How to deregister business in the UAE
The country has specific rules and regulations that need to be followed before a business set up in the UAE can deregister and shut down. Following through on every one of the requirements, in the correct chronology, is a good idea as it saves time and money. The process also ensures that all legal and financial liabilities, as well as fines and penalties, are cleared.
Here are some of the steps a business set up in Dubai would have to follow through on when shutting on the mainland and in free zones:
Deregistering business setup in mainland
Cancelling business license and permits: When deregistering, a business set up in Dubai or the wider UAE, a company would need to cancel their business license and permits, submitting reasons for shutting down. The company form and structure, determine the cancellation procedures.
The process to deregister a company is slightly simpler for sole proprietorships, where a company needs to apply, and get clearance for, the cancellation of the business setup license through the DED.
Companies with shareholding, however, have to discharge their liabilities towards creditors and partners, to protect not only their interest and shares but also their reputation and market goodwill, should they decide to setup a new business again.
A sole proprietorship needs clearance from:
- Ministry of Human Resources and Emiratisation (cancelation of labour card)
- Directorate of Residency and Foreigner’s Affairs
- Relevant water and electricity authorities (to ensure that all bills are cleared)
- Leasing entity (under which the license had been granted)
Deregistering a business set up in the UAE:
The process of deregistering all types of businesses set up in the UAE (other than civil companies) involves two major stages:
- Prepare notarised minutes of the general assembly, confirming the liquidation of the company, and the appointment of a liquidator.
- Submit an official letter by a registered liquidator accepting the duty.
- Fill out the required forms to apply for cancellation, through DED, or other approved channels.
- Get a liquidation certificate from the DED.
- Publish the company liquidation notice in two local newspapers.
- Submit the claim after a grace period of 45 days from the date of issue.
- Submit a declaration letter from the liquidator and the partners, indicating a ‘no objection’ clearance from any other parties during the grace period.
- Collect the required approvals from government entities (example DEWA etc.) that clear a business set up in the UAE of outstanding bills etc., and allow it to cancel their license.
- Cancel the firm card at the Ministry of Human Resources and Emiratisation.
- Cancel foreign partners’ visas that have been sponsored by the company at the respective General Directorate of Residency & Foreigners Affairs.
- Submit all the documents mentioned above to get final approval to deregister a company.
- The DED will determine the fee that needs to be paid for cancellation, and a business set up in the UAE will receive a certificate of deregistration (cancellation).
Deregistering a Civil Company: The process to deregister a civil works company is largely the same as when deregistering any business set up in the UAE, with the added step of a partnership cancellation contract that has been authenticated by the public notary. The partnership cancellation contract, in addition to all the other documents mentioned above, needs to be submitted to receive a certificate of deregistration.
Deregistering a company in free zone
There are broadly three types of closures:
- Summary winding up – this happens where a company set up under a free zone visa has either no liabilities, or is able to discharge its liabilities within 6 months, and commences with a statement of solvency.
- Creditors winding up – when a company passes a resolution for winding up and is followed by a meeting with the company’s creditors.
- Bankruptcy – when a court, under UAE Commercial Transactions Law No. 18 of 1993, passes a judgement and a company is no longer able to function.
Depending on the free zone visa under which a company is licensed, different deregistering processes apply. In the Dubai Multi Commodities Centre (DMCC) free zone, a company deregistering needs to apply through the member’s portal.
The application is reviewed and after the steps mentioned above are reviewed and processed, final deregistration and termination letters for a business set up there are issued.
In JAFZA, a company looking to deregister must notify the authorities three months prior, for the office and warehouse facility, and 6 months prior for plot facility.
Across all free zones, when deregistering a company, a business set up in Dubai will need to cancel its employees’ visas and their work permits through the Department of Naturalisation and Residency, as well as the Ministry of Human Resources and Emiratisation.
Enlisting the help of professionals when trying to figure out asset and business liquidation, so that a business set up in UAE is cleared of all legal and financial liabilities is a good idea, to ensure that there are no loose ends left untied.
Book an appointment with one of our trusted consultants at Decisive Zone and get expert help on how to dissolve and de-register a company in the UAE.