Abu Dhabi Global Market (ADGM) free zone regulations allow companies to carry out voluntary liquidation in the UAE to terminate their business operations subject to the conditions. Voluntary company liquidation in ADGM is the best strategy for businesses to cease their operation in a legal way which is agreeable to all stakeholders involved including employees and creditors. You can appoint leading company liquidators in Abu Dhabi to complete the liquidation process faster.
During the process of voluntary company liquidation in ADGM, a company’s assets will be used to pay off its debts, liabilities and winding up expenses. Any remaining amount will be distributed to the shareholders of the ADGM company. Read the following blog to understand how to wind up a company in ADGM in 2022:
1. Make a Declaration of Solvency
In the first step, the directors should make a declaration of insolvency to close down a company in ADGM voluntarily. The declaration of solvency should be signed by all the directors or a majority of them. The declaration of solvency should be sent to the ADGM authority.
2. Pass a Resolution to wind up the Company
The directors must call a general meeting to wind up the company. The members must pass a board resolution at the general meeting to liquidate their company in ADGM.
3. Appoint a Company Liquidator
The board members must appoint a liquidator at the general meeting through the board resolution. The liquidator can be an audit firm with a valid license to carry out its operations in the UAE.
4. The liquidator Sends a Letter of Acceptance
It is mandatory for company liquidators in the UAE to send a letter to the licensing authority confirming their willingness to act as the official liquidator of their client. The same rule applies to shutting down a company in ADGM. Once the liquidator accepts his responsibility, the powers of the shareholders over the company will cease and be transferred to the liquidator.
5. Cancel the Visa and Establishment Card
Before applying for shutting down a company in ADGM, you must ensure to cancel all employee visas/sponsorships. You must also cancel the company’s establishment card and e-channels account.
6. Terminate the Lease
A company under liquidation in ADGM must terminate the lease for its company’s registered office address. You need to surrender the company’s lease registration with the Registration Authority.
7. Return the Original Documents
All the documents issued by the ADGM authority at the time of incorporation must be returned. The original documents and certificates may include the company’s trade license, Memorandum of Association (MoA), Certificate of Registration, Share Certificates, etc.
8. Close the Bank Account
You are required to close your company’s bank account if it is active at the time of liquidation. You must also get a bank account closure letter from the bank.
9. Clearance from Authorities
Clearance letters must be obtained from authorities including Abu Dhabi Customs, Abu Dhabi Distribution Co (ADDC), and Etisalat/Du.
10. Newspaper Advertisement
The Company must publish an advertisement in an English and Arabic language newspaper with wide circulation. There will be a notice period of 45 days after the advertisement, during which the creditors or any interested parties can raise any claim.
11. VAT Deregistration
Companies having active VAT registration in the UAE must apply for VAT deregistration within 20 days of cessation. The Federal Tax Authority (FTA) will impose a fine of AED 10,000 if the company under liquidation fails to comply with this requirement.
12. Economic Substance Regulation
If your company has carried out any of the nine relevant activities, you must meet ESR obligations such as ESR Notification filing, ESR Report submission and Economic Substance Test. 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. Compliance failure will lead to hefty penalties and other severe consequences such as the exchange of information with a foreign competent authority.
13. Maintenance of UBO Registers
Companies undergoing voluntary liquidation in ADGM must meet their obligations as per Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO). As per the UBO Law in the UAE, a company under liquidation is required to hand over the Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone Authority within 30 days of appointing the liquidator. Your UBO obligations in the UAE do not end there. The company administrator or liquidator must maintain the RBR and PSR for at least five years from the date of liquidation.
14. Submission of Liquidation Report
The process of voluntary liquidation in ADGM will come to a close when the liquidator presents the final Liquidation Report to the free zone authority. After receiving the report, the ADGM registrar will strike off the company’s name from the register and its trade license will be cancelled.
Hire the Best Company Liquidators in UAE
Even though voluntary company liquidation in the UAE is the best exit strategy available for companies, the process may appear to be complex without prior planning. The process involves a series of steps and requirements and that’s why you need to hire the top company liquidators in UAE such as Jitendra Business Consultants (JBC).
JBC has liquidated both mainland and free zone companies across the UAE. Our highly qualified team of liquidators can execute the liquidation process seamlessly and in compliance with the existing regulations. JBC’s experience and the learning curve will allow you to complete the process fairly quickly.