How to cancel a company in the UAE
Cancel a company in the UAE the right way to avoid legal and financial complications. While the country is famous for its business-friendly environment, there are times when owners decide to close their companies—whether due to financial challenges, strategic shifts, or new opportunities
Whether it’s due to financial difficulties, strategic pivots, or other reasons, closing a company involves following a legal process to ensure that all obligations are met. Closing a company in the UAE involves a series of meticulous steps, ensuring compliance with legal and administrative requirements. This comprehensive guide will walk you through the entire process, from preparation to finalization, making it easier to navigate the complexities of company liquidation in the UAE.
First phase: Preparing to cancel the company
1. Prepare and obtain an auditor’s report
The initial step to cancel a company is to prepare and obtain an auditor’s report. This report should reflect the company’s financial status and confirm that there are no outstanding liabilities. An auditor’s report is crucial as it provides a clear picture of the company’s financial health, which is essential for the liquidation process.
2. Submit liquidator’s acceptance letter
Once the auditor’s report is ready, the next step is for the liquidator to submit a letter accepting the liquidation process. This letter should be accompanied by the following documents:
- A copy of the trade license: This document verifies the legitimacy of the business.
- The accountant’s registration certificate: This certificate confirms the qualifications of the accountant overseeing the liquidation.
- A notarized signature form: This form, certified by a notary, verifies the signatures involved in the process.
3. Submit original documents to cancel the company
You must also submit the original certificate of registration and the original trade license. These documents are necessary to prove the legal standing of the company and to facilitate the liquidation process.
4. Notarized minutes of the general assembly meeting
Present the notarized minutes from the General Assembly meeting. This document should confirm your decision to cancel the company and the appointment of the liquidator, explicitly mentioning the liquidator’s name. The minutes should be certified by a notary to ensure their authenticity.
5. Payment of government fees
To proceed, a government fee of AED 2,020 must be paid to cancel the company. This fee is for obtaining the certificates of the company’s dissolution and the liquidator’s appointment, subject to the legal advisor’s approval. It is essential to keep receipts of this payment for future reference.
6. Announce that you cancel the company in newspapers
The next step is to announce the company’s liquidation in two Arabic local newspapers for one day. This announcement gives debtors 45 days from the date of publication to submit their claims. The advertisement must be placed by the business owner or supporting partners. After 45 days, you will need to follow up on the cancellation procedure with the Department of Economic Development (DED).
Second phase: Final steps to cancel the company
1. Submit the Newspaper announcement and final report
After the 45-day period, submit the original newspaper with the liquidation announcement. Alongside this, you must provide the company’s final report, which details the company’s financial and operational status up to the point of closure.
2. Prepare a declaration Letter from the liquidator and partners to cancel the company
A declaration letter from the liquidator and the partners must be submitted. This letter should indicate that no objections were submitted by any parties during the 45 days following the announcement. This step ensures that there are no pending claims against the company.
3. Cancel Labour Cards
The Ministry of Human Resources & Emiratization (MOHRE) handles the cancellation of labor cards. While it’s not necessary to furnish a document from MOHRE, ensuring the cancellation of all labor cards is crucial for compliance.
4. Cancel residence and employee visas
The General Directorate of Residency & Foreign Affairs (GDRFA) is responsible for canceling the partners’ and employees’ visas. This step is essential to avoid any legal complications related to immigration status.
5. Submit dissolution certificate
Submit a copy of the minutes from the General Assembly meeting and a copy of the certificate of dissolution.
6. Pay the final government fee to cancel the company
Pay the final government fee of AED 3,020. This fee covers the last administrative requirements of the liquidation process. Ensure you keep the payment receipt for your records.
Important Considerations
- The steps outlined above involve only government charges. They do not include any fees from legal consultants or accounting firms.
- It is crucial to follow all procedures meticulously to avoid legal issues. The Federal Decree-Law No. (32) of 2021 on Commercial Companies provides the legal framework for these processes.
- Consulting with a legal advisor or a professional service provider can help ensure that you meet all regulatory requirements efficiently.
Overall cost to cancel company including all fees could be around AED 12,000 – AED 15,000.
Conclusion
By sharing this comprehensive guide, we hope to assist business owners in understanding and executing the steps required for a successful company closure in the UAE. For those considering closing their businesses, it is essential to stay informed and seek professional advice to navigate the process effectively.
If you found this guide helpful, please share it with your network to help others navigate the complexities of closing a company in the UAE. Feel free to reach out with any questions or for further assistance on company liquidation and other business-related inquiries.
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BUSINESS SETUP DUBAI FAQ’s
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At the present time, corporate tax in the UAE is 0% for profits up to AED 375,000, and 9% for anything above that. Additionally, every company is required to register the Corporate Tax Certificate for earned income within three months after company formation.
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