Voluntary company liquidation in Dubai is the best exit strategy for companies licensed by the Dubai Development Authority (DDA). The DDA is a government body that regulates certain free zones that are located in Barsha, Dubai. DDA oversees the process of company liquidation in Dubai free zones that come within its regulatory control. Company liquidation in DDA companies involves certain regulations and steps that will be discussed in detail in this blog. However, appointing the best company liquidators in Dubai is critical for the quick completion of the process. Keep reading to understand the conditions and requirements to wind up the companies licensed by DDA.
Send Notice to the Dubai Development Authority
You need to send a notice to the DDA regarding your intention to liquidate the company in the free zone. The notification should contain the reason for liquidating the company.
Pass a Board Resolution to Liquidate the Firm
After sending the notification, the shareholders or directors should pass a board resolution to wind up the company. The board resolution should be signed by all the shareholders or directors and must be notarized by the Notary Public. You must submit the signed resolution to the DDA with the required fees for liquidation.
Appoint a Liquidator
The company under liquidation in Dubai must appoint a liquidator to carry out the entire process of liquidation. The liquidator can be any audit firm holding a valid license to carry out its operations in the UAE. The name and address of the liquidator must be stated in the resolution forwarded to the DDA. It is advisable to hire company liquidators in Dubai having extensive experience so that you can complete the process without any delay.
Acceptance Letter from the Liquidator
Once appointed, the liquidator should inform the DDA that he is willing to take up the responsibility of liquidating the company under the DDA. The liquidator is required to send an official acceptance letter to the DDA in this regard.
Advertisement in the Newspaper & Lock-in Period
An advertisement should be published in both English & Arabic Newspapers notifying the news of the liquidation. The advertisement must state that any interested party can raise a claim against the liquidation within the lock-in period of 45 days, counting from the date of publication. DDA will not entertain any claim made after the grace period.
Obtain Clearance Certificates
A clearance certificate must be obtained from various departments, government authorities and utility service providers. NOCs must be obtained from the following entities:
- The finance department at TECOM
- TECOM Government Services Operations (for PO Box and Visa Cancellation)
- Dubai Customs
- Dubai Electricity and Water Authority (DEWA)
- Etisalat / Du
Close the Bank Account
The bank account of the company must be closed before starting the process of liquidation in DDA. A letter from the bank must be obtained to show the bank account has been closed.
Cancellation of Visas
The company should ensure that all the visas held by the company have been cancelled. This includes the visas of the employees. Once all the visas have been cancelled, you must also cancel the company’s establishment card.
Most companies that have an active VAT registration in the UAE forget to apply for VAT deregistration before winding up the company. If you are a VAT registrant, it is mandatory to apply for VAT deregistration within 20 days of becoming eligible for it. Companies that fail to meet this critical requirement within the set deadline will attract a penalty of AED 10,000.
Comply with Economic Substance Regulations
Companies undergoing liquidation in DDA need to meet their obligations as per the Economic Substance Regulations (ESR) if they have conducted any of the nine relevant activities. The nine Relevant Activities under ESR 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. If any of these activities have been carried out by the companies, they need to meet ESR obligations such as ESR notification filing, submission of ESR Report and meeting the ESR test. Companies under liquidation in the UAE will attract hefty penalties if they fail to meet the ESR group.
Ultimate Beneficial Ownership Regulations
Companies undertaking liquidation in the UAE must fulfil their obligations as per Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO). The companies are required to hand over the Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the DDA within 30 days of appointing the liquidator. Apart from this, the liquidator or administrator is required to maintain the registers for at least five years from the date of liquidation. Companies will attract hefty penalties if they fail to meet the UBO requirements.
Submission of Final Liquidation Report
The process of company liquidation in DDA will come to an end when the liquidator submits his final liquidation report. The DDA will then strike off the company’s name from the free zone Register and cancel its trade license. The best company liquidators in Dubai can provide liquidation reports in full compliance with the laws and requirements.
Free Zones Regulated by Dubai Development Authority
Stated below are the free zones being regulated by the DDA:
- Dubai Internet City
- Dubai Media City
- Dubai Outsource City
- Dubai Production City
- Dubai Knowledge Park
- Dubai Studio City
- Dubai Design District
- Dubai International Academic City
- Dubai Science Park
Work with the Best Company Liquidators in Dubai, UAE
Voluntary company liquidation in Dubai allows DDA-licensed companies to exit their operations peacefully. Hiring experienced company liquidators in Dubai such as Jitendra Business Consultants (JBC) can ensure that your company is shut down as per the relevant laws and procedures. JBC has an impressive track record in liquidating free zone, mainland and offshore companies operating in the UAE. We can help you with creating Board resolutions, filling all forms related to liquidation, applying and obtaining NOC, preparing and submitting Liquidation reports etc. Consult with us today to ensure your company is wound up peacefully.