Company Liquidation in JAFZA
The UAE’s free zones attract businesses from all over the world. These designated zones provide an environment that makes it easy to start up and run businesses of all kinds. A business-friendly environment certainly helps with running a business, but it does not necessarily guarantee a business’s success. A lot of companies are unable to make it past their first couple of years. Ensuring a business’s survival and growth is a lot harder than you may think.
When a business fails, its owners need to liquidate the company which is known as voluntary liquidation. But sometimes a company is forcibly dissolved which is called mandatory liquidation e.g liquidation by the regulator. If your business is established in the Jebel Ali Free Trade Zone (JAFZA), then there are certain regulations that must be followed in order to wind up your company. Every area has its own rules regarding company liquidation (also known as company winding-up). In the UAE, the regulations for company liquidation are determined by the local authority of every region. For company liquidation in JAFZA, business owners/partners need to wind up their company in accordance with the JAFZA authority’s policies.
What is Company Liquidation?
Company liquidation is a process in which a failing company’s assets are turned into cash. The primary purpose of company liquidation is to pay off any liabilities a company has and recover investment (if any is left). A company can fail for many reasons, from unfavorable market circumstances to poor management. Regardless of why a company becomes insolvent, it needs to be liquified in order to settle its affairs.
Company Liquidation in JAFZA
It is natural for business owners to want to wind up a failing company as quickly as possible. No one wants to waste their time dealing with a business venture that does not have any future. Below is the brief company liquidation process in JAFZA.
JAFZA Company Liquidation Process
- Free zone companies have to fill and submit a de-registration form to the authority along with a company’s original documents. Overseas and branch companies must submit a board resolution issued by their parent company in order to inform the authorities of their intent to wind up the business.
- Company owner(s) need to arrange an exit interview with the authority so that they can declare their intention to wind up.
- For companies that have leased premises, they must notify JAFZA’s lease department 3 months in advance for warehouse and office facilities and 6 months in advance for plot facilities. The leased premises must be left in its original condition, any number of days taken to maintain or repair the premises after it has been cleared shall be counted in the premises’ rent.
- An official customs clearance letter should be obtained from Dubai Customs as proof that the company has settled all of its customs-related matters (duties, goods clearance, etc.)
- Clearance from RTA, DEWA, and Etisalat should be obtained as proof that the company doesn’t have any registered vehicles under its name and all outstanding dues have been paid off.
- Clearance from JAFZA’s Finance Department is required as well. A liquidator report has to be submitted to the department for review before the department grants clearance. This step is particularly time-consuming and complex; this is why assistance from a company liquidator is required.
- All visas issued under the company’s license should be canceled. The company will have to ensure that its employees receive their gratuity.
- After the company has obtained all the necessary clearances, the JAFZA authority shall publish the company’s de-registration intent in the local newspaper. This advertisement will be published for 15 days. During these 15 days, anyone who has an objection against the company’s liquidation can notify the authority.
- Once the 15 days have passed and no objections have been presented, the company can be de-registered and its license is terminated. If a company’s license has already been expired when it applied for de-registration, it will have to renew its license before it can de-register. Otherwise, the company will be fined AED 1,000 for every delayed month.
Once a company has successfully undergone the entire liquidation steps, it can be shut down. Business owners should keep in mind that the list of requirements provided by JAFZA is not set in stone. The authority can update it at any time and/or request a company to follow additional requirements as needed.
List of Required Documents
- Completed De-Registration Form
- In the case of overseas/branch companies, a board resolution from the parent company is needed as well
- Certificate of Formation
- Share Certificate
- Audit Report
- Liquidator’s Report
- Lease Termination Form
- Clearance letters from DEWA, Etisalat, and RTA
- Clearance document from JAFZA Finance Department
- Clearance Documents from Dubai Customs
Arranging all of these documents is necessary (and time-consuming) in order to liquefy a company in JAFZA.
Why Push Digits Chartered Accountants?
Push Digit Chartered Accountants is a leading audit firm in UAE providing company liquidation services in mainland and free zones. We have helped countless businesses to liquidate their companies in a matter of days. We know the ins and outs of the entire liquidation process of all types of companies which gives us an edge over any other liquidator in the market.
Push Digits can help you:
- Allocate one of our best JAFZA approved liquidators
- Gather all documents and clearances needed to proceed with your company’s liquidation.
- Ensure that you submit all documents without delay and you don’t experience any delays during the liquidation process.
- Conduct an audit of your company accounts.
Our liquidators are available to help you 24/7/365. So forget the rest and contact the best.