How to close a UAE mainland company
The motives for closing a company are many and varied. Financial difficulties due to factors such as a decline in sales, increasing competition or rising costs may make it difficult to sustain operations. Changes in market conditions such as a shift in consumer preferences, new regulations or technological disruptions can mean that a company’s business model is no longer viable.
Sometimes, a company owner may choose to close down a business as part of their retirement or succession planning or other personal reasons such as relocation, health issues or family priorities.
Irrespective of the reasons, it’s crucial that you officially cancel the business and obtain full liquidation to avoid the possibility of incurring any fines or penalties or other legal complications.
For establishments and sole proprietorships, the only requirements are that you submit an application for cancellation to the Department of Economic Development (DED) and obtain all necessary clearances. However, for companies with multiple shareholders, the process can be slightly more time consuming since it’ll be necessary to liquidate all shares and discharge your liabilities towards creditors and partners. This article will focus on the process for closure of a mainland limited liability company (LLC)
Officially closing a UAE mainland LLC requires that all shareholders be in the country or have someone with power of attorney who can sign the shareholder resolution on behalf of those unable be present.
The following are the steps that need to be completed:
- Settle assets and liabilities: Ensure that all company assets and liabilities are settled. This includes any property or shares held in other entities. You should keep evidence of transfer or sale of any assets since this will be needed for the liquidator’s report.
- Close the company bank account: All accounts under the company name must be closed. You should ensure that all refundable cheques are collected, and all loans are settled. You must also request a clearance letter as proof of closure.
- Immigration clearance: This involves cancelling the general manager’s visa and any other visas registered to the company. This step can only be done once all creditors have been paid any all debts settled.
- Close lease on office or business premises: You should ensure that any outstanding amount is paid to the landlord and a clearance letter is obtained.
- Cancel all utilities: You should ensure that all utilities connections are cancelled and that you obtain NOC letters for each.
- Obtain clearances from relevant regulatory authority: You must obtain a clearance letter from the regulatory authority responsible for your business activity. For example, if you are closing a trading company, you would request a clearance letter from the Ministry of Customs and the Chamber of Commerce or if you are closing an events company, clearance can be sought from the Department of Tourism and Commerce Marketing.
- Publish the notice of liquidation in two local newspapers: The notice must be published in two UAE newspapers, providing creditors a grace period of 45 days from the date of publication to submit any claims. It is, therefore, essential during this period to ensure that any outstanding debts are paid.
- Obtain audited accounts and liquidators report: You should ensure that you have obtained completed audited accounts up to the company closure date along with a liquidator’s report.
- Apply for confirmation certificate: After completion of all of the above, you should apply for a confirmation certificate from the DED as confirmation of termination of the company trade licence and de-registration of the company.
The process of closing a company in the UAE can be quite complex and time-consuming. It involves obtaining various clearances from government authorities and a number of other legal formalities. Failing to fulfill these requirements can result in legal issues and penalties which may also jeopardise future commercial activities you undertake in the country. It is therefore advisable to seek professional advice and guidance to navigate the process successfully and compliantly.
How can Global Link help?
Global Link has over 16 years’ experience working with local and global businesses, providing bespoke consultancy services for company incorporation and other corporate services in Dubai and the wider UAE.
We can assist you with closure of your company in the UAE, ensuring that every step is completed correctly and in full compliance with legal and regulatory requirements.
If you need advice on this or any other aspect of company incorporation, PRO services or visa acquisition, please get in touch with us on +971 4 553 9901 or email us at [email protected] and we will be happy to assist you.