The laws of most countries contain different rules, applicable to the procedure of companies’ liquidation – either voluntary or compulsory.
There are plenty of examples and cases when business owners simply forget or leave their companies which are no longer required, thus wanting to save time and money on the formalities related to the official liquidation / closure of such company in Dubai, UAE. In such cases, the required procedures of closure / liquidation of the company are not made in time or totally fail to be completed. The owners of such companies expect that the company will first be deleted from the companies registry for non-payment of annual fees, and, as a result, would lead to the automatic closure of the company in the UAE, and after a while will be completely liquidated.
But such type of solution is improper in its nature and can be quite dangerous. Why? First, in most countries, including Dubai and all other Emirates of the UAE, at the time of deleting of the company from the register, the liability of shareholders and directors of the company still remain in full power as the company has not followed the process to be closed. The assets of the company, including bank accounts, if they have not been moved out from the company, would become inaccessible due to the dissolution of the company.
In this case, if it becomes necessary to re-establish / reopen such company in Dubai, it can be very difficult or almost impossible.
In addition, as was mentioned above, the directors of such companies are liable for existing debts and liabilities of the company since it did not proceed with the procedure to close / dissolve, and such liability remains for a long period of time.
According to the examples above, a company in the UAE may cease to exist due to non-payment of annual fees and, as a result, this may lead to negative consequences which can even result the Dubai entry ban of the company shareholders or directors for a long period of time.
At the same time, in order not to face the problems above, you can get in touch with professional companies that specialize in closure / liquidation of companies in the UAE strictly in accordance with the applicable rules and regulations. Such company would execute the whole procedure to dissolve the company in Dubai or any other Emirate of the UAE and at the end of liquidation process would provide the official company closure certificate – Company’s Dissolution Certificate.
Let’s briefly see an example of core steps on how the liquidation / closure of the company in, for example, the Free Trade Zone of Ras Al Khaimah looks like and what shall be done in company owner decided to close the company in UAE.
If, during the liquidation of the company in the UAE, there are any assets, it is recommended to transfer such assets to its shareholders or to transfer such to the third parties.
Next, the board of directors and shareholders must prepare the resolution to liquidate the company and appoint the liquidator to approve the closure procedure of the company in the Emirates. Dissolution and liquidation of the company in the UAE can be done by empowered persons whereby such empowered persons must be duly empowered by all shareholders. In this case, the liquidators must approve the order of action of the company’s liquidation – send confirmation that the company has no assets or any obligations.
Then then next step to be followed to close the UAE company is publishing in the local press of the notice on the beginning of the liquidation process.
Then there are a couple of other steps to be followed to fulfill the requirements for company liquidation. Their scope and nature depends on the type of company and the type of its activity. As an example, retail companies may be required to obtain confirmation letter from the UAE customs of not having any debts or outstanding customs payments.
Another important point – if dissolution of onshore company in Dubai was not carried out as required, and the shareholders and directors simply leave the company without the renewal, and after 2-3 years are going to enter the country on a tourist visa in the UAE, the entry to the country can be banned. To address this situation, the client will have to pay all the debts of the company for the entire period of time, even if he was not staying in the UAE and did not conduct any activities over such abandoned company. Accordingly, only the full payment of debts and penalties will allow entry into the country. However, we cannot rule out the possibility that in such case the restriction on entry may affect not only UAE, but also the Gulf region itself.
Therefore, we strongly recommend not leave the company in Dubai and use the applicable practice to liquidate / close it solely within the legal framework.
Our company provides not only the registration of any type of company in the UAE, but also companies liquidation and execution of all the steps and requirements within the companies dissolution in Dubai and other Emirates of UAE.
