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LLC & Off-shore Liquidation

As part of the UAE’s commitment as a member of the OECD Inclusive Framework, the UAE issued Economic Substance Regulations (Cabinet of Ministers Resolution No. 31 of 2019), on 30 April 2019.

 

The Company liquidation is a long process; it might be compulsory or voluntary.

Immediately after planning to close down your business, the government entities should be notified of the same. This is to avoid any accumulated fines and penalties. It is also advisable to contact a Firm that offers company liquidation services in UAE.

Company Liquidation is the process of concluding its affairs, which normally involves the investigation of past actions, sale of assets, the equitable distribution of the assets of a company amongst its creditors, and thereafter to its shareholders.

Immediately after a company is liquidated it is required to cease doing business and employing people. Upon liquidation, a company’s business license is revoked, its name is removed from the Trade Registry and the entity is considered to have ceased to exist.

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What is a Liquidator?

A liquidator is normally a registered agent or a firm from UAE. Typically a chartered accountancy or audit firm, that is assigned to act on behalf of the company to sell its assets to generate cash and use it to discharge any outstanding liabilities. A liquidator is usually appointed by shareholders via resolution or may be appointed by the courts in the case of compulsory liquidation. Upon appointment, the liquidator will issue an official letter of acceptance at the initial stage.

What are the LLC company liquidation processes?

Appointing a Liquidator

A liquidator is appointed, either by the company shareholders passing a resolution (voluntary liquidation) or by the Court making an order (compulsory liquidation).

Advertisement in the newspapers

The dissolution should be published in two daily local newspapers; one of them should be issued in Arabic. The dissolution of the company shall not be effective against third parties until the date of such registration.

Notification of the Competent Authority and the Registrar of the Dissolution

The Managers of the company, the Chairman, and the Liquidator, as applicable, shall enter the dissolution of the Commercial Register with the competent authority with relevant documents.

Obtaining Certificate of deregistration

After 45 days from the date of advertisement, if no objections were received from any third parties, Therefore, the liquidator will ask for the cancellation of the business license from the competent authority. The registrar of the company will issue a certificate of deregistration.

How can Parker Russell UAE help you liquidate LLC company?

It is a legal requirement to appoint a liquidator for the process of liquidation. That is to say, Parker Russell’s vast experience in the field of liquidation will guarantee you that this process will be smooth. Above all, We are an approved and registered auditor with almost all government institutions including the ministry of economy, the central bank of UAE, RERA, Ministry of Justice, UAE federal courts, Dubai courts, Abu Dhabi courts, DIFC, and most of the big banks in the UAE. To clarify, Please visit the Memberships and Registration page for more details.

We understand that companies going for liquidation face a huge financial crisis, Therefore, we charge very reasonable and affordable fees for our liquidation services.

Liquidation process can be complex. That is to say, We will take out all the burdens from you and we’ll handle all legal procedures as prescribed in the related UAE laws, including:

 

  • filing relevant documents with relevant authorities
  • advertising in the newspapers
  • the preparation of Final Account of the Liquidation.

What are the different types of company closure (winding up)?

The winding-up of the company may either be:

Summary Winding Up: A summary winding up applies in cases where a company either has no liabilities or is able to discharge its liabilities within 6 months and commences with a statement of solvency.

Creditors Winding Up: A Creditors Winding Up commences when the company passes a resolution and is followed by a meeting with the company’s creditors.

Court Winding Up: Court winding up under UAE Commercial Transactions Law No. 18 of 1993 (Volume 5, Bankruptcy and Preventive Composition) and other applicable legislation

What are the two stages in the liquidation process?

  • First, is the termination of the company’s license/s
  • Second, is the company deregistration or dissolution Both of these stages involve the submission of resolutions and may include a public notification process.

How to make Summary winding up?

If you think your business is not doing well and you plan to liquidate the company. Then you can start up with a summary winding up. However, If a company that has no liabilities or which is able to discharge its liabilities in full within six months after the commencement of the winding-up and such a winding-up is called summary winding up.

How to make Summary winding up?

If you think your business is not doing well and you plan to liquidate the company. Then you can start up with a summary winding up. However, If a company that has no liabilities or which is able to discharge its liabilities in full within six months after the commencement of the winding-up and such a winding-up is called summary winding up.

I. Appointment of liquidator

On or after the date of commencement of a summary winding up, the company by passing a Resolution should appoint a person to be liquidator for the purposes of the winding-up.

On the appointment of a liquidator, all the powers of the directors cease except so far as the Resolution appointing the liquidator or any subsequent Resolution otherwise provides and, subject to any such Resolution and to Regulation. All those powers shall thereafter be exercisable by the liquidator.

Why is it mandatory to appoint a Liquidator in the winding up of a company?

It is mandatory to appoint a Liquidator for winding up a company, as the Liquidator carries out an important duty by determining the assets and liabilities of the company and settling those liabilities in a proper manner.

All powers of the Shareholders/Directors of the company shall cease upon the appointment of the Liquidator for winding up. The Liquidator shall determine the financial standing of the company at the time of liquidation and shall be responsible for the discharge of the assets and liabilities of the company. During the winding-up process, all these will be included in the Liquidation Report to be provided by the Liquidator.

Who can be appointed as a Liquidator of the company?

The Legal Registrar may prescribe the qualifications required for a Liquidator.

 

II. Application of assets and settling

A statement should be delivered to the Legal Registrar confirming that the company has no assets and no liabilities. Therefore, The statement should be signed by each of the directors or, if the distribution has been completed by a liquidator, should be signed by the liquidator, that each director or (as the case may be) the liquidator, having made a full inquiry into the company’s affairs, is satisfied that the company has no assets and no liabilities and, upon the registration of the statement, the company is dissolved.

III. Liquidator Report and Closed Audit Report

Finally, the liquidator report and final closed audit report should be submitted to DMCC. On the other hand, If the liquidator is an audit firm, both reports can be prepared by them and will be submitted to DMCC.

IV. End of Liquidation

Upon completion of the requirements and process, DMCC shall issue the following to be collected through DMCC Client Service Centre Counters:

  • License Termination Letter
  • De-registration Letter

Time Frame

45 to 60 days upon completion of requirements inclusive of 14-day publication twice.

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