ITC Accounting and Tax Consultancy

Liquidation Procedure in The UAE

The method through which a business is shut down is called Company Liquidation. All partners receive equal shares of the company’s assets and property.

Articles 306 – 326 of Federal Law No. 2 of 2015, which outlines the steps and processes for dissolving an LLC firm, provides that a corporation may be dissolved for the following reasons:

  • The expiration of its duration,
  • The accomplishment of its goal, or
  • The loss of all or most of its assets.
  • The company has become bankrupt. A business that no longer pays its debts to other firms may be declared bankrupt. It is true even if the business is in the process of liquidation.


Step 1. Passing shareholder resolution
Passing a shareholder resolution in a shareholders meeting announcing the shareholders’ approval to revoke the firm’s license is the first and most crucial stage in cancelling the company’s trading license. If the resolution was enacted in a different nation, it must be officially attested by a public notary and other pertinent institutions.

Directors must bring the issue of dissolution before a general meeting for the business to be dissolved if an LLC’s share capital is reduced by half. A fourth of the capital-holding partners may propose the dissolution of the partnership if losses reach more than half of the capital.

Step 2. Liquidator appointment
The liquidation process may be handled by one or more liquidators whom the partners choose in the business or by the general meeting with the majority’s approval. A liquidator must be appointed to represent the court and all the company’s creditors. The liquidator’s primary duty is to pay off the whole balance of the company’s debt by the sale of its tangible or intangible assets or as determined by the shareholders through the passing of a board resolution.

Step 3. Notice period
A liquidation certificate is given to the liquidating firm to continue the process when the relevant documentation sought by the competent department— the Department of Economic Development (DED) in the case of mainland LLC companies or other approved channels — has been submitted. DED will issue a certificate of liquidation. 

For any creditor to pursue their unpaid claim, a notice of dissolution is published in two Arabic newspapers and the business registry for forty-five (45) days. Send a letter of confirmation to DED from the liquidator and the partners stating that no other parties objected within the grace period.

 Step 4. Visa Cancellation
All partners and workers must have their visas cancelled as the final stage in the liquidation procedures. They must also have a clearing certificate from different government agencies, including the Ministry of Labor, the Ministry of Immigration, the water and electricity authority (e.g. DEWA), the telecommunication provider, and other utilities.

Which documents will you need to provide for company liquidation?
1. Your original Trade License                                                            2. Your company’s E-sign Card
3. Original Certificate of Registration                                           4. Original Lease Agreement
5. Original Share Certificate                                                               6. Company Stamp
7. Original Memorandum of Association (if applicable)     8. Bank Account Closure Letter
9. Original Establishment Card                                                        10. Corporate Account Statement

This article was published on  19 April 2023

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