As much as we want you to succeed in your new business venture, we also want you to know what you need to do, should you require to close this business and how much this may cost you. Business liquidation is not solely related to unsuccessful business ventures. Liquidation may also take place, as you need to move from your small set-up in the northern emirate to a bigger set-up with a physical office space, say in Dubai or Abu Dhabi. So, it is important to know from the start, how long it would take you to complete the liquidation process, how much you should budget for the same and whether or not there is a different way to transfer your business from one registration authority to another, instead of liquidating the company.
When you decide to liquidate a company, you shall consider a number of additional factors, which go beyond simply ceasing company’s operations. Among those one can name settling your company’s assets, liabilities and property, in case there are any. If you have a really small straightforward set-up, liquidation will not take much of your time.
Now, the first thing we want you to remember is to allow ample time for liquidation process. This means you need to start the process two or even three months before your company’s license expires. Should you delay the process until the company’s license expiries, registration authority will request to renew the license first and only after the license is renewed, apply for liquidation. In order not to trigger such additional expenses, plan application for liquidation in advance.
Next you need to know, that you would be requested to cancel all resident visas. This means that you need to ensure that you can apply for a new resident visa through your new company, as soon as your previous visa is cancelled. Same applies to your employees, if you have any. First make sure that you can transfer them to your new company and then cancel current visas.
Depending on the free zone or if it is economic department, where your company is registered, requirements for company liquidation may vary. Let’s discuss those, which are similar to most free zones, and next we will move on to those of them, that may or may not be on your list.
Irrespective of the registration authority, you will always need to complete and sign an application form for company de-registration or liquidation. You will need to accompany your application by a number of other documents. These might include Shareholder Resolution, Board Resolution or Owner’s Declaration calling for de-registration, including the reason for such de-registration. Additionally, if you have previously appointed a manager of the company, you will need to submit Manager’s resignation letter. All original corporate documents of the company will have to be returned to the registration authority.
While some free zones in the northern emirates are silent on appointment of a liquidator for the purpose of company de-registration, other free zones require only liquidation certificate. Most Dubai free zones request for submission of a liquidator’s report along with the audit report.
If a company you want to de-register is less than one-year-old, usually no confirmation letters and no reports from liquidators are required.
Most of the time registration authorities clarify who can be appointed as a liquidator. For example, DMCC free zone authority considers any chartered accountant or a law firm registered and licensed in the UAE as a liquidator for the purpose of liquidating a company. Or, for example, Sharjah Airport Free Zone rules state that a liquidator can be an accountant licensed to conduct business in the Emirate of Sharjah. As you see, requirements differ, so before you decide to appoint a liquidator, double check with the free zone authority as to who can be appointed as a liquidator.
The cost of a liquidator’s report varies and you have a choice to choose that service provider, who can offer a price that you may find reasonable.
Along with appointing a liquidator, you will need to make sure that you obtain clearance letters and final bills from authorities your company dealt with. These are clearance from telecom providers, utility providers, clearance letters from Emirates Post, from Dubai Customs (if your company had a trading license), from Chamber of Commerce (if required) and more.
You will also need to close your corporate bank account and receive a letter confirming this closure.
Most of the time, to liquidate or to de-register a company it is required to publish an advertisement in a Local English & Arabic Newspapers. Some registration authorities do this from their end, collecting additional payments to cover costs, others request you to the same and submit original newspaper with advertisement to them. Regardless of how it is done, notice period applies, after which registration authority can remove your company’s name from the registrar.
These are the main requirements to de-register or to liquidate your company.
You should not view liquidation as a complex process, if you had a small set-up only. Each registration authority, be it a free zone or economic department, maintain their list of requirements with respect to de-registration and liquidation. What you will need to do, just simply follow the instructions, collect all documents and pay relevant fees.
Charges of registration authorities for liquidation and de-registration vary and can be as little as AED 1,500 and as much as AED 8,000 plus. In the northern emirates this figure usually remains toward the lower end of the range.
What is also interesting to know, that some free zones in Dubai allow now to transfer companies from one free zone to another and DMCC is among those. As such, before you start liquidating company, see, if the registration authority you want to register your next company with, will allow company transfer. It will definitely require from you certain expenses, but this will allow you not to interrupt your operations and continue running business from the free zone of your choice.
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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