Company liquidation in Dubai free zones is a highly streamlined process that requires the investors to follow the procedures set by the respective regulatory authority. The process of company liquidation in the DMCC free zone becomes a necessity due to various reasons including bad economic conditions, cash flow challenges, change of business strategy, etc. In such circumstances, the owners of the company operating within the DMCC free zone may opt to wind up their business.
To initiate the process of company liquidation in DMCC free zone the directors need to inform the DMCC authority in advance about closing down and appoint a liquidator to carry out the winding-up of the company. The management can appoint registered auditors with the DMCC free zone to successfully close down the business.
The Key Procedures to Wind up a Company in DMCC Free Zone
1. Making a Declaration of Solvency
To initiate the company liquidation in DMCC free zone, the directors of the company should meet and sign a statement that says they have investigated the company’s affairs and are satisfied that
(a) The company has no assets and no liabilities; or
(b) The company has assets and no liabilities; or
(c) The company will be able to discharge its complete liabilities within six months of the commencement of the liquidation process.
2. Passing a Board Resolution
After making a statement of insolvency, the directors should pass a resolution that the company would be closed down summarily. The resolution should be submitted to the DMCC Free Zone Authority. Parent company’s resolution if DMCC is a subsidiary of the parent company in the UAE or a foreign country. also, some more documents required (certificate of incumbency of the parent company)
3. Application for Company Liquidation in DMCC
The company management should submit an application to the free zone authority to commence the process of winding up the company in DMCC. The application should be submitted along with the resolution and all the relevant documents. The DMCC officials will verify the documents to confirm whether the supplied information and documents are valid or not.
If the supplied information or documents are found to be inadequate the management should furnish the additional requirements as requested by the DMCC. After the approval, the management will get a notification and can continue with the process of company liquidation in DMCC free zone.
4. Cancellation of Visas
The company should apply for the cancellation of all the active visas, access cards, and permits issued by the DMCC. All the relevant original documents should be submitted to the DMCC Client Service Centre.
5. Appointment of Liquidator
On or after the date of commencing the winding-up procedure, the directors need to appoint a liquidator by resolution, who would carry out the process of company liquidation in DMCC. After the appointment of the liquidator, all the powers of the directors and will be transferred to the liquidator. Any audit firm registered in the UAE can be appointed as the official liquidator of the company. The DMCC should be notified about the appointment of the liquidator as part of the process by submitting the resolution.
6. VAT, Subsidiary and Branch Deregistration
The companies often overlook the importance of VAT deregistration while commencing the process of company liquidation in Dubai free zones. The management should file an application to the Federal Tax Authority (FTA) for deregistering the VAT account. It is important that the VAT deregistration application has to be made within 20 business days of the company becoming eligible for VAT deregistration. If a company fails to deregister VAT within this timeframe, then a penalty of AED 10,000 has to be paid.
Just like VAT deregistration in Dubai, the management should ensure that their branches or subsidiary needs to be shut down if they have any. This is important as once the parent company is liquidated it would be tough for the branches to wind up as board resolution by the parent company is a prerequisite for liquidating the branches.
7. Clearance Letter from Service Providers & Customs
To successfully complete the company liquidation in DMCC free zone, the companies should ensure that a clearance letter from utility providers and other organizations. The clearances should be obtained from Etisalat, DEWA and Banks should be submitted. The management should submit a customs clearance letter if the company is operating under a trading or industrial license.
8. Liquidation Report
After completing the company liquidation in DMCC, the audit firm appointed as the liquidator will file the liquidation report to the free zone authority. If the Liquidation Report includes the Financial Statement of the last Financial Year, then the Shareholder or Director of the Company should sign the Financial Statement.
Why Choose Jitendra Business Consultants?
The company liquidation process in DMCC free zone involves processes including the appointment of a liquidator, deregistration of the VAT account, and cancellation of visas, etc. The companies require expert professional assistance to prepare and submit an exhaustive list of documents including the resolution to the free zone authority. This is where a top liquidator in Dubai like Jitendra Business Consultants (JBC) comes in handy for the companies.
JBC is a reputed company liquidation firm with years of experience in helping the free zone, mainland and offshore companies to wind up. JBC’s highly qualified liquidators will handle the all the processes like document preparation, utility cancellations, clearance certificates, bank account closure, VAT deregistration, audited financial statements for liquidation, and a final liquidation report to make the insolvency process hassle-free.