The process of voluntary company liquidation in Dubai Production City allows the businesses registered in the free zone to wind up their operations legally. Company liquidators in Dubai recommend the liquidation process for business owners as it is widely regarded as the best exit strategy available. The liquidation process allows the business owners to shut down their company’s operations in a way which is agreeable to all the stakeholders involved.
Shutting down a company in Dubai Production City is not a complex task. However, the process may get delayed if you ignore compliance requirements related to Value Added Tax (VAT), Economic Substance Regulations (ESR) and Ultimate Beneficial Ownership (UBO). Business owners busy with the liquidation process may forget such critical requirements and incur hefty penalties. The following article will enlighten you on winding up a company in Dubai Production City without any delays.
Read ahead to understand all the steps involved in company liquidation in Dubai Production City:
Pass a Board Resolution
A board resolution should be passed to initiate the process of company liquidation in Dubai Production City. The resolution should also mention the reason for winding up the company. All the shareholders or directors must sign the resolution and submit it to the free zone authority. Dubai Development Authority (DDA) is the authority that regulates both licensing and liquidation procedures in Dubai Production City.
Appointment of Company Liquidator
The company must appoint an official liquidator to carry out the entire procedure of liquidation. The official liquidator can be any audit firm holding a valid license to carry out its operations in the UAE. The name and address of the liquidator must be mentioned in the board resolution.
Letter of Acceptance from the Liquidator
Once appointed, the liquidator is required to confirm his appointment by sending a letter of acceptance to the free zone authority. It is important to note that the powers of the directors/shareholders will automatically transfer to the liquidator at this juncture.
Cancellation of Visas & Establishment Card
The company is required to cancel all of its visas, including that of the employees, before the liquidation. It is also mandatory to cancel the company’s establishment card before liquidation.
Bank Account Closure
If the company has an active bank account under its name, it must be closed before winding up its operations. A closure letter issued by the relevant bank must be submitted to the free zone authority.
Return the Original Documents
The free zone authority must have issued a set of original documents at the time of incorporation. All such documents must be returned to the free zone authority before winding up your company in Dubai Production City. The documents you need to return include Trade License, Tenancy Contract, Memorandum & Articles of Association, Investment Service Agreement, Share Certificate, Certificate of Incorporation etc.
Obtain Clearances from Authorities
Clearances or No Objection Certificates must be obtained from government authorities and utility service providers as listed below:
- Dubai Customs
- DEWA
- Etisalat/Du
- Emirates Post (if the company has a PO Box)
Return Keys to the Free Zone Authority
Companies that leased out any premises within the free zone must return the keys to the authority. A clearance letter must be obtained from the concerned department in this regard.
Settle Outstanding Payments
If the company has any pending amount with the free zone authority, the management should settle it before the liquidation. You can approach the finance or accounting department at the Dubai Production city free zone to sort this out.
Publish a Newspaper Advertisement
The news about the company’s liquidation in Production City must be notified through a newspaper advertisement. There should be a lock-in period of 15 days from the date of publication. This grace period allows interested parties to make any claim toward the company. Hire the best company liquidators in Dubai to publish the advertisement in compliance with the free zone regulations.
Apply for VAT Deregistration
If you are a VAT-registrant company, you must apply for VAT deregistration within 20 days of becoming eligible for deregistration. Ignoring this critical requirement will delay the process of company liquidation in Dubai Production City. Most importantly, your company will incur a penalty of AED 10,000 for violating this critical requirement.
Comply with ESR Requirements
Companies undergoing liquidation in Dubai Production City are required to fulfil their ESR obligations. If your company has conducted any of the nine relevant activities, you may be well within the scope of ESR. In such a case, you may be required to meet ESR requirements such as filing ESR Notification, submitting ESR Report and meeting Economic Substance Test. Failing to comply with ESR will lead to hefty penalties.
Meet UBO Requirements
Companies undergoing liquidation in Dubai Production City are required to hand over their Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the Free Zone Authority within 30 days of appointing the liquidator. The liquidator or administrator is also required to maintain these registers for at least five years from the date of liquidation. Company liquidators suggest ensuring UBO compliance to avoid hefty penalties.
Submission of Final Liquidation Report
The process of winding up a company in Dubai Production City ends when the liquidator submits his final liquidation report to the free zone Registrar. The Registrar will then strike off the company’s name from the Register along with cancelling its trade license.
We are the Best Company Liquidators
The best company liquidators such as Jitendra Business Consultants (JBC) can make the liquidation process easy for all types of companies. We are a bunch of professionals providing bespoke company liquidation services. JBC can help you navigate the challenges of company liquidation in Dubai by ensuring all the requirements are met as per the regulations. Hiring approved company liquidators in Dubai such as JBC is the key to ensure your company is shut down as per the law.
