Companies operating in Dubai Airport Free Zone (DAFZA) can easily wind up their operations by opting for voluntary company liquidation. Voluntary company Liquidation in DAFZA is the best exit strategy available for companies as it allows the business owners to wind up their operations fulfilling the interests of all the stakeholders involved. Moreover, the liquidation process is simply provided you appoint the best company liquidators in Dubai.
However, you need to understand all the mandatory steps and requirements to complete the UAE liquidation process hassle-free. The following blog will enlighten you on how to wind up a company in DAFZA in line with the mandatory regulations and standard procedures. Keep reading further information:
Pass a Board Resolution
Before you start the process of company liquidation in DAFZA, you need to issue a formal statement on your intention to wind up the company. This statement must be in the form of a board resolution. The board resolution must be signed by all shareholders or directors and attested by the Notary Public. The board resolution must be submitted to the DAFZA authority.
Appoint a Liquidator
You need to appoint a third-party liquidator to oversee the liquidation process in DAFZA. An audit firm with a valid license to carry out its operations in the UAE can be appointed as a company liquidator.
Liquidator Sends an Acceptance Letter
Once the company liquidators in Dubai decide to provide their liquidation service to you, they must send an official letter of acceptance to the free zone authority. From here all of the powers of shareholders or directors will cease and the liquidator will assume the full power of the company under liquidation.
Public Announcement of Liquidation
A company that has initiated liquidation in DAFZA needs to publish an advertisement in the local newspaper regarding its intent to liquidate. Once the advertisement for the DAFZA-registered company’s liquidation is published, there will be a mandatory lock-in period of 45 days. During these 45 days, any party with an objection can come forward. However, the free zone authority will not accept any objection raised after this grace period.
Cancel Visas & Establishment Card
A company under liquidation must cancel all the visas issued under its business license. Do not forget to cancel the visas of all of your employees as well. Apart from this, you need to cancel the company’s establishment card.
Close the Corporate Bank Account
Companies with an active corporate bank account must cancel it before starting the liquidation process. Business owners are also required to obtain an account closure letter from the bank and submit it to the free zone authority.
Obtain Proof of Clearance from Authorities
The DAFZA-licensed company under liquidation is required to obtain proof of clearance from various authorities and utility service providers. You need to obtain a clearance letter from Dubai Customs, Etisalat/Du and DEWA. A clearance letter from RTA is required if any vehicle is registered under the company’s name.
Apply for VAT De-registration
Companies undergoing liquidation in DAFZA must apply for VAT deregistration if they have an active VAT registration in the UAE. The request for VAT Deregistration must be submitted to the Federal Tax Authority (FTA) within 20 days of becoming eligible for deregistration. Failing to carry out VAT deregistration will make you eligible for a hefty penalty of AED 10,000.
Handover Ultimate Beneficial Ownership Registers
The provisions of Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO) will apply to companies undergoing liquidation in the UAE. As per the Cabinet Decision, companies winding up their operations in DAFZA need to hand over their Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone authority within 30 days of appointing the liquidator.
Apart from the handover of the RBR and PSR, the company liquidator or administrator is required to maintain the registers for at least five years from the date of liquidation of the company. If your liquidating company fails to meet the UBO requirements, you will incur hefty administrative penalties.
Comply with Economic Substance Regulations
Apart from UBO, the companies that have initiated the liquidation process must also comply with the obligations under the Economic Substance Regulations (ESR). Companies are required to meet ESR requirements if they have carried out any of the nine relevant activities such as ESR notification filing, and ESR report submission and meet the Economic Substance Test for any period during which they carry out a Relevant Activity and derive Relevant Income.
The Nine Relevant Activities are Banking business, Insurance business, Lease Finance business, Investment Fund Management business, Holding Company business, Headquarters business, Shipping business, Intellectual Property business and Distribution & Service Centre business. Violation of this requirement will attract hefty penalties along with reputation damage.
Submit the Final Liquidation Report
The winding process of your DAFZA-registered company will conclude once the liquidator submits his final liquidation report to the free zone authority. The authority will then remove the name of the company from its register and cancel your company’s trade license.
Hire the Best Company Liquidators in Dubai, UAE
Business owners need to be aware of all the steps detailed here to make the voluntary company liquidation process in DAFZA smooth. Any mistake or lapse will delay the winding-up process but top company liquidators in Dubai such as Jitendra Business Consultants (JBC) can help you out. JBC has a dedicated team of company liquidators in Dubai who can assist you to have trouble-free company liquidation.
JBC has been helping businesses take care of their liquidation requirements for many years. We are known for providing reliable company liquidation services in Dubai and across the UAE, including offshore, free zones and mainland companies. With JBC’s assistance, you can comply with all the regulations set by relevant licensing authorities. We will work closely with you until you get the liquidation certificate from the regulator.