Latest Steps and Requirements to Liquidate a DIFC Company in 2022

Latest-steps-and-requirements-to-liquidate-a-DIFC-company-in-2022

You may opt for voluntary company liquidation in Dubai International Financial Centre (DIFC) when you think your company is unfit for operation or business conditions are going bad and will not improve further. Company liquidation in DIFC is the best exit strategy for shutting down your business legally. The process of liquidation helps you to close down your company, satisfying all the stakeholders involved including your employees. It also saves you from undergoing compulsory liquidation in Dubai, which typically happens after a court order.

However, you need to plan your exit strategy at the time of company incorporation as you may find it tough to navigate the complex steps and requirements associated with the company liquidation process in the UAE. You can simplify the process by appointing leading company liquidators in DIFC. Meanwhile, you can understand the nitty-gritty of the liquidation process by going through this blog:

Shareholders’ Resolution

The company undergoing voluntary liquidation in DIFC must submit a shareholders’/board resolution to the free zone authority. The board resolution should declare the intent to wind up the company. All the shareholders/directors are required to sign the resolution and get it notarised by the Notary Public.

Appoint a Company Liquidator

Voluntary liquidation needs to be carried out only through company liquidators in Dubai, UAE. You must appoint an official liquidator for winding up your DIFC company on your behalf. The liquidator can be an audit firm holding a valid license to carry out its activities in the UAE.

Letter of Acceptance from Liquidator

The official liquidator of the company needs to send a letter to the free zone authority stating his willingness to act as the liquidator for the company.

Advertisement in Newspaper

The decision to wind up your company in DIFC must be made public through a newspaper advertisement. The news of liquidation must be published in Arabic or local English newspapers. A waiting period of 45 days must be given to creditors to raise a claim.

Cancellation of Visa and Establishment Card

You must ensure that all the visas issued under the company are cancelled before the liquidation. This includes the visas of employees as well. You need to cancel the company’s establishment card as well.

Bank Account Cancellation

If the DIFC company has any bank account, it must be cancelled. It is important to obtain an account closure letter from the bank and submit it to the DIFC authority.

Clearance from Authorities

Clearance must be obtained from authorities such as Dubai Customs. You must also obtain clearance from utility service providers such as DEWA and Etisalat/Du.

Return Keys to the Free Zone Authority

If you have rented or leased out any office space or facility within the DIFC, you must return the keys to the free zone authority. You need to obtain a clearance letter from the relevant department in this regard.

Apply for VAT Deregistration

If your DIFC company has an active VAT registration, you are required to apply for VAT deregistration within 20 days of cessation. Compliance failure may force the Federal Tax Authority (FTA) to impose a penalty of AED 10,000.

Economic Substance Regulations Compliance 

Companies undergoing liquidation in the UAE are required to comply with Economic Substance Regulations (ESR). You must submit the ESR notification, and ESR Report and fulfil the ES test if the company has carried out any of the nine relevant activities in the UAE. 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. Failing to comply with the requirement will attract hefty penalties along with reputation damage.

Compliance with Ultimate Beneficial Ownership

A UAE company under liquidation needs to meet its obligations as per Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO). In line with this Decision, the liquidating DIFC company needs to hand over its Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone authority. Moreover, the liquidator or administrator is required to maintain the RBR and PSR for at least five years from the date of liquidation.

Submission of Liquidation Report 

The process of closing down a DIFC company will conclude once the liquidator submits the final Liquidation Report to the free zone authority. Upon receiving the report, the Registrar of the free zone will cancel the company’s license and remove its name from the register.

Hire the Best Company Liquidators in Dubai

Closing down a company in DIFC is not a simple task. Business owners need to hire experienced company liquidators in Dubai such as Jitendra Business Consultants (JBC) to close down their company in line with all the mandatory steps and procedures. JBC is one of the leading company liquidators in Dubai with years of experience. JBC can help you liquidate all types of companies such as free zone companies, offshore companies and mainland companies. If you are looking for the best company liquidation services in Dubai, look no further than JBC.

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