When a company is formed, a lot of hard work and planning is put into the formation. But not every company has a long life. Even after constantly examining the business and making strategies for the future, the business may not survive for a long time. This may be due to the fact the taste and preference of the people have changed or the particular product or services has become obsolete.
In such case, the company will have to look into liquidating the company. The liquidation must be done in a proper way so that the management does not face any problem in the future.
Company liquidation can be defined as a process in which the management of a company considered to bring an end to all the business activities. This decision is dependent on many different factors such as the following:
- The taste and preference of the people has changed
- The company has become obsolete
- The company has taken too many debts and is now unable to repay them back
- The company is gradually going into loss.
If any of the above reasons occur then the business management will have to think about company liquidation. While liquidation the management tries to sell off all the assets and liabilities of the company to pay off the debts taken during the course of business. If after the sale of all the assets and liabilities and repaying of all the debts there is some profit left, then the profit is divided amongst the shareholders of the company.
Dubai Development Authority (DDA)
Dubai Development Authority (DDA) is an entity of the Dubai government and is a critical player in the future growth of Dubai's economy. Earlier known as the Dubai Creative Cluster Authority or DCCA, The DDA is committed to providing a business-friendly environment which will foster business excellence and will profit all shareholders and stakeholders, real estate developers and all strategic partners that are a part of the economy of Dubai.
The focus of the DDA is mainly on three important points which are:
- The development of industries and other individual professions
- The planning, development, and control of the real estate
- Providing licensing and regulatory services to all industries and strategic projects which fall under the free zones jurisdiction
Apart from these three main focuses, the free zone also strives to provide better services, standards, and guidelines. It also aims to provide state of the art technologies and advanced infrastructure, which will help in the quick and simple transformation of the companies towards excellence.
Liquidation of a company in DDA
Different free zones may have different procedures for company liquidation, but most of the process is the same. Given below are the steps for company liquidation in DDA:
The first step is to submit the notice of closure of the company to the DDA Free Zone Authority. This notice should be given to the authority at least one month before liquidation and should contain the primary reason behind the closing of the company. In case the proper timing s are not followed, the company may face specified fees for cancelling the lease agreement.
The board of directors of the company must sit together and draft a resolution for the liquidation of the company. This resolution should be attested in front of the executives of the free zone. In case the owner of the company is a foreign businessman, then the decision needs to be notarized and attested by the embassy of the United Arab Emirates, and the same has to be notarized by the UAE’s Ministry of Foreign Affairs.
All the companies except Leasehold or Freehold companies must give back all the physical assets received from the side of the free zone such as keys, transponders, etc.
The company has to publish the news of the liquidation of the company in two different local newspapers. The announcement of the liquidation should be printed in English and Arabic.
The management of the company must keep ready documents such as the original license issued to the company, the Certificate of formation and Share Certificate, Lease Agreements and the original copies of the license issued by the Department of Economic Development and present these documents when required or asked for.
The company going through liquidation must obtain clearances from the following departments:
- The Dubai Customs Department
- DDA Finance Department
- DDA Government Services Department
- DDA IT Section
- Approval from the Management of Facilities
It should be kept in mind that you cannot appoint an auditor to help in the liquidation of your company. Only a Dubai Development Authority (DDA) approved auditor is allowed to prepare all the required financial reports of the company.
If you are looking to liquidate your company in the Dubai Development Authority, you should look into the services provided by JAXA Chartered Accountant. JAXA will not only help you in the liquidation process but will also help you to plan your next business venture. JAXA is a DDA approved auditor and will ensure that the company will not face any problem in the future. To know more contact us – we’ll be happy to help you.