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Company Liquidation in DSO

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Company Liquidation in DSO

Liquidating a company can be a sad affair. Companies get liquidated when their financial mechanism fails; meaning their ability to generate enough revenue to sustain themselves gets compromised. Oftentimes, a company is liquidated either because it cannot pay back its debts or because its owner(s) decide that the company is not worth operating anymore. The liquidation process basically involves selling off a company’s assets in order to pay off its liabilities and wind up its affairs. In the UAE, business owners need to follow specific steps outlined by the authorities if they want to successfully liquidate a company.

The UAE has various laws in place that help maintain a business-friendly environment. This is why you will find the UAE’s regulations regarding company liquidation rather tedious. You cannot simply sell off your assets and say that your business is shut-down. You have to check with your local authority and follow the applicable regulations before you can wind-up your business. Free zone company liquidation in the Emirates varies from one designated zone to the other. This is because the local authority of every Free zone decides the regulations itself. However, the general aspects of the company liquidation process are the same.

Company Liquidation in the Emirates

The reasons for liquidating a company are the same in the UAE as in the rest of the world. When a company reaches a point of failure or is unable to pay off its liabilities, it becomes insolvent. An insolvent company is unable to take care of its liabilities, resulting in its liquidation becoming necessary. There are two forms of liquidation in the UAE:

The former being forced upon a company through legal action and the latter carried out by the company itself. For companies in the Dubai Silicon Oasis (DSO), there are several regulations that must be observed during the winding-up process, regardless of whether the company is being liquidated voluntarily or otherwise.

Company Liquidation Process in DSO

In order to successfully wind up your company in DSO, you need to comply with the local authority’s requirements. Complying with their requirements helps you liquidate your company in a systematic manner. It also helps to notify the authority that you are no longer operating under that company’s name. The downside of these regulations is that they add complications to the liquidation process. This is why companies have to hire professional company liquidators in Dubai to help them out.

  • Notifying the Authorities: In order to initiate the process, companies have to send an official notification to the DSO authorities stating their intent. The notification has to be sent 3 months before the company’s liquidation commences. If you are unable to provide a notification within the given time period, the authorities will impose a fine on you.
  • Board/Shareholder’s Resolution Regarding Company Liquidation: This resolution should state the board/shareholder’s intent to liquefy the company. For companies with foreign ownership, the resolution has to be attested by the UAE Embassy as well.
  • Appoint a Third-Party Liquidator: DSO regulations require companies to appoint a third-party liquidator to oversee their winding-up process. A company’s owner(s) must present an official letter requesting a liquidator to provide their services. The liquidator in turn has to present an official letter of acceptance. Once they have been appointed, the liquidator will then assume control over the company’s winding-up process.
  • Visa and Bank Account Cancellation: All visas issued under the business’s license must be canceled and end of service benefits paid in line with the gratuity calculation in UAE labour law. Immigration cards and ID cards have to be canceled as well. The company’s bank accounts need to be closed with proof of closure from the bank as well.
  • VAT Account De-registration: Companies that are registered for VAT must make sure to de-register themselves when winding up. Once a company becomes legible for liquidation, it must deregister within 20 days or risk being fined AED 10,000 by the FTA.
  • Branch Closure: If a company has many branches, it has to shut-down every branch before it can undergo liquidation. This is important for parent companies since their branch companies will be unable to qualify for liquidation if their parent company has been liquidated before their closure.
  • Clearance from Relevant Entities: A company must have proof that it has taken care of all its affairs with the various entities that it was working with. The DSO authority requires clearance letters from the following:
    • DEWA
    • Facilities Management
    • Etisalat
    • Dubai Customs
    • DSO Govt Services Department
    • DSO IT Section
    • DSO Finance Department
  1. Transferring Ownership of Intellectual Property Assets: All companies have some sort of intangible assets (trademarks, patents, etc.). Before liquidating itself, a company has to ensure that it has transferred all intellectual property that is owned.
  2. Handing Over Premises Keys: When a company initiates the liquidation process in DSO, it’s lease agreement should be canceled. The company must return the keys to all warehouses, shops, and office spaces during the liquidation process.
  3. Furnishing of Original Documents: All original documents that the company furnished when it was being established must be given to the authority.
  4. Provision of Liquidation Report: The appointed auditor will generate a report documenting the company’s liquidation process. This report provides various details about a company’s financial activities and is required by the authority.

List of Required Documents

  1. Notification of Liquidation
  2. Board/Shareholder’s resolution. The resolution must be attested by the UAE Embassy in case of foreign companies.
  3. Letter requesting the appointment of liquidator
  4. Letter of acceptance from the appointed liquidator
  5. Bank closure document
  6. Clearance documents from:
  • DEWA
  • Facilities Management
  • Etisalat
  • Dubai Customs
  • DSO Govt Services Department
  • DSO IT Section
  • DSO Finance Department

       7. Company’s original documents:

  • Tenancy contract
  • MOA and Articles of Association
  • Certificate of Incorporation
  • Share Certificate
  • Business License

        8. Liquidator’s report

After all the requirements have been met, the company can proceed with its liquidation. Upon successful liquidation, the company is officially wound up. Meeting all of these regulations can be time-consuming and complicated. This is why it’s recommended to hire a professional liquidator to help you out.

Push Digits Chartered Accountants is a well-known audit firm in UAE with over a decade of experience in auditing, accounting, tax, and liquidation services. We have the knowledge and experience needed to guide businesses throughout their company liquidation process in DSO. We can help you liquidate your company quickly and without any hassle. We can help you:

  • Determine how to wind up your company and how to liquidate your assets
  • Understand DSO’s regulations and meet them to the letter
  • Avoid facing penalties by meeting deadlines and following the authority’s guidelines
  • Act as your company liquidator
  • Prepare all documents that must be submitted to the authority

We will be available round the clock to assist you until you get the closure letter from the authorities.

Get a quote now!