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Dubai mostly holds the title of being one of the major business attractions of the desert region. But less spotlight is thrown on the fact that often, businesses do not follow a straight trajectory and may end up in a different place altogether than what you envisioned.
Sometimes, despite commendable efforts, the businesses might not take off or go woefully wrong after some time. And in a few cases, it may reach a point where the closure of the company becomes the only viable option.
This is where you need to have adequate knowledge about company liquidation. There are steps and procedures to shut down or close a company completely and legally, and they need to be followed that way as well. Read ahead to learn how you can liquidate your company without any major hassles in Dubai.
Formally, company liquidation is the process by which a technically active business entity is dissolved. It involves selling all company assets, settling any outstanding invoices and debts, and finally getting the company’s license canceled.
This is often done when a company has ventured too much into losses and isn’t promising any more profitable potential, or the operations need to be ceased due to other reasons like the end of contracts, a conflict of interest within the current market, etc. Company liquidation is seen as one of the most organised ways of winding down operations and ensuring a clean closure in the business lane.
In Dubai, no matter the reasons that may have led to this, there are two main reasons for company liquidation.
In the most common business scenario, this is how companies often meet their ends. When the company’s shareholders make a unanimous decision to shut down, the process is initiated through a shareholders’ resolution, and this also requires the presence of a licensed liquidator.
This refers to a liquidation through legal orders. This can occur due to various reasons, like violations of commercial regulations, creditor claims, or any kind of insolvency. The liquidator in these cases is a court-appointed one who oversees the entire process.
Once you start the process of company liquidation, it means that you are agreeing to make your company cease to exist any longer. If your company is a sole proprietorship, then you have no need for a liquidator.
However, if your company falls into the category of a limited liability company or a general or limited partnership, then a licensed liquidator will be necessary. Here’s what the entire process includes:
[This resolution, along with accompanying documents and required fees, will be submitted to the relevant licensing authority for a provisional liquidation certificate.]
The entity that is undergoing the liquidation process will be required to maintain the following documents in order to get the process completed smoothly: The documents are listed below:
Certain companies are required to appoint a licensed liquidator for the purpose of the liquidation. Liquidators play a major role in the process; some of them are listed below and are performed by them:
There are different situations that require a company to be completely liquidated. While conflicts of interest and disputes may seem common, there can also be other reasons, such as:
Sometimes, while the company steadily moves towards success, there may be a point where you realise you may need to restructure your company entirely because your goals have changed or you’ve suddenly found more purpose in a different venture.
Financial shortcomings are one of the biggest reasons why a business venture might need to be liquidated. This can happen when you’re unable to find new investors or if your business has been making more losses and accumulating more debt. Liquidation is a good step to avoid further financial strain.
Suppose your business was established with a predetermined end date. It could be contractual, or if your company is a project-based one, then you may choose to liquidate after fulfilling all project-based requirements.
Company liquidation in Dubai may seem daunting, but the experience doesn’t have to be. If you are sure of the decisions and are convinced that this is the best step, then it is best to seek proper professional help and guidance to assure a lawful and proper closure. The liquidation process can be simplified if you approach professional services, as they can get it done in very little time and cost. The experts can help you solve all the major issues that might be confronted during the liquidation process of your company in Dubai.
And as for closure, it doesn’t always have to be a sad one. Every ending can be a gateway into a new beginning!
Company liquidation can be a severely taxing experience for all entities and people involved. But with CDA’s perfect professionals at your service, it doesn’t have to be. Appoint CDA’s seasoned people for your company’s liquidation needs for a smooth closure experience. The professionals at CDA can guide you through the procedures involved in the liquidation process. Our team can help you settle all the legal obligations, get approvals from the authorities, get the documents sorted, etc. for liquidation purposes. Even after the liquidation process, our team can provide you with the required assistance for starting a new business with a fresh start.
The best part is that it’ll give you time to plan your next venture!
Learn more about our business setup services here.
