Company liquidation in the UAE is a process that needs a proper strategy and planning, which, unfortunately, many investors fail to acknowledge. Company liquidators in the UAE advise you to develop an exit strategy at the time of incorporation itself to avoid the struggles you may face at the time of closing down the company. Unfortunately, many investors think they can simply abandon their company without any consequences, once going ahead becomes difficult.
However, business owners are not allowed to do so. You must legally close down the company by strictly following the procedures set out by the relevant licensing authority. In this respect, voluntary company liquidation is the best exit strategy for an investor as it allows them to close down a company, satisfying the interests of all of its stakeholders.
In this article, we discuss the latest conditions and requirements governing the liquidation of a RAK ICC company. RAK ICC is one of the most reputed registries allowing the formation of an offshore company in the UAE. You need to follow the regulation of the RAK ICC registry to smoothly liquidate your offshore company. Read on to know in detail:
Declaration of Solvency
Article 204 of the RAK ICC Regulations 2018 mandates the directors of a RAK ICC company to make a declaration of solvency or a board resolution in the approved form. The declaration of solvency should state the reason for winding up the company and the expected time to complete the process. All of the company’s directors are required to sign the board resolution to commence the RAK ICC company liquidation process.
Appointment of Company Liquidator
In the next step, the directors must appoint a liquidator by passing a resolution. Company liquidators in the UAE can be any audit firm holding a valid license to carry out its operations in the country. The liquidator must submit the following documents within 14 days of his appointment:
- A notice of appointment in the prescribed format
- Declaration of solvency made by the directors or its certified extract in the approved format
- A copy of the liquidation plan
- Letter of acceptance
A RAK ICC company registered for Value Added Tax (VAT) must apply for de-registration before commencing the process of company liquidation in the UAE. As per the UAE VAT regulations, companies winding up their operations must apply for de-registration within 20 business days of becoming eligible. Failing to comply with this requirement will subject the companies to a penalty of AED 10,000.
Maintenance of Real Beneficiary Register
Companies undergoing liquidation in the UAE, including RAK ICC offshore companies, need to comply with the Ultimate Beneficial Ownership (UBO) regulations. According to the Cabinet Resolution No. (58) of 2020 on Ultimate Beneficial Ownership, companies undergoing liquidation are required to hand over their Real Beneficiary Register and Partners and Shareholders Register to the Registrar within 30 days from the date of the liquidator’s appointment. Furthermore, the liquidators in the UAE or the company administrators must maintain the Registers for at least five years from the date of liquidation. You must strictly comply with the UBO regulations to avoid hefty penalties.
Economic Substance Filing Requirements
A RAK ICC company undertaking liquidation must also comply with the Economic Substance Regulations, if it has carried out any of the nine Relevant Activities at the time of liquidation. If yes, it should meet ESR obligations such as filing annual ESR notification, submitting ESR Reports and should meet the Economic Substance Test. The nine Relevant Activities are Banking, insurance, lease-finance business, holding company business, shipping business, headquarters business, investment fund management business, intellectual property business and distribution & service centre business. Hiring the best company liquidators in the UAE can help you to avoid hefty penalties resulting from ESR non-compliance.
Transfer of Intellectual Property
A RAK ICC company having any form of intellectual property ( IP) such as patent, trademark or copyright should transfer it before completing the liquidation process. You can opt for IP licensing, or assignment processes to transfer the intangible assets.
Closing of Bank Account
You must close any bank account under the company’s name before winding up the company. Company liquidators in the UAE may ask you for a bank account statement for the last financial year to compile the Liquidator’s report. You just ensure to obtain the Bank Account Closure Confirmation from the bank as proof for account closure.
The news of the company’s liquidation just be published in one local daily newspaper. It follows a lock-in period of 15 days, during which creditors can raise any claim.
Completion of voluntary liquidation
The process of liquidation comes to a close once the liquidator submits a statement that the liquidation of the RAK ICC company has been completed. The liquidator must also submit a liquidation report to the RAK ICC Authority. After receiving the report the Registrar will strike off the company’s name from the Register and issue a certification of dissolution.
Hire the Best Company Liquidators in the United Arab Emirates
Opting for voluntary liquidation in the UAE is the best exit strategy for RAK ICC offshore companies. For a better liquidation process, hire the best company liquidators in the UAE such as Jitendra Business Consultants (JBC). We have a qualified team of liquidators who can wind up your company in compliance with the RAK ICC authority. JBC can also help you to comply with requirements related to ESR, VAT and the UBO.