Any business is incorporated with the underlying idea that it will grow tenfold in the future and the venture would be a great success. However, due to a mistake in the workings, a shift in the perception of the target market or instability in the business environment, the business might have to face its end. It would be a logical step for the business owner to initiate the company liquidation process generally known as the “winding up process”. At the end of this process, the company would be officially considered closed. There could be many other reasons for the winding up of a company.
Now, the Dubai Multi Commodities Centre (DMCC) is one of the one of the fastest growing free-zone in UAE, is one of the leading centres for trading international commodities. In case a company needs to wind up in the DMCC, it needs to follow a set of regulations. Let’s have a look at the reasons due to which a company might have to liquidate.
Reasons for Liquidation of a Company
1.The Company is not taken Seriously
If the company is run more like a hobby, and the owner is not serious about the future of the company. This could be because of the lack of time or resources for the owner.
2.Scanty Working Capital
When the owner does not accurately assess the money that would be required to conduct the business properly which leads to improper allocation of the resources to the various parts of the company.
3.Poor Accounting and Financial Skills
If the manager of the company has poor accounting and financial skills, he may not be able to take proper decisions for the future of the company.
The business environment is very dynamic and keeps on changing. Thus an owner should plan and prepare contingencies for all the situations which a company may face. Failure to do so will result in winding up process.
Marketing plays a significant role in the success of a company. If the company has poor marketing skills, then it may be not being able to communicate with people that it is still functioning and is ready to do business.
6.Rigid Business Model
The business model should be flexible enough to take into consideration any last minute changes in the working of the business.
7.Lack of Company Audit
Audit plays turns out to be beneficial while figuring out the company loopholes. Be it an internal audit or an external audit, it contributes a lot in growing the company.
These factors can act as a catalyst to the downfall of the company and will finally have to initiate the liquidation process. If a company in the DMCC needs to liquidate itself, it should follow the following steps.
Prerequisites for Company Liquidation in DMCC
- A statement of solvency should be made
- A liquidator must be appointed
- A company termination letter should be submitted
After the conditions mentioned above have been fulfilled, the company can then request for the termination of the company by following the steps below.
Steps to be followed for Liquidation Process
- All the necessary documents need to be uploaded in the DMCC portal, and the relevant information needs to be given.
- All the working Visas, Permanent Identity Cards and Temporary Identity Cards need to be cancelled.
- All original documents need to be submitted to the DMCC
- The copy of the liquidators’ report will be uploaded on the SR
- The licence termination would be published for a period of 14 days
- A copy of the liquidators’ report should be uploaded to the SR while the original is submitted to the DMCC
- The license termination letter, and the deregistration will be issued to the clients and the originals should be collected from DMCC.
After following the aforementioned steps, the company will officially and formally cease to exist. Now let us see the documents required by the DMCC for the procedure of liquidation.
Documents Required for Company Liquidation
- Shareholders’ Resolution regarding closing and winding up of the company
- Board Resolution from the parent company relating to end and winding up the company
- Recent Certificate if Incumbency of the parent company
- A request letter for the appointment of the liquidator
- License, MOA, Certificate of Registration, Share Certificate and Personal Secondment Agreement
- Establishment Cards
- Clearance letter
- NOC from customs
- NOC from Community Property and Assets Management
- Liquidator and Closed Audit Report
After the submission of all the required document and the application to the DMCC through its web portal, the process of the company liquidation and dissolution is initiated. A notice of termination is published in the local Arabic newspaper and the completion of the business is done by issuing a termination letter.
If you want to liquidate your company in the DMCC without any difficulty, you can hire the company liquidation services of a firm which deals in the financial and business domain. JAXA is a firm consisting of experienced Chartered Accountants, auditors and specialist service teams which offer a wide range of services including Auditing, Accounting, etc. If you require any assistance in such financial matters, do contact us – we will be happy to help!