Liquidation/Insolvency
Company winding up involves ending all business affairs including liquidation or dissolution. When any business of company is going bankrupt or the shareholders decide to close the operation of the company, then the assets and properties of the company is distributed to the creditors and shareholders it is also known as winding up or dissolution. It is important for relevant government entities to know that you are no longer in the business so you will avoid any accumulated fines and penalties incurred upon your license, when it is not renewed upon expiry date. If you are in a shareholding company, it is important to discharge your liabilities towards creditors and partners and protect your interests and shares.
It is also wise to put your goodwill and business reputation in perspective, if you decide to reopen a business again.
Winding up can be compulsory or voluntary and can apply to publicly and privately held companies.
The winding up of a company begins when the shareholders passes a resolution for the dissolution of the company in the Shareholders’ meeting. The above mentioned resolution needs to be notarized as In The Case Of Limited Liability Company. Apart from the passing of the notarized resolution, the liquidators should also be appointed and the name of the liquidators along with their addresses should be mentioned in the resolution.
Documents required for winding up a LLC company
1. Application form duly signed by all the shareholders.
2. Trade License
3. Passport copies and Emirates ID of all the shareholders/manager.
4. Original Memorandum and Article of Association of the company.
5. Notarised original Shareholders resolution to wind up the company
6. All visas of employee have to be cancelled and NOC letter required concerning cancellation issued by the Ministry of Labour & Social Affairs.
7. Release letter from the landlord in favor of the licensees.
8. Liquidation report (showing all liabilities paid) from a certified Auditor.
9. Bank closure letter to confirm closure of Bank Account.
10. NOC/Clearance letter from DEWA / Etisalat and customs.
11. NOC/Clearance letter from the Immigration Department.
12. Notification from the Federal Tax Authority (FTA) cancellation of the VAT account
13. Advertisement of Liquidation will be published in 2 local Newspapers and the waiting period for the same will be 45 days.
14. A letter stating approval of liquidator.
All the above mentioned documents should be submitted to the Department of Economic Development and a liquidation certificate is issued which is a proof that the company has started the procedure of closing down of the company. After receiving the liquidation certificate, the company is required to get and advertisement printed in the newspaper. Limited Liability Companies are required to publish two advertisements in the Arabic and English Language. A 45 days’ notice period is provided to the company.
During the notice period provided, it is mandatory that the company obtains the clearance from the immigration department, from the labor department, from the water and electricity departments, from the Telecom Authority, from the landlord and the bank account closure letter issued by the bank.
At the completion of the notice period, the liquidation report along with the newspaper advertisement should be submitted to the Department of Economic Development.
Winding up of a company in UAE is complicated and time consuming process. ARC Associates assists in simplifying the legal compliance and assists in avoiding extra charges in the finalization of the liquidation report, other formalities for winding up of a company on time.