Dubai, UAE - Liquidating a company involves a complex process involving legalities that are different in every part of the world. In the UAE, company liquidation is caused by primarily two factors: the first being mandatory liquidation whereby the company is forcefully dissolved in order to pay the pending debts of the business and the other is voluntary liquidation which is completed when the owners and shareholders want to close down the firm to pay debts.

The process can be started when a copy of the business license, MOA (Memorandum of Association), power of attorney of any copies of all shareholders’ passports and Emirates IDs along with shareholders’ resolution and deregistration form are submitted to the government. Upon doing so, a 45-day liquidation notice period is granted to pay off any debts, liabilities and bills, cancel visas as well as obtain a bank closure letter and prepare an audit report for liquidation.

Then depending on the type of organisation that is being liquidated - mainland companies or free zone ones, the process of liquidation will also vary as per the laws set forth by the UAE Government. The team at Best Solution explains,

“For a free zone business setup, the closure process falls under mainly three kinds: bankruptcy - which is carried out as per the Commercial Transaction law by the court; creditor winding up - when a company decides to wind up the business that then leads to a creditors’ meeting; and summary winding up - the option chosen when a company has no outstanding debts or debts that can surely be paid in the next six months.”

As for mainland businesses, a distinction exists between sole proprietorships and public companies wherein the former type of setup needs to obtain and submit clearance forms from the Ministry of Human Resources and Emiratisation, Directorate of Residency and Foreign Affairs, relevant Electricity and Water Authority and Leasing Entity. LLCs, Simple Limited Partnerships, General Partnerships, Public and even Private Joint Stock Companies are required to first sell their respective shareholder shares and pay off debts prior to applying for cancellation.

Further to this, experts at Best Solution clarify that “a liquidator is applied to the case who then begins the winding-up process, publishes the liquidation notice, collects and distributes the entity’s assets and finally prepares the Statement of Affairs. Variations exist in the prescribed two stages of liquidation depending on the type of company liquidating the business - specifically for Civil Works Companies an d also if any of the partners plan on continuing business later on.“

To learn which process is applicable for a company of concern, the best business setup consultants in Dubai, Best Solution can help identify, guide and also assist in completing the process on the company’s behalf to ensure it is both smooth-running and hassle-free for all parties involved from the very start.

About Best Solution: Best Solution Management Services is a leading business setup and corporate solutions provider equipped with extensive industry knowledge and domain expertise to help investors build the business of their dreams from scratch. From mainland company formation to virtual business setup, the expert team at Best Solutions helps owners at every step of the way to provide a solid foundational base for the smooth running of business operations in the present and future.