The process of closing a firm is called liquidation. It’s a situation that frequently arises when a business lacks the resources to pay off its outstanding debts. The corporate assets are typically distributed to shareholders and creditors according to the priority of their claims when the corporation ceases to exist.
A liquidator is typically the person who handles the entire liquidation process. Depending on the kind of liquidation, the court or the company’s shareholders will choose the liquidator.
Types of Liquidation in the UAE
1. Voluntary Liquidation
In a voluntary liquidation, the owners of the business will want to shut it down because they lack the money to pay the creditors. In this type of liquidation, creditors are given priority.
2. Compulsory Liquidation
The corporate liquidation process that is mandated by a court order is known as compulsory liquidation. Priority claims are used to divide up the company’s assets among creditors and donors in this instance.
Company Liquidation in the UAE
UAE Company Liquidation necessitates a skilled strategy and strict adherence to predetermined steps. Our specialised services present you with a sensible alternate strategy. The process of liquidating a business is drawn-out and complex, requiring the completion of multiple steps, the beginning of the de-registration process, and agreements between employees and numerous governmental organisations. You need to properly complete registration paperwork and carefully remove certificates from various government agencies in order to stray from the path.
In Dubai and Abu Dhabi, company liquidation calls for a professional approach and strict adherence to predetermined protocols. You may only comply with the current laws’ liquidation requirement if you have a complete awareness of all the rules and regulations in effect. You can check out the Company Liquidation in Dubai for more information.
What are the Procedures in Liquidating a Company?
Getting the proper documents that allows a liquidation in the first place is the most important and initial stage. A court order or a board decision with the notary’s attestation could be used to administer liquidation.
The next action you must take is to request a firm that provides liquidation services. All procedures pertaining to the company’s liquidation will be governed by the company.
The government has in some circumstances made it necessary to appoint an official liquidator company. The government demands utmost impartiality and objectivity in all actions pertaining to the liquidation of your business. It is for this reason that a liquidation services firm must be proposed. For professional advices and assistance you can go through the Business Setup in UAE.
Notifying the authorities who issued the company’s trade licence is the next step after contracting a liquidation services provider. For instance, Assume the Dubai DED has jurisdiction. In that situation, the company’s liquidation must be reported to the DED, and a formal application for licence cancellation must be started.
The next step is to confirm that every employee of your business has been formally terminated, all outstanding debts have been paid, and the staff count has been reduced to zero. The business establishment cards must be discarded, while the letters must be kept as proof for future use.
The revocation of the final trade licence must be validated through a document from the licence issuing body, and all external consents for cancellation must be secured.
N.B. Although these procedures are the same for liquidating a firm, the precise steps may differ slightly due to the nature of the process.