Setting up a business in the United Arab Emirates is a very beneficial and profitable decision which any businessman can take. With a number of business opportunities and the prospect of exploring new markets, setting up a business in the UAE can be a very profitable venture. Even the Government of the country is providing various benefits to the companies coming in to incorporate a business.
In the long run, a company may have to shut down all its business processes. The process of shutting down all the company’s business activities is known as the liquidation of the business. This may be possible due to a number of reasons such as:
- Lack of knowledge of relevant business practices or the Rules and Regulations of the jurisdiction
- Inability to recover the Expenses made by the Business
- Increase in the Competitions in the Market
- Improper Financial Management
- If a partner leaves the Company or a Merger or Acquisition by another Company
In the United Arab Emirates, the businesses can be set up in two different locations, namely in the Free Zones or in the Mainland. It is very important for us to know the meaning of both terms.
What is a Free Zone Company?
Free Zones are also known as Free Trade Zones and can be defined as economic areas with their own tax and customs rate, which is a lot beneficial to a business. The main intention to develop a free zone was to attract more and more business from all over the world. In the UAE, there are many free zones and each free zone is dedicated to specific business activity.
What is Mainland Company?
A mainland company can be defined as an onshore company that possess a license which states that this company allowed to conduct business in the markets which are local to the emirate as well as outside of the borders of the UAE without any restrictions. This license is provided to the company by the Department of Economic Development (DED) of the concerned Emirate.
In this blog, we will be talking about the process used to liquidate a company in Mainland UAE.
Liquidation in Mainland UAE
There are many steps involved in the liquidation of a company in the UAE. These are:
Step 1: Submit notification for the Liquidation.
The first step for company liquidation is to submit a notification stating the relevant authority stating the reason for company liquidation. This will notify the relevant authority to conduct the necessary about the impending liquidation process.
Step 2: Cancellation of the Business Licenses
In order to conduct business, the company requires licenses for particular business activity as well as it also needs to acquire different licenses for specific activates. These licenses must be cancelled as a part of the liquidation process.
Steps 3: Submitting the required documents to the Authority
The liquidation authority needs to gather certain documents for the liquidation process. This authority can ask for any more documents of the company if required.
Step 4: Selling off the Assets of the Company
All the assets of the company must be sold off to gather funds. These funds will be utilised to pay off all the liabilities of the company. If, after clearing all the liabilities of the company, some of the funds are left, then these should be distributed among the shareholders and partners of the company.
Step 4: Receiving the Certificate of Deregistration
Upon the completion of the liquidation process, the company will receive a Deregistration certificate which will state that the company has been disbanded and cannot practice any business activity.
If you are looking to liquidate your company in the UAE, then you must take professional help to do the process in the right way. JAXA Chartered Accountants consists of a panel of experts who will provide quality liquidation services.
JAXA also provides many other services such as Accounting and Bookkeeping Services, Audit and Assurance services, VAT and Tax-Related Services and many others. To know more about the services provided by JAXA Chartered Accountants, feel free to Contact Us. We will be happy to assist you in your business journey.