A Comprehensive Guide to Company Liquidation in Dubai
In the business area, company liquidation in Dubai can be an overwhelming and complex process, and you will need extensive information on legal requirements, and business practices, among other topics of interest to approach this topic in a good light. In this article, we will see each of the legal procedures that you must follow, we will provide you with all the relevant information when it comes to company liquidation in Dubai, so you can do it in a successful, reliable, and dynamic way, let us see what we can expect from this complex but interesting topic. Understanding the Company Liquidation Process in Dubai Let us see what are the important points to understand what is company liquidation in Dubai, the steps to be able to do it, the required documentation, or other key aspects. In addition to understanding what liquidation is, also keep in mind that you must have all this clear at the time of liquidation as it goes hand in hand with several laws. Introduction to Company Liquidation Company liquidation in Dubai is a process in which a company closes all business operations. In addition, the assets of the company are sold and used to pay creditors and other obligations of the company, whether debts or liabilities. Liquidation can be voluntary if you decide to close your own company, or it can be unnatural when an order is made by a court or other legal authority. Liquidation will always be accompanied by specific legal procedures depending on the jurisdiction in which your company operates. Legal Framework for Company Liquidation The legal framework for company liquidation in Dubai is governed by various laws and regulations. In addition to procedures established by the authorities, this is to ensure an organized liquidation firsthand. In addition, among the components of the legal framework we have: Commercial Company Law: The Federal Law No. 2 of 2015 on commercial companies, gives a general legal framework for all operations and liquidation of companies in the UAE, in this framework enters also Dubai. The law describes the procedures for the liquidation of companies whether voluntary or compulsory. Department of Economic Development: This is the main regulator in Dubai responsible for being in charge of commercial activities. It plays an important role in issuing permits, licenses, and approvals necessary for the closing of businesses. International financial center laws: This is for companies operating within the free zone. There is also the insolvency law and the company law which describe the procedures and requirements for the liquidation of companies within the free zone. Appointment of the liquidator:x A liquidator must be appointed for the liquidation process of the companies. In addition, Liquidators must be licensed professionals which must be approved by the permitting authorities. Employee rights: The laws address the rights of employees affected by the liquidation of the company, this includes end-of-service benefit payments, gratuity in addition to other benefits. Creditors’ rights and claims: Throughout the liquidation process, creditors’ rights are protected. The creditors have the right to assert their claims against any of the assets of the company. They also have the right to participate in the distribution of the proceeds. Types of Company Liquidation in Dubai We must know that there are different types of company liquidation in Dubai, which are 2. Let us see the differences between each one and its definition. Voluntary liquidation: This can occur when you or your shareholders decide to close the company. Liquidation could occur for many reasons. Such as changing market conditions, inability to maintain the operation of your company, or the completion of your company’s objectives. Voluntary liquidation by the members: This could occur when the company is solvent, meaning that it can pay all debts within 12 months usually. In addition, this occurs when the shareholders want to withdraw from the business and want to look for other opportunities. Voluntary liquidation by creditors: This happens when your company is insolvent, in other words, it will not be able to pay all its debts. In these cases, shareholders seek to voluntarily liquidate the company to avoid having to pay interest to creditors. Compulsory Liquidation: This may occur when a company receives an order from a court or competent regulatory authority to close all operations of the company. It can happen due to insolvencies or the inability to meet financial standards. It can be initiated by creditors. to shareholders, to regulatory bodies, or to the company itself. Steps for Successful Company Liquidation in Dubai Let us take a look at the key steps you can take to make company liquidation in Dubai easy. Following a guide to better understand how to handle the closure of your company and comply with all the regulations. Pre-Liquidation Preparation: The preparation before any company liquidation in Dubai is important that you make a series of controlled decisions and actions. Here are some of them that you can keep in mind Decision Making Whether you have already made the decision to liquidate or it is an unavoidable reality, it is better to do it with self-control and plan everything several months in advance. Gathering all documents: You must gather all relevant financial and legal documentation of your company, such as financial statements, contracts, licenses, and cooperative records. Asset management: You will also have the tax consequences, of transferring ownership and control of all company assets that you wish to retain in advance. Cost reduction: Try to keep the cost of liquidation to a minimum. In addition to preparing all of your affairs for the handover of everything to the liquidator Minimal address details: This can be coordinating all emails, phone numbers, contracts, etc. Protect personal assets: You will also need to protect your assets or other assets of the entity that will be held in one way or another with the assets of the company. This is because they could get caught in the liquidator’s net. Plan of Action: You must have a fully detailed plan of action, which includes a
