Business Liquidation in Dubai is a process in which an LLC company (or branch of a company), a sole establishment, a free zone company, or an establishment closes its operation and the assets and property of the company or establishment are shared with the Company's creditors and shareholders.
Liquidation is a formal insolvency procedure in which a company is brought to an end (also often termed ‘winding up’ or ‘closing’ a company); all of its assets are liquidated and the proceeds from the sale of assets are used to settle debts, pay expenses and transfer any remaining balance to shareholders of the company.
Once a company is liquidated it will cease doing business and employing people.
Why is liquidation required?
There are two principal reasons why the liquidation of a company may be necessary for the UAE:
1. The original purpose for setting up of the company is fulfilled and the entity is no longer required;
2. The company is considered to be insolvent.
Is liquidation necessary in the UAE even if there are no outstanding debts?
Even if there are no debts to be paid to creditors, it is highly advisable to formally liquidate a company and obtain a clearance certificate letter rather than simply allowing your trade license to expire. There are several procedures to be completed when formally liquidating a company. Ignoring these may attract various penalties and could also result in the ‘blacklisting’ of the company, as well as its directors and shareholders. These may impact their involvement in other businesses or damage their ability to set up another company in the future.