General Process of Closing a Company in UAE Free Zone

Hello and welcome to the video about closing a company in the UAE and how to do it properly if you have a free zone company. As we previously mentioned, the process of terminating a company in mainland and freezones is a bit different and subject to change, therefore in this video we will cover the general process of closing a company in a free zone.

To start with, the procedure of closing a free zone company is easier than a mainland company, especially if we compare the procedures in Northern emirates for example. In most Dubai free-zones appointment of a liquidator-company became mandatory, as in all Dubai free zones submission of audit report is required, which is currently not applicable for Northern emirates at the moment. The Liquidator can be any chartered accountant or law firm registered and licensed in the UAE . Your appointed liquidator company needs issue an official letter with duty acceptance at the beginning and final report at the end.

Remember, that whenever you decided to close down the business, you will need to cancel your business license and all the permits associated with it and will not be able to operate any more.

Of course, the procedure will differ depending on the free zone, but in general the following steps will be required to be taken.

In all cases, you start with filling in and submitting the application form to free zone. In case you can not submit the application in person, authorization letter that should be legalized and attested can be given to your appointed individual who can do it for you. In some developed free zones like DMCC, for example, you can apply for closing the business online, through member portal. At the time of submitting the application you will also be required to submit Board Resolution specifying the reason of closure.

Not all free zones require to specify the reason of closure the business, though. DMCC free zone, for example, allows the following reasons to mention:

  • Summary winding up - in cases where a company has either no liabilities or is able to discharge its liabilities within 6 months and commences with a statement of solvency
  • Creditors winding up – in cases when the company passes a resolution for winding up and is followed by a meeting with the company's creditors
  • Bankruptcy – in cases when it’s court under UAE Commercial Transactions Law No. 18 of 1993.

Once Board resolution is ready, you will also need to submit original trade license, original establishment card, various certificates (like Original Chamber of Commerce Membership Registration Certificate (if valid), NOC letters from utilities providers (electricity, water, cooling), finalize all agreements with office and warehouse landlords. In JAFZA free zone, fore example, you must notify the authorities three months prior for the office and warehouse facility and 6 months prior for plot facility.  In case you have a trading company an NOC from Customs will be required. If you are dealing with particular governmental authorities and ministries, like Health Authority, DHA, DGCX, etc. clearance letters from such authorities will be also mandatory.

Please bear in mind that you will not be able to keep UAE resident visas. If you close a company, you will need to cancel all UAE resident visas, including the resident visas of shareholders. As per the UAE's Labour Law, employers are required to give their employees a two-month, paid notice period before terminating their contracts. In many cases, employees can keep their residency visas until the company's trade licence runs out.

Once all the documents are in place, the application for company closure will be reviewed and processed. You will also need to publish an announcement in a local federal newspaper and bring a confirmation company to the registrar.

All UAE freezone Registrars apply late renewal penalty fees if you do not timely inform the authority of closing a free zone company. Therefore, to avoid paying accumulated penalties, be sure to cancel your license upon business closure prior to license expiration date.

In cases when you are one of the corporate shareholders, make sure to fulfil all your liabilities towards other shareholders and 3rd parties related to your company. We recommend not to burn bridges behind and break off all ties with parties and partners, as you might decide to start up new endeavour again soon, and it’s obviously much easier task to do with those who already know you and had previous deals experience with you in the past, than to start over again and try to establish good relations with new partners, which is a time-consuming task.

Upon completion of the process, you will receive a license termination letter and De-registration letter. If that is not given to you by default, request such letters from a free zone.

The general timeline to complete the process of free zone company termination is from 2 weeks up to 2 months (60 days).  As far as associated costs is concerned, the total amound will depend on the free zone and your company specific activity, but if we consider the complete process, it will cost you AED 3,000 dirhams at minimum and up to AED 10,000 or more, if we take the most expensive free zones.

Remember, it is not that difficult as it may seem as UAE is a very dynamic country that implements modern technologies and allows to execute the necessary procedures quite fast. You should also know that in case you will not have time to do it yourself, you can always hire someone do it for you, so that you do not spend time on it. What is important, is that at the time of visa cancellation, in case you as investor have a resident visa, you will need to come to the UAE to cancel it, so plan accordingly.


    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 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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