What Conditions to Meet Before Liquidation of a Company in the UAE

Liquidation, winding up and dissolution are used as synonyms in the UAE, so when you hear one term or another, it’s all about one and the same process. Depending on the company type, liquidation can be executed by following the provision of either Commercial Companies Law for mainland companies, Free Zone Regulations for free zone companies or Offshore company Regulations for offshore companies. As there are many emirates and registration authorities in the UAE, there are many different rules and conditions for executing procedure. We wanted to unify all of them for you to understand what the process looks like and what should be done prior to it.

To liquidate a company certain conditions should be met in accordance with the rules and regulations of the relevant authority. Liquidation could either be compulsory (sometimes noted as a creditors’ liquidation) or voluntary (sometimes noted as a shareholders’ liquidation).

The reasons for liquidation can be different: expiry of license or duration mentioned in the articles of incorporation or association; completion of the objective for which the company was established; loss of all or most of the company’s assets; merger; approval of the shareholders that the company’s term of existence be brought to an end as per stipulated majority, etc. Irrelevant of the main liquidation reason, to execute the procedure certain conditions have to be met.

The process of liquidation in free zones and offshores is much easier compared to mainland as it doesn’t include so many steps. One of the main differences between liquidation of company in mainland and freezones or offshores is that it is requires to appoint a liquidator for mainland company liquidation. To clarify, a liquidator is a UAE based accounting or legal company that should execute the main part in company liquidation process and issue a special certificate of liquidation.

For liquidation to happen smoothly, certain conditions have to be met.

One of the conditions is the cancellation of all existing employees’ visas. In case there are active UAE resident visas, they should be cancelled prior to the process of company liquidation, as the employees have to either shift to the sponsorship of another company or leave the country.

The second condition is issuance of Board of Directors resolution with liquidation decision and appointment of liquidator. The Resolution should be attested by Notary Public.

The third condition is issuance of company liquidation certificate by the Liquidator upon the completion of the process. The liquidator should gave  License Copy, Auditor registration certificate and Authorized signature certificate attested by Notary Public.

The fourth condition is publication of liquidation advertisement in two local Arabic newspapers for one day and absence of financial claims against the company  within the period of 45 days since publication.

Condition number five is confirmation of the Liquidator and Partners that there are no any objections or claims from the third party during the Ad period.

Condition number six. Once previous five conditions are met, a final audit report of the company should be prepared and submitted to the Registration authority. In Norther emirates outside Dubai auditors report is not required.

Condition number seven is cancellation of investors and partners visas, that are still active and associated with the company.

And the final, the eights condition, is getting clearance letters from Ministry of Labour, Immigration and Utility providers.

Many new and even experiences business owners ask how long does it take to liquidate and dissolve the company? There is no simple answer to that question, as the more complex the business is, the longer the liquidation of assets will be.

Since the liquidation process and procedure is both complex and statutory, it is recommended that business owners plan the process in advance and seek advice and assistance from qualified professionals.

Always remember that even though your business failed, that doesn’t mean you are a failure. When you don’t control these thoughts, they are controlling you and undermine your confidence and self-esteem. Don’t take it too seriously and keep going. Keep going focusing on your final dream and goal. So many people went through it.

Imagine if Bill Gates took the failure of his first business, Traf-O-Data company which analyzed traffic data for the Washington state highway department–personally. Microsoft may have never been founded. The same with Setve Jobbs, imagine if he took the failure of being fired personally, will Apple be the same as it is now? Or Thomas Edisson. He was fired from his first two jobs for being "non-productive." As an inventor, Edison made 1,000 unsuccessful attempts at inventing the light bulb. When a reporter asked, "How did it feel to fail 1,000 times?" Edison replied, "I didn’t fail 1,000 times. The light bulb was an invention with 1,000 steps." Henry Ford kept failing for many years and went 5 times broke before the success. Charlie Chaplin was initially rejected by Hollywood studio chiefs because his pantomime was considered "nonsense”.  Van Gogh sold only one single painting during his life. And this was to the sister of one of his friends for 400 francs (approximately $50). This didn't stop him from completing over 800 paintings. Leo Tolstoy, one of the greatest world literature writers, flunked out of college. He was described as both "unable and unwilling to learn.", but wrote the books that all world is reading until now. Winston Churchill repeated a grade during elementary school and, when he entered Harrow, was placed in the lowest division of the lowest class. He twice failed the entrance exam to the Royal Military Academy at Sandhurst. He was defeated in his first effort to serve in Parliament. He became Prime Minister at the age of 62. He later wrote, "Never give in, never give in, never, never, never, never - in nothing, great or small, large or petty - never give in except to convictions of honor and good sense. Never, Never, Never, Never give up."

And that is what we want to say to anyone who is following the path of business. It is an adventure, short or long, and of course sometimes you take the wrong turn. But this is not the reason to stop going and throw you compass away. Maybe you need to tweak it little bit and follow another road. Keep going and remember, winners never quit, quitters never win.


    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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