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 mainlandCancelling 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: Stage 1:
- 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 company in free zoneThere 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.