Company Liquidation UAE
There comes a time when a firm must close its doors. To consider a firm closed in the UAE, it is not enough to simply cease operations and not renew a trade license when it expires. A proper and legal business license deregistration with business closure, liquidation, or bankruptcy is required to consider a business officially closed.
A company comes to an end through the formal insolvency process of liquidation. During this process, all of the company’s assets get liquidated, and the proceeds are then used to pay off debts, cover expenses, and distribute any remaining funds to the shareholders.
Many factors could contribute to the closure of the company. Most frequently, a firm chooses liquidation when its cash flow is unreliable and challenging to manage all the stresses.
Company Liquidation Process in Dubai, UAE
A liquidator must be appointed to finish the company liquidation process in Dubai, United Arab Emirates, which entails several legal steps. The liquidator, who may be an experienced individual or a specialized company, is in charge of winding up an entity’s operations in a fair and orderly approach to benefit creditors.
A liquidator is a person or corporation registered in the UAE who acts on behalf of the company to sell its assets to raise money to pay off any unpaid debts. Typically, this person or company is a chartered accountant or audit firm. In the event of compulsory liquidation, the courts may appoint a liquidator, or shareholders may do so via resolution. The liquidator will initially issue a formal letter of acceptance after being appointed. They will prepare a statement of affairs and the liquidator’s report once all of their tasks have been performed, which is necessary to wrap up the liquidation process.
The general assembly, court, or partners typically designate the liquidator, who is the entity’s legal representative. Liquidators in the UAE must comply with many laws and regulations before they are appointed. As soon as the liquidator assumes control of the company’s affairs, the directors lose all authority and are unable to act on the company’s behalf.
Functions and responsibilities of liquidators
A liquidator must ensure that:
- All contracts on the entity have been executed or transferred.
- The company’s operations have ceased.
- Any legal disputes are resolved.
- The selling of any assets.
- The company collects the money payable to it.
- Creditors receive their funds.
- The shareholders’ share capital is refunded.
- The entity is dissolved and no longer appears on the register.
- Liquidators must register their appointment in the commercial register after they have been appointed. The procedure and rules that must be followed during the liquidation process will be outlined in the registration.
- The partners and senior management of the firm must give the liquidator all necessary papers, accounts, and books of the company’s finances and its assets and obligations to facilitate the stock trading of the company’s assets and liabilities.
- A thorough list that contains information on the company’s assets and liabilities, the balance sheet, and other facts must be prepared by the liquidator and signed by the entity’s managers or the Chairman.
- The liquidator must take the required efforts to collect debts from other parties and transfer the money to the liquidated company. Furthermore, it is the liquidator’s responsibility to perform all liquidation-related activities, such as representing the entity in court, settling debts, and selling the entity’s moveable belongings or real estate by public auction or as specified in the liquidation paperwork.
- Whenever a firm conducts operations in the United Arab Emirates, it must document all transactions in a book. Typically, this confirms that the liquidation obligations were correctly carried out and without breaches.
HLB HAMT to Assist
Because businesses must coordinate with several external parties/authorities to organize everything on time, the liquidation process can be time-consuming and costly. Leaving any steps or documents out will lead to unnecessary delays and complications. HLB HAMT provides liquidation services for all UAE entities, including LLCs, free zone companies, and offshore firms, ranging from a full liquidation to dealing with specific parts of the process, as required by the client.
The liquidator is entrusted with all entity-related data, and it is their job to carry out tasks with maximum accuracy while protecting the firm’s assets and interests. It is essential to choose a liquidator who will act in the company’s best interests during the liquidation process. HLB HAMT can help with the company liquidation process in Dubai, UAE, from the start to the end.
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