Company Liquidation in UAE

farhan
Farhan Aqil
Audit Partner – NUF Chartered Accountants
Managing Partner – Push Digits

“UAE is a dynamic business environment where Companies open and close so frequently that the Authorities have placed Audit Firms with a greater role in certifying the financial aspects of a Company, both when it is opened and closed. A far greater responsibility lies with the Auditors, when they verify and report on the financial aspects of a Company at the time of its liquidation, since the Audit Firm has to check whether all the liabilities and dues were settled and all the parties including shareholders of the Company were fairly treated. Our Audit Firm, NUF Chartered Accountants (Nadeem and Umendra Chartered Accountants) is registered with all the Free Zones of UAE and DED (Dubai Economic Department). Our Liquidation Audit Reports are approved by all Free Zones and DED facilitating the Liquidation process of any Company registered with these Authorities.”

Company Liquidation & License Cancellation in Dubai, Sharjah, Abu Dhabi – United Arab Emirates

The United Arab Emirates has evolved into a major international business region. Several business-friendly “free zones” offer quick and easy business formation combined with tax free regulations. In such business friendly environments, thousands of businesses are sure to pop up. Starting a business does not always result in the expected profits. Business environments change; partners become involved in other projects; owners may need to recover their investment for some reason. There are many reasons for liquidating a Company. It is not as simple as disconnecting the phone and locking the door. There are legal requirements in place to guarantee that all involved parties are fairly treated and that required fees are paid as well as dues & liabilities settled. In the UAE it is also important that UAE citizens are not treated wrongly as a business is liquidated. There are regulations in place governing company liquidation. Failure to observe the regulations can result in penalties.

What is Company Liquidation?

When a Company ceases its operations, all the assets of the company are distributed to the Shareholders of the Company after settlement of dues to creditors and lenders. However, there is much more to the process of liquidating a Company. The regulations are in place to ensure all parties involved are treated fairly – that one party does not benefit at the expense of others involved.

Company liquidation can be voluntary (instigated by the business owners) or compulsory (where authorities force the business to cease operating). Voluntary liquidation commonly results from continuous losses, a bank call on a loan, or changes in business environment causing the business to be impracticable. In some circumstances creditors can call for a voluntary liquidation. Authorities may force a business to liquidate for several reasons. A forced liquidation will occur when a company no longer has liquid funds required to maintain daily operations; creditors are not being paid; or the company commits a serious offense against established laws and regulations. Ignoring the company liquidation rules has some significant penalties for Company owners and top managers so it is important to properly end the company operations. The first step is to designate a liquidator. The duties of the liquidator are set forth in official regulations and only approved firms may be designated as liquidators.

The Liquidation Audit?

There are several reasons for a liquidation audit. Anytime a liquidation of Company is called for irrespective of the reason it is important that all the Company’s assets are accounted for. It is just as important to discover and list all of the Company’s obligations. A liquidation audit report will list the assets and liabilities of the Company and should preclude any objections from creditors. As the liquidation progresses, all the Company’s assets are converted to cash and distributed to the creditors or assigned to other Company obligations. There are specific rules concerning the way the assets are distributed. It is extremely important that all the relevant information is available to the liquidator. The liquidation audit helps assure the information is accurate and complete.

As a Company’s liquidation is completed, a post liquidation audit may be performed to verify all assets were valued and distributed properly. This post liquidation audit report will help creditors understand what occurred and how the funds (if any) they received from the liquidation were calculated. This report will reduce the chances that a creditor might question the liquidator’s actions.

Why a Liquidation Audit is Required?

Liquidation audit are required before any company can be closed in Dubai or any of the Free Zones in Dubai. Dubai Economic Department (DED), Jebel Ali Free Zone Authority (JAFZA), Dubai Airport Free Zone Authority (DAFZA), Dubai Multi Commodities Center (DMCC) and Dubai Silicon Oasis (DSO) all require liquidation audit in their respective authority regions whenever a Company is closing its operations and cancelling its license. Abu Dhabi, Sharjah, Hamriyah Free Zone and SAIF Zone also have regulations concerning Company liquidation and for liquidation audit very similar to other regions within UAE. For up-to-date information on liquidation audit, an authorized UAE Audit Firm can be contacted to determine the actual requirements for a specific region, just like our authorized Audit Firm NUF Chartered Accountants (Nadeem and Umendra Chartered Accountants).

Who is Authorized to Perform Liquidation Audit?

Auditing Firms holding official certification from UAE financial authorities are approved for liquidation audit in mainland and within the Free Zones. Authorities for each Free Zone also approve the Audit Firms to conduct financial and liquidation audit for Companies in the respective Free Zones. Our Audit Firm, NUF Chartered Accountants (Nadeem and Umendra Chartered Accountants) is an approved Audit Firm by all Free Zones of UAE. Only these approved auditors are authorized to prepare and submit liquidation audit report for a Company. The liquidation audit report is submitted to the authority of the Free Zone where the company is registered as part of the liquidation process. The authority will then officially close the company and cancel the business license.

Audit Firms are required to maintain their professional qualifications and to keep current with International Auditing Standards to remain approved by the Free Zones as well as Dubai Economic Department (DED). They also must be familiar with the liquidation process and employ qualified auditors.

CLIENTS

Our expertise and experience in professional accounting and consultancy equips us to provide our services to a wide range of clients ranging from service providers, traders to manufacturers. Our clients have every reason to say that we are the best professionals in the town in terms of our quality work and competitive prices.

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TESTIMONIALS


Outsourcing is not necessarily an external option when Professional Accounting Services are rendered with intimacy and high level of commitment. That truly speaks for our experience with Push Digits.
George Yiasemides
COO – Middle East / UFC Gym
Push Digits has helped Mapto Media professionalize our accounting and have so far been a great choice to outsource this function to. It is a pleasure to work with Push Digits and we can only highly recommend them to anyone else who considers the same.
Anders Kargaard
Managing Director / Mapto Media
Farhan is a very responsive business partner to Climax. No matter when we have questions, he always follows up quickly. This is very important when we operate on time zones that are 11 hours apart. Push Digits use of Xero technology is very helpful, providing immediate visibility into our financial information so that we can work together to ensure the financials are complete and accurate. Push Digits works closely with it’s clients to ensure that they deliver timely and accurate information. While our relationship is only a couple of months old, we have been very pleased thus far with the support we receive from Farhan and his team.
Michael T. Love
Chief Financial Officer, Vice President / CLIMAX Portable Machining & Welding Systems
I have started dealing with Push Digits 3 months ago and I have a startup trading business where it has quite complicated transactions internally and externally e.g. expenses, reimbursements, receivables, cash on hand and many others. Push Digits Team knows how to categorize and deal with each single transaction in a professional way. They are always there to answer my questions (morning to late evening) when I make new transactions or advise on how to do effective accounting for my business. Moreover, they also suggested a brilliant clouds based online accounting software called Xero that turns all our accounting work online in a simple friendly way. I would highly recommend Push Digits and their services.
Musab Allahwany
General Manager / Tamara Foodstuff Trading
Push Digits are very efficient and provide a very high quality accounting service. They are very prompt and organized which keeps us very happy. We would very much recommend their services to anyone looking for top notch accountants.
Steven M Curbelo
Managing Director / Brooklyn General Maintenance
“Push Digits team is very professional and responsive. Their work representation is up to the mark. We wish the team good luck.”
Affan Zuberi
Director / Fruitful
We had assign the Inventory data entry work in Tally.ERP 9 Accounting Software of our Company to the team of Push Digits. We feel that Push Digits is very good and capable enough to deliver the results in decided time frame and cost with accuracy in results.
Shriram Gaud
Finance Manager / GME Aviation Services DWC LLC
Push digits is our first choice to receive diversified management services with pronounced flexibility and eminent expertise.
Atif Abrar
Finance and Accounts Manager / Atlas Foundations Company L.L.C.
Push Digits has been very helpful in getting my bookkeeping processes set-up. The staff is very flexible and have been able to provide me with the exact support that I need. I am very grateful for their contributions to my company.
Husni Al Bayari
Managing Partner / Davie & Bay Real Estate

Requirements for Liquidation Audit of a Free Zone Registered Company

Main requirements for the liquidation audit of a Free Zone registered company includes:
1. Trial Balance including all transactions up the the liquidation date. This document and other required accounting information up to liquidation date of the Company is required. An alternative to a Trial Balance can be up to date records of transactions on an Excel spreadsheet.
2. The Company’s board must create a Board Resolution stating that the Company is to be liquidated on a specific date. The resolution must state a liquidator was appointed. The liquidator is the name of the Audit Firm appointed.
3. The Shareholders of the company must issue a letter on the Company’s letterhead stating that Audit Firm has been appointed as Liquidators. This letter must be signed and stamped by the Shareholders.
4. The Company must issue a signed No Liability Certificate printed on Company letterhead.
5. If there were any bank loans the bank(s) must issue No liability Certificate after settlement of their respective bank liabilities.
6. Banks must issue account closing letters.
7. No Objection Certificate (NOC) is required from Dubai Electricity and Water Authority (DEWA) and Etisalat or DU for Utilities clearance of the Company where applicable.

Requirements for Liquidation Audit of a Dubai Mainland (DED) Registered Company

Main requirements for the liquidation audit of a DED (Dubai Economic Department) registered company includes:

1. Trial Balance including all transactions up the the liquidation date. This document and other required accounting information up to liquidation date of the Company is required. An alternative to a Trial Balance can be up to date records of transactions on an Excel spreadsheet.
2. There must be notarized minutes of a general meeting where the decision to liquidate was made; a liquidator was appointed and the audit firm acting as liquidator was named.
3. A public notice of liquidation must be published in two local Arabic newspapers for at least one day. Creditors are given 45 days to submit claims.
4. A letter on the company letterhead naming the audit firm as liquidator must be signed and stamped.
5. The company must issue a signed No Liability Certificate printed on Company’s letterhead.
6. If there were any bank loans the bank(s) must issue No liability Certificate after settlement of their respective bank liabilities.
7. Banks must issue account closing letters.
8. No Objection Certificate (NOC) is required from Dubai Electricity and Water Authority (DEWA) and Etisalat or DU for Utilities clearance of the Company where applicable.

Contact us for Quickest Liquidation Audit of your Company

Our Audit Firm, NUF Chartered Accountants (Nadeem and Umendra Chartered Accountants) is an approved Audit Firm by all the Free Zones of UAE as well as DED (Dubai Economic Department). Farhan Aqil is a qualified and experienced Audit Partner at our Audit Firm and you can contact us at +971503958931 or farhan@nufca.ae for any specific liquidation audit requirements. We always make sure to provide the best efficient audit quality services to our clients and you will find great value in our audit services.

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