Companies operating in Khalifa Industrial Zone Abu Dhabi (KIZAD) can wind up their operations by opting for voluntary liquidation. The process of voluntary company liquidation in KIZAD is the best exit strategy for businesses operating within the free zone. Entrepreneurs should develop an exit strategy even before incorporating a company and summary winding up is the ideal choice.
A company in KIZAD may be forced to shut down due to a wide range of reasons such as debt, financial loss, adverse market conditions, low demand for products, achieving the objective etc. As an investor, you should be prepared for any of these events right from the beginning. Furthermore, opting for voluntary liquidation will enable you to exit the operations satisfying all the stakeholders including employees and creditors. The following blog will enlighten you on the steps involved in the summary winding up of a company in the KIZAD free zone:
Board Resolution
The process of company liquidation in KIZAD begins with a resolution passed by the shareholders or directors regarding the winding up of the company. The resolution, along with a statement of solvency, should be submitted to the Registrar. The statement of solvency should be signed by all the shareholders and get notarized by the Notary Public.
Appointment of a Liquidator
The resolution must state that the company has appointed an official liquidator to carry out the process of company liquidation in KIZAD. The name and address of the liquidator must be clearly stated in the resolution. Company liquidators in the UAE can be any audit firm holding a valid license to carry out their activities in the country.
Letter of Acceptance from a Liquidator
The liquidator will then send a letter of acceptance to the free zone authority, expressing his willingness to assume the role. Once liquidators in the UAE take charge, the powers of the shareholders will cease and get transferred to the liquidator.
Cancel All the Visas
The management should apply to cancel all the visas under the company including that of the employees. You should also cancel the establishment card of the company. Experienced company liquidators in the UAE can help you clear all such hurdles easily.
Obtain No Objection Certificates
Clearance should be obtained from the immigration and labour departments while liquidating the company. You must also return the keys to the facilities to get clearance from the KIZAD leasing department. All the original certificates issued at the time of incorporation must be returned to KIZAD Authority. No Objection Certificates (NOC) must also be obtained from Abu Dhabi Customs, Abu Dhabi Distribution Co (ADDC) and Etisalat / Du.
Newspaper Advertisement
You must publish an advertisement in the newspaper announcing the liquidation of the company. The notification regarding the liquidation of a company in KIZAD must be published in both English and Arabic newspapers. There will be a notice period of 45 days after the advertisement, during which the creditors or any interested parties can raise a claim.
VAT Deregistration
If you have registered for Value Added Tax (VAT), you must apply for VAT deregistration before winding up the company. As per the UAE VAT Law, VAT registrants are required to apply for deregistration within 20 days of becoming eligible for it. Violating this requirement will attract a penalty of AED 10,000.
Economic Substance Regulation
You must also check whether your company falls within the scope of Economic Substance Regulations (ESR). Companies that conduct nine relevant activities must meet ESR obligations such as ESR Notification filing, ESR Report submission and Economic Substance Test. The nine relevant activities are Banking business, Insurance business, Lease-Finance business, Investment Fund Management business, Holding Company business, Headquarters business, Shipping business, Intellectual Property business and Distribution & Service Centre business. Companies that fail to meet ESR requirements will attract hefty penalties.
Maintenance of UBO Registers
Companies undergoing Liquidation in KIZADwill incur heavy penalties if they fail to comply with their UBO obligations. As per Cabinet Decision No. (58) of 2020 on UBO, companies are under obligation to hand over the Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the free zone Authority within 30 days of appointing the liquidator. Apart from that, the liquidator or administrator is required to maintain the RBR and PSR for at least five years from the date of liquidation of the company.
Submission of Liquidation Report
Concluding the winding-up process, the liquidator will submit his final Liquidation Report to the KIZAD free zone authority. After receiving the report, the free zone authority will strike off the company’s name from the register and cancel its trade license.
Hire the Best Company Liquidators in UAE
Even though the steps associated with company liquidation remain similar throughout the UAE, companies must adopt special exit strategies depending on the requirements of the licensing authority. Hiring experienced company liquidators in UAE such as Jitendra Business Consultants (JBC) will come in handy for business owners to develop a robust exit strategy. JBC has years of experience in both company incorporation and liquidation. Our team is highly qualified to help the business owners meet complex requirements such as VAT deregistration, ESR and the UBO. JBC will ensure that business owners can wind up their company without any hassle.
