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What is Company Liquidation?
In simple words, company liquidation is the closure of the business. De-registration and dissolution of the company are synonymous with company liquidation. It is a procedure when all the acquisitions of a business are sold and all the obligations are paid off. Hence, the business comes to an end. It comprises liquidation of the enterprise’s capital where assets and liabilities are set off to be equally divided among the shareholders. This cancellation of the company also involves the redistribution of any substantial earrings among all the shareholders and creditors depending on their shareholding percentage.
Types of Liquidation in the UAE
Generally, there are two types of Liquidation in the UAE:
- Voluntary Liquidation: When all the directors, owners, and shareholders of the company decide that there is no point in continuing business operations, voluntary dissolution is carried out. Such liquidation is self-induced and is also known as shareholders liquidation. Unstable operating conditions, ongoing losses, termination of objects, loans, and more are some of the reasons for the voluntary liquidation of the company.
- Compulsory Liquidation: Compulsory dissolution of a business is conducted when a business’s debts are not fulfilled during a given timeline. Hence, investors and creditors ask the court authorities to liquidate the company to get their dues. This forceful movement is conducted by the court to wind up the company and support investors in recovering their capital.
Why Liquidate Your Company?
Here are some of the key reasons which demand for the liquidation of the company:
Expensive Administration
Liquidation is required when the company is small and administration is too costly.
No Cash
If a company has no funds to pay back to creditors and the ATO then liquidation is carried out immediately.
Facing Loss
If a business is dealing at a loss and cannot be recovered from previous losses then liquidation is necessary.
Zero Assets
If a business has no assets or a small amount of assets then the company needs to be diluted.
Company Liquidation Is Also Good For The Director Because:
- It can make the director personally liable for all the company’s tax obligations and debts.
- This leads the director to feel stress and worry about trying to save the company.
- Prevents creditors from disturbing directors
- Provide the chance to move on with life
Company Liquidation Process
When it comes to the procedure of company dissolution, there are no specified actions. You are required to comprehend that the business liquidation procedure relies on numerous aspects including the state of the business, the kind of liquidation, motives behind the business liquidation or de-registration, and more. The procedure of business liquidation for one firm would be distinct from another. Here is a general overview of the process:
- The company should call a broad meeting of shareholders to vote on a solution to liquidate the business. The resolution should be agreed upon by a large proportion of the shareholders present in the meeting.
- The business should hire a liquidator to supervise the liquidation procedure. The liquidator may be selected by the general discussion of shareholders or by the committee of directors.
- Make sure that your business has stopped operations. If there are any remaining assets, a decision must be made regarding their disposal, such as transferring them to a related company or distributing them to stakeholders. All outstanding liabilities should be settled.
- Officially close the company's bank account and obtain the necessary documentation.
- Work with auditors to prepare financial statements up to the liquidation date. These statements should be submitted to the concerned state authorities during the liquidation process.
- Remove the company from VAT registration and settle any corporate tax responsibilities.
- Cancel any investor visas and UAE work permits for company employees.
- Provide the comprehensive collection of documents to the registered agent for signing.
- The liquidator is responsible for publishing a liquidation notice in a newspaper to ensure that the maximum number of creditors is notified.
- The liquidator then submits a notice of liquidation completion. Once the company is removed from the official register, a liquidation certificate will be issued.
- To complete the process, a notice confirming the end of liquidation will be published on the regulator’s website. The company is officially considered liquidated from the moment the certificate is issued and can only be reinstated by a court order.
What are the Necessary Documents Required to Commence the Liquidation Process of a Company?
Here is a complete list of documents needed to liquidate a company in Dubai, UAE:
- Copy of Emirates ID
- Copies of shareholders' passports
- Resolution of the Shareholders
- A Copy of Business License
- De-registration Application Form
- Power of Attorney, if any
- Copy of Memorandum of Association(MOA), with any changes
The team of Arabian Wingz is always ready to assist you with the comprehensive documentation procedure that is needed to liquidate a business. In addition to these documents, you are required to acquire approvals from DDA Finance Department, Dubai Customs Department, DDA IT Section, and more. Our reliable liquidation experts have the experience and in-depth knowledge of the intricacies of business and present effective services to help you close your business seamlessly.
Last Steps for Liquidation of the Company
After all the documents are submitted, the authorities will evaluate the application and the final payment to the administration has to be completed. Following that, the final certification called the license cancellation certificate will be granted by the relevant authorities.
Arabian Wingz guarantees clients with appropriate processes for the liquidation of the company in the UAE. Reach out to our team for a one-on-one consultation on how to get started with the most suitable procedure.
How Can Arabian Wingz Help in Company Liquidation?
As one of the leading company liquidation services providers, Arabian Wingz is dedicated to navigating you through the comprehensive procedure of liquidation. At Arabian Wingz, you will discover a professional team of company liquidation consultants who assist you in this crucial time and guide you to dissolve your company lawfully without any stress. We deliver company liquidation solutions for all kinds of free zones, offshore, and mainland companies across the UAE. Our experts are here to take care of all the paperwork, bank account dissolution, utility cancellations, no liability certifications, and more to make the whole procedure smooth and efficient for you.
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