Abu Dhabi Global Markets (ADGM) is a premium financial centre located in Abu Dhabi that allows business owners to close down their companies through a process called voluntary liquidation. Voluntary company liquidation in ADGM allows business owners to wind up their entities legally as per the existing regulations. However, you need to create a strategy for closing down your ADGM Company to avoid any delays or errors.
Such an exit strategy should be planned well before the commencement of the liquidation procedure. An unplanned exit decision will lead to rude shocks and last-minute surprises. Company liquidators in the UAE who are listed with ADGM authority can help you plan an effective voluntary liquidation strategy. Let us discuss some useful tips to make the process of voluntary liquidation in ADGM hassle-free:
Determine if Liquidation is the Best Strategy for Exit
The reasons for company liquidation in ADGM are varied and mostly include debt, financial crisis, adverse market situation, low demand for products or services, recession, and the company is no longer viable. Companies may also opt for voluntary liquidation in the UAE when the founder passes away without any successor or when the company achieves its goal. Determine how opting for voluntary liquidation can mitigate your current problems. Talking with company liquidators in the UAE can help you decide why liquidation is the best strategy for winding up your ADGM entity.
Look for ADGM-listed Liquidators in the UAE
A company liquidator is an audit firm with a valid license to operate in the UAE. Appointing a liquidator is mandatory for winding up a company in ADGM. ADGM keeps a Register of Insolvency Practitioners in the UAE. Business owners should select the best company liquidators in the UAE from this list. Company liquidators in the UAE carry out the entire process of liquidation on behalf of the shareholders. You must also remember that the powers of directors or shareholders will cease once the liquidator is appointed.
Carry out VAT Deregistration
If your company is a VAT registrant in the UAE, you must apply for VAT deregistration before applying for voluntary company liquidation. A company under liquidation is not required to pay taxes and must immediately conduct VAT deregistration. As per the UAE Vat regulations, VAT-registered companies need to apply for deregistration within 20 days of cessation and failing to do so will make them liable for a penalty of AED 10,000.
Meet Economic Substance Regulations Requirements
A company that carries out any of the nine relevant activities is required to comply with Economic Substance Regulations (ESR). The Nine ESR 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. A company opting for voluntary liquidation in the UAE is required to all the ESR obligations such as ESR Notification filing, ESR Report submission and Economic Substance Test. Failure to meet the ESR requirements will attract hefty penalties and other serious consequences.
Maintain UBO Registers
Companies undergoing voluntary liquidation in ADGM are subject to the laws regarding Ultimate Beneficial Ownership (UBO). As per Cabinet Decision No. (58) of 2020 on UBO, companies undergoing voluntary liquidation in the UAE must hand over the Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the licensing Authority within 30 days of appointing the liquidator. Moreover, the company administrator or liquidator is required to maintain the RBR and PSR for at least five years from the date of liquidation.
Cancel all the Visas and Establishment Card
You need to cancel all employee visas/sponsorships before closing down your company in ADGM. It is mandatory to cancel the company’s establishment card and e-channels account. This will make the process of voluntary company liquidation in ADGM stress-free.
Close Down your Business Bank Account
The company’s bank account must be closed before winding up your ADGM entity. A closure letter must be obtained from the bank.
How to Liquidate a Company in ADGM?
The following are the procedures for voluntary company liquidation in ADGM:
- Make a Declaration of Solvency; get it signed by all shareholders; submit it to ADGM authority
- Pass a resolution to wind up the company; submit it to the ADGM authority
- Appoint an ADGM-listed liquidator
- Submit the liquidator’s acceptance letter to the ADGM authority
- Terminate the lease
- Return original documents such as the company’s trade license, Memorandum of Association (MoA), Certificate of Registration, Share Certificates, etc.
- Submit bank account closure letter
- Submit NOCs/clearance letters from Abu Dhabi Customs, Abu Dhabi Distribution Co (ADDC), and Etisalat/Du.
- The Company must publish an advertisement in an English and Arabic language newspaper with wide circulation. There will be a notice period of 45 days after the advertisement, during which the creditors or any interested parties can raise any claim.
- Submit the liquidation report to the ADGM authority
- ADGM registrar strikes off the company’s name from the register; ADGM authority cancels the company’s trade license
Hire ADGM-listed Company Liquidators in UAE
The process of voluntary company liquidation in ADGM involves complex steps and requirements. However, hiring the best ADGM-listed liquidators can make the process simple. When it comes to company liquidation services in the UAE, look no further than Jitendra Business Consultants (JBC). We are listed with ADGM and can execute the liquidation process seamlessly and in compliance with the existing regulations. We have liquidated both mainland and free zone companies across the UAE. JBC’s experience and learning curve will allow you to complete the process fairly quickly.
