The offshore companies licensed by the relevant free zone authorities in the UAE can wind up their operations due to a variety of reasons including debt, unfavourable economic conditions, loss, etc. Each of the offshore authorities has implemented highly efficient regulations allowing the business owners to close down their companies. The process of company liquidation in the UAE is almost similar to the three offshore jurisdictions (JAFZA, RAK ICC, and Ajman Offshore), but the regulations may slightly vary depending on the laws of the regulatory authority.
The following processes are to be followed for successful offshore company liquidation in the UAE.
To initiate offshore company liquidation in the UAE, the directors of the company shall make a statement of solvency regarding the closing of the entity through a board resolution. Each of the directors is required to sign the statement and the statement should inform that the directors have made a full inquiry into the affairs of the offshore company.
Appointment of Liquidator
The directors are required to appoint an official liquidator through the board resolution. The liquidator can be a registered audit firm and the liquidator will oversee the entire process of winding up the UAE offshore company. The board resolution should contain a statement about the name and address of the liquidator.
Official Letter from Liquidator
The liquidator is then required to submit an official letter to the Offshore Company Authority that he has accepted the responsibility of winding up the company. The directors of the offshore company can hire the best audit firms in Dubai, UAE to act as the liquidator for winding up their company.
Application for Liquidation
In the next step, the liquidator will submit an application for winding up the offshore company. Along with the application, the liquidator is required to submit the relevant documents requested by the offshore authority. The offshore authority will examine the documents and will give approval for the liquidation process to commence. If the authority finds the documents to be insufficient, additional documents will be required to be submitted as requested. Consult the best offshore company liquidators in Dubai, UAE to have a hassle-free liquidation process.
Notification of Liquidation
A notification about the liquidation of the company should be published in a local newspaper to announce the company liquidation. There will be a grace period granted by the regulatory authority after the newspaper advertisement during which any creditors can put a claim over the company.
Closing of Bank Account
The directors should ensure that all the bank accounts associated with their UAE offshore entity should be closed. The liquidator will need a bank account statement for the last financial year to compile the Liquidator’s report. It is also important to obtain the Bank Account Closure Confirmation from the bank as proof of account closure.
Transferring or Selling of Company Assets
The companies should ensure that any asset that it owns must be sold or transferred to complete the process of liquidation. The assets could be properties that the company owns in the UAE, IP assets or shares in other companies. The liquidators will ask the company to present the proof of transfer or the proof of selling the assets while preparing the Liquidators report.
Economic Substance Regulation
Companies often fail to check their obligations under Economic Substance Regulations (ESR) while undertaking liquidation in the UAE. Many business owners are unaware that companies undergoing liquidation also fall within the scope of ESR. A company going through the liquidation process must check if it has conducted can’t of the nine relevant activities such as 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 yes, the company should meet ESR requirements such as Notification filing, ESR report submission, and meeting the Economic Substance Test.
Maintenance of UBO Registers
Businesses must meet their Ultimate Beneficial Ownership (UBO) requirements while undergoing liquidation in the UAE. As per Cabinet Decision No. (58) of 2020 on UBO, companies undergoing liquidation in the UAE must hand over their Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone Authority. The handover should be done within 30 days of appointing the liquidator. In addition to that, the liquidator administrator must maintain the RBR and PSR for at least five years from the date of liquidation. Hefty administrative penalties will be imposed on those violating the UBO regulations.
The liquidator will submit a report to the Registrar that the liquidation has been completed. The registrar will remove the company’s name from the Registrar of Companies and issue a certificate of dissolution. The dissolution of the company will be effective from the date of the issue of the certificate. The offshore Company must hire a licensed and approved audit firm in Dubai, UAE, that is authorized to prepare the Liquidators Report for the company.
Choose Jitendra Business Consultants for Company Liquidation in Dubai, UAE
The process of winding up an offshore company in the UAE is not a simple one and involves a lot of mandatory steps. All the steps in company liquidation in Dubai such as the appointment of a liquidator and cancellation of bank accounts need the professional assistance of the best company liquidators in Dubai. Jitendra Business Consultants (JBC) is a renowned company liquidator in Dubai with years of experience in carrying out the liquidation of offshore, Mainland LLC, and free zone companies. JBC’s highly qualified liquidators carry out all the documentation and clearances required to wind up an offshore company in the UAE.