Steps for Company Liquidation in UAE

The UAE is highly popular for setting up businesses due to the lively environment, business-friendly policies and various other factors. However, it is challenging to keep up with economic downfalls, mismanagement and understanding the market requirements, which leads to financial losses for the company. In such cases, it is beneficial to shut down the company to avoid any further violations and protect the company’s interests.

Therefore, the officials of the country issue an organised procedure for closing a company, which must be followed by the management. There are a number of benefits of company liquidation such as It helps in minimising expenses and meets the standards set by the authorities.

Let’s get into this article to understand the steps for company liquidation in Dubai, UAE.

What is Company Liquidation in UAE?

Company Liquidation refers to the process of closing a business and selling the assets to pay off the company’s debts and obligations. The term is also known as winding up or dissolution of a company.

Liquidation can take place due to many reasons, like being unable to meet financial requirements, facing huge losses, being unable to understand market dynamics, etc. It is nothing but a solvency procedure which is governed by specific laws and regulations to ensure transparency and professionalism.

Types of Company Liquidation in UAE

There can be many reasons to liquidate a company, and that is why there are three types of liquidation, each having its specific requirements and procedures. So let’s understand them in detail –

a) Voluntary Liquidation:

Voluntary liquidation refers to the process of closing down a company by choice. They make decisions to wind up the operations and distribute its assets among the creditors of the company.

It is initiated by the shareholders when they no longer want to operate in the business.

Reasons for Voluntary Liquidation in UAE

There are many reasons for voluntary liquidation like –

  • Internal Disputes.
  • Financial Difficulties.
  • Unable to make Profits.
  • When the company is unable to meet its objectives.

b) Compulsory Liquidation:

Compulsory liquidation is also known as mandatory liquidation. It is a formal insolvency procedure where a company is forced to shut down and sell its assets to pay off its respective debts. It consists of strict legal regulations initiated by court orders.

This type of liquidation takes place when a company’s debts are not cleared on time. The creditors and investors file a petition so that the court can take necessary actions and help the parties recover their money.

Steps to Follow for Company Liquidation in Dubai

Let’s look at the procedure to liquidate your company in Dubai, UAE, and they are as follows –


The steps explained below are applicable to both mainland and freezone companies. The management of the respective company should ensure compliance and move ahead with the business closure in Dubai. It is suggested that they reach out to a consultancy firm because the company liquidation services in Dubai provided by them will make the procedure quicker and smooth.

Step 1 –

In the first step, the company need to collect certain documents like –

  • Power of Attorney.
  • Shareholder’s Passports.
  • Shareholder’s Resolution.
  • Copies of the Emirates ID.
  • Memorandum of Association.
  • Copy of the Business License.
  • Application form of the Deregistration.

Step 2 –

Once the documents are prepared, the government grants a notice period in which they can focus on any debts. The duration of this notice period is 45 days, and within these days, the company must make sure to complete the following tasks –

  • The pending utility bills must be paid.
  • A liquidated audit report must be prepared.
  • Pending telecommunication bills must be paid.
  • Visas must be cancelled if taken under the current license.

Step 3 –

The management of the company needs to cancel the business license. This is important because it comes to notice to the authorities that the company is no longer working in the market. This applies to both mainland and freezone companies in UAE. The company needs to obtain the necessary forms from the relevant authorities.

Step 4 –

A private joint stock company, partnership firm, public joint stock company, and limited liability company are the types of entities that need to hire a liquidator who can handle the process for company liquidation in UAE.

They are responsible for beginning with the process, publishing the notice period in the newspaper, collecting and distributing the company’s assets, settling the company’s liabilities, and preparing the statement of affairs.

Once these general steps are completed, entrepreneurs can continue with submitting the necessary documents and obtain approval from the authorities for company liquidation in UAE. The details explained in this article are helpful in closing a company, irrespective of the jurisdiction. However, later on, we will be providing brief information on company liquidation in UAE Mainland and Freezones for easy understanding and follow-up.

The process and requirements to liquidate a company might be complex to follow due to the legalities, formalities and necessities, but reaching out to a consultancy firm like JAXA Chartered Accountants can answer to all your questions because we are a team of experts with well-versed knowledge in the concepts of accounting, auditing, taxes, etc. We can be a helping hand in company formation, management, and finances due to our top-quality services. Contact us soon; we are looking forward to working with you!

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