Knowing an exit strategy is equally important while making a strategy for starting a company in Dubai. Company liquidation in Dubai is considered an excellent exit plan when you no longer wish to carry out the operations of your business. Companies operating in Dubai Internet City Free Zone can opt for voluntary liquidation if they wish to wind up the company. The process includes steps such as appointing the best company liquidators in Dubai etc.
Apart from that, the introduction of new regulations has increased the compliance burden on business owners who want to wind up a company in Dubai. The investors now need to consider new requirements such as Ultimate Beneficial Ownership (UBO) and Economic Substance Regulations (ESR) to close down their companies in Dubai. Here is a list of the latest requirements and steps you must consider to liquidate a company in Dubai Internet City Free Zone.
1. Appointment of a liquidator
The shareholders of the company have to pass a board resolution to liquidate the company. The resolution must also state the appointment of the official liquidator. The liquidator can be an audit firm licensed to operate in the UAE. The liquidator will carry out the entire process of the liquidation. All the shareholders must sign the resolution and it must be notarized by the Notary Public.
2. Notifying the Free Zone Authority
The shareholders or the board of directors should notify the free zone authority about the decision to liquidate the company. The board resolution must be sent to the authority and the registrar will enter the name of the liquidator in the register. Consult with companies that provide the best liquidation services in Dubai to speed up the process.
3. VAT De-registration
If the company in question is a VAT registrant, it must immediately apply for VAT registration before starting the process of company liquidation in Dubai. If a company is under liquidation, it becomes eligible for VAT de-registration. Such companies are required to apply for de-registration within 20 days of becoming eligible. Failing to apply within the stipulated time frame will attract penalties up to AED 10,000. Furthermore, the liquidation process will be delayed if VAT de-registration is pending.
4. Maintaining Real Beneficiary Register
Companies under liquidation are required to meet the requirements as per the Ultimate Beneficial Ownership (UBO) regulation. As per Cabinet Resolution No. (58) of 2020 on Ultimate Beneficial Ownership, such companies must hand over the Real Beneficiary Register and Partners and shareholders Register the free zone authority within 30 days from the date of the liquidator’s appointment. Furthermore, the liquidator or administrators must maintain the registers for at least five years from the date of liquidation.
5. ESR Notification, Report Filing Before Liquidation
Companies undergoing liquidation in Dubai Internet City must check if they have conducted any of the nine relevant activities as per the ESR. If yes, they must meet the ESR obligations such as filing ESR notification, submitting ESR report and also meeting the Economic Substance Test. The nine relevant activities are insurance business, banking business, lease & finance management business, shipping business, holding company business, headquarters business, investment fund management business, Intellectual Property business, distribution and service centre business. Failing to meet ESR obligations will lead to hefty penalties and other consequences.
6. Clearances from Immigration, Labour and Others
Getting a NOC from Dubai Customs is mandatory to ensure that the goods imported and/or exported by the company have been cleared. The NOC is also required to show that the company has settled all the pending customs duties. The company should also obtain Visa and immigration clearances and must ensure that visas of all the employees are cancelled. Clearance should also be obtained from utility service providers such as DEWA and Etisalat.
7. Lock-In Period after Clearances
After all the clearances are obtained, the notification about the liquidation must be published in two local daily newspapers, one in Arabic and one in English. It is an invitation for anyone to object to the liquidation within 45 days from the date of the publication.
8. Completion of Liquidation in Dubai Internet City
At the final step of the company of liquidation in Dubai Internet City, the liquidator must submit the final liquidation report to the free zone authority. The Dubai Internet City authority will then cancel the company’s trade license and remove its name from the register.
Hire the Best Company Liquidators in Dubai, UAE
Voluntary Liquidation is the best exit strategy for companies operating in Dubai Internet City. Companies that find going ahead tougher should go for liquidation by appointing the best company liquidators in Dubai such as Jitendra Business Consultants (JBC). With its years of experience and resources, JBC continues to be the leader in providing the best company liquidation services in Dubai. JBC’s company liquidators in Dubai are highly qualified and key to ensuring that your company is wound up without any hassle.