Business owners often struggle when it comes to winding up their companies in Dubai. The process of company liquidation in Dubai CommerCity is straightforward and involves only a few steps. The process could go smooth if you hire experienced company liquidators in Dubai. However, the process appears to be complex for some business owners because they failed to develop an exit strategy at the time of incorporation.
As an entrepreneur, you must stick to the slogan ”you must know the exit before you enter”. Voluntary liquidation in Dubai is the best exit strategy for any business owner as it provides a robust solution agreeable to business owners, employees and creditors. Entrepreneurs wishing to wind up their companies in Dubai CommerCity can read ahead to know the steps and requirements involved:
As the first step of company liquidation in Dubai CommerCity, the shareholders or directors must pass a resolution towards winding up the company. The liquidation should state the reasons for winding up the company in Dubai CommerCity.
Notice to the Free Zone Registrar
The shareholders must then notify the free zone authority about the liquidation of the company. The shareholders must appoint a liquidator and the authority should be notified about the liquidator’s appointment. The liquidator must be an audit firm holding a valid license to carry out its operations in the UAE.
Liquidator’s Acceptance Letter
The liquidator should send a letter to the free time authority, accepting the appointment. Once the liquidator accepts the appointment, the powers of the directors or shareholders will cease and get transferred to the liquidator.
Cancellation of visas
All the visas issued by the company must be cancelled, including that of the employees. The establishment card of the company must also be cancelled.
Obtain No Objection Certificates
The management should obtain clearances and No Objection Certificates (NOC) from many authorities and government departments. NOCs must be secured by the immigration and labour departments. The management should return the keys to the premises to the leading department. Apart from that, the original certificates issued at the time of incorporation must be returned to the free zone authority. A clearance certificate must also be obtained from Dubai Customs, DEWA and Etisalat / Du. The bank account under the company name must be closed and a closure letter must be obtained.
A newspaper advertisement should be published to notify the public about the liquidation of the company in Dubai CommerCity. The notification should be published in one Arabic language national UAE newspaper and one English language national UAE newspaper. A lock-in period of 45 days follows, during which creditors can raise their claim. Any claim made after the lock-in period will not be accepted by the free zone authority.
Apply for VAT Deregistration
Applying for VAT deregistration with the Federal Tax Authority (FTA) is a mandatory requirement for VAT registered companies undergoing liquidation in the UAE. As per the UAE VAT regulations, VAT registrants must apply for deregistration within 20 days of becoming eligible for it. Companies violating this rule will incur a penalty of AED 10,000. Many companies forget this key requirement incurring penalties and thereby delaying the process of liquidation.
Economic Substance Regulation
Companies often fail to check their obligations under Economic Substance Regulations (ESR) while undertaking liquidation in the UAE. Many business owners are unaware that companies undergoing liquidation also fall within the scope of ESR. A company going through the liquidation process must check if it has conducted can’t of the nine relevant activities such as 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. If yes, the company should meet ESR requirements such as Notification filing, ESR report submission, and meeting the Economic Substance Test.
Maintenance of UBO Registers
Businesses must meet their Ultimate Beneficial Ownership (UBO) requirements while undergoing liquidation in Dubai CommerCity. As per Cabinet Decision No. (58) of 2020 on UBO, companies undergoing liquidation in the UAE must hand over their Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone Authority. The handover should be done within 30 days of appointing the liquidator. In addition to that, the liquidator administrator must maintain the RBR and PSR for at least five years from the date of liquidation. Hefty administrative penalties will be imposed on those violating the UBO regulations.
Submission of Liquidation Report
The process of company liquidation in Dubai CommerCity will end once the liquidator submits the final liquidation report to the free zone authority. Once the company liquidator submits the report, the free zone Registrar will remove the name of the company from the register and cancel the license of the company.
Hire the Best Company Liquidators in Dubai, UAE
Companies should develop a robust exit strategy to have a smooth process of liquidation in Dubai CommerCity. The services of the best company liquidators in Dubai such as Jitendra Business Consultants (JBC) are essential to make the winding process hassle-free. JBC has a team of highly qualified consultants and liquidators in Dubai who will help the businesses undertake all the necessary steps of closing down a company. We can also assist the companies to meet critical compliance requirements related to ESR, VAT deregistration, and the UBO. JBC can ensure that business owners can wind up their company in Dubai CommerCity without any headache.