An Introduction to Company Liquidation in UAE
In simple terms, company liquidation, de-registration, or dissolution is a process whereby the existence of a company is brought to an end. It is also known as a formal insolvency procedure that helps in the winding up of a company, cancellation of a company, or closing of a company. During this procedure, all of a company’s assets will be liquidated or sold for the benefit of the shareholders and the company. Apart from this, any significant revenue is redistributed amongst the shareholders and creditors on the basis of their shareholding percentage. Once a company is de-registered or liquidated, it will cease all business operations.
Types of Liquidation
In the United Arab Emirates or UAE, there are two types of liquidations or de-registrations:
Voluntary Liquidation: It is a self-induced liquidation and dissolution of a company. Such a decision is made once a company’s directors, owners, and shareholders decide that there is no reason to continue a particular company.
Voluntary liquidation is also referred to as shareholders’ liquidation. In certain circumstances, a company decides to liquidate to avoid further losses. Poor operating conditions, continuing losses, termination of the objects, debts, and more are some reasons for voluntary liquidation of a company.
Compulsory Liquidation: Compulsory or mandatory liquidation of a company takes place when a company’s debts are not cleared on time and investors or creditors request the court to de-register it to claim their dues. The court then takes action to forcefully wind up the company and help investors recover their capital.
Why is Company Liquidation Required?
Insolvency is one of the major reasons why a business chooses to liquidate its assets. When a company is not able to pay debts and process further operations, it is considered to be insolvent. Liquidation or de-registration enables a company to terminate its operations and turn its assets to cash to clear debts. There can be some other reasons behind liquidation as well. Some companies liquidate their assets due to unfeasible operations and updated technology. Others wind up their companies because the founder has retired or passed away.
Company Liquidation Process
Clearly, company liquidation is a tedious task for creditors and directors alike but can help avoid further losses. When it comes to the process or procedure of company liquidation, there are no fixed steps. You need to understand that the company liquidation process depends on several factors including the condition of the company, type of liquidation, reasons behind the company liquidation or de-registration, and more. The process of company liquidation for one company would be different from another.
Are you struggling with unpaid debts? Are you worried about the future of your company? Hire professional company liquidation services to wind up your business hassle-free. MPMS is a trusted and reliable company liquidation services provider that understands the complexity of your business and is deeply committed to assist you through the liquidation process so you move out legally and smoothly.
What are The Necessary Documents Required to Initiate The Liquidation Process of a Company?
- Emirates ID
- A Copy of Shareholders’ Passport
- Shareholders Resolution
- A Copy of Business License
- Deregistration Application Form
- Power of Attorney (If Any)
- A Copy of Memorandum of Association (MOA)
At MPMS, we have a team of expert company liquidation consultants to help you with the complete documentation process required to liquidate your company. Apart from these documents, you need to obtain clearances from DDA Finance Department, Dubai Customs Department, DDA IT Section, and more. Our trusted liquidation consultants have the expertise to understand the complexities of your business and offer an effective solution to help you wind up your company smoothly.
How Can MPMS Help in Company Liquidation?
Being the best company liquidation services provider, MPMS is committed to guide you through the company liquidation process. At MPMS, you will find an expert team of company liquidation consultants to help you in this critical time and guide you to move out of your business legally without hassles. Our experienced professionals are will take care of all the document preparation, bank account closure, utility cancellations, no liability certification, etc. to make the liquidation process smooth for you.
We offer company liquidation services for all types of free zone, offshore and mainland businesses across the United Arab Emirates (UAE).
Frequently Asked Question (FAQs)
How long does it take to wind up or liquidate a company?
There is no specific time frame for the liquidation process. It depends on several factors including the type of liquidation, complexities in a company, shareholders’, current condition, and more. According to a survey, six to eighteen months are enough to liquidate a company in the United Arab Emirates or UAE. Looking for a professional company to help you in liquidation? Talk to our experts!
How do I close or liquidate my company in Dubai, UAE?
In order to liquidate your company in Dubai, you should hire a professional liquidation services company. A company liquidation services will have experts to help you address the complex nature of company liquidation and guide you in the right direction.
Can I liquidate my company by myself?
You cannot liquidate a company as a licensed insolvency liquidator is required to liquidate or de-register a company on its own. Liquidating your company is a complex process best left to the professionals. Milestone offers cost-effective company liquidation services to help you close your business smoothly without any further stress.
What happens to a company after initiating the liquidation process?
Once the liquidation process is initiated, the assets are liquidated and the existence of the company comes to an end.
What is the role of a liquidator?
A liquidator has the legal authority to de-register or wind up a company in order to clear debts and settle claims.
Who can apply for liquidation of a company?
Company liquidation is the process of bringing a business to an end. A corporate debtor or a financial creditor can initiate the process of company liquidation. As the best project management company in the United Arab Emirates (UAE), we offer cost-effective company liquidation solutions to help you in winding up your business easily. Our expert team of consultants offers corporate assistance and legal advisory during the entire liquidation process.
Is liquidation and insolvency are same?
Clearly, both are pretty identical but not exactly the same. Insolvency describes the financial status of a person or a business. In simple terms, insolvency is a situation where a debtor is unable to pay debts he/she owes. On the other hand, company liquidation is the process of shutting down a company or a business.
When should a company liquidate?
If your company is not able to pay its due obligations, then you should liquidate it. During this process of company liquidation, the assets are diluted and the company closes down.
Is liquidation good for a company?
It is an incredible way of winding up a company that is failed to process company operations due to its debts. By liquidating the assets of a company, you don’t have to worry about legal actions and other problems.
What are the advantages of company liquidation?
Some benefits of company liquidation are:
- Minimize debt repayments
- End of legal actions
- No court processes
- No redundancy or restructuring costs
