned, it takes about one-two months to finalize the complete procedure, if no claims or liabilities appear against the deregistration of the company during the process from any 3^rd party.

We would like to point out in conclusion that it is a duty of investors to close down the company in accordance with rules and regulation of the emirate and UAE in general. Failure to comply with the set rules may result in calling in the bank deposit guarantee deposited upon setting up. It should be also noted, that if investor escaped the country without fulfilling necessary obligations on proper company deregistration, he may be prohibited from leaving or re-entering the UAE. Needless to say, that such behavior may result in black-list of such investor and further imposing of civil and in some cases even criminal liabilities.

We outlined how the general closure of foreign company, branch or representative office might look like, but of course, there are always slight variations in procedures, that exists in all seven UAE emirates.

UAE is a great and very investor-friendly country, therefore we need to stay within rules and be grateful for the opportunity of doing business in such a great market.

If you want to know more about Dubai freezone company formation, feel free to get in touch with our professional consultant team and we would be delighted to assist you and help you to compare Dubai freezone company setup costs and help you to find that free zone, which would suit your business needs the most.

Disclaimer: Business Boutique UAE-Consultants.com is not affiliated with any particular government or legal entity. Business Boutique does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea as to the reasons of Dubai freezone company setup and Dubai free zone company formation cost. Business Boutique in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.

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