The Dubai Development Authority (DDA) is a government body that regulates a select few free zones managed by Tecom Group. Formerly known as the Dubai Creative Cluster Authority (DCCA), DDA issues licenses to companies operating in industry-specific free zones, including Dubai Media City. Apart from issuing trade licenses, the DDA also oversees the process of company liquidation in Dubai free zones that come under its regulation.
Company liquidation in DDA free zones is generally a straightforward process, even though the introduction of recent regulations has increased the compliance burden. Appointing leading company liquidators in Dubai will help the business owners navigate such challenges stemming from regulations such as Ultimate Beneficial Ownership (UBO), Value Added Tax (VAT) and Economic Substance Regulation (ESR). Read ahead to understand the conditions and requirements to wind up the companies licensed by DDA.
1. Send Notice to The Dubai Development Authority
The liquidation of DDA-licensed companies begins with the shareholders sending a liquidation notification to the Authority. The notification should mention the reason behind the decision to liquidate the company.
2. Pass a Board Resolution to Liquidate the Firm
The shareholders of the company should meet and pass a board resolution to wind up the company. The Resolution also should mention the name and address of the company liquidators in Dubai who will oversee the winding-up process. The shareholder’s Resolution to wind up a company in DDA must be on the company’s letterhead.
The Resolution must be notarised by the Notary Public. If the Resolution is executed outside the UAE, it should be notarised, legalised and authenticated at the level of the UAE embassy. The signed Resolution should be submitted to the DDA with the required fees for liquidation.
3. Acceptance Letter from the Liquidator
The liquidator should send a letter to the DDA confirming the appointment. The liquidator can be any audit firm holding a valid licence to operate in the UAE.
4. Advertisement in the Newspaper & Lock-in Period
An original newspaper advertisement should be published in both English & Arabic Newspapers notifying the news of the liquidation. The advertisement should mention that any interested party can raise a claim against the company within the lock-in period of 45 days, counting from the date of publication. Objections or claims raised after 45 days won’t be entertained by the free zone Authority.
5. Obtain Clearance Certificates
Next, clearance should be obtained from the finance department of the TECOM Investments on all outstanding liabilities the company owes to TECOM Group. Clearance should also be obtained from the Leasing Department specifying the date on which the premises will be vacated. No Objection Certificate (NOC) should also be obtained from the Government Services Operations (Including PO Box and Visa Cancellation). NOCs should also be secured from Dubai Customs, and utility service providers such as DEWA & Etisalat / Du. Bank account of the company must be closed, and a letter of closure should be obtained.
6. Cancellation of Visas
The liquidator should ensure that the visas of all the employees and partners of the company are cancelled. Clearances should be obtained from the Immigration department and Labour department. After cancelling all the visas, the establishment card of the company must also be cancelled.
7. VAT De-registration
VAT registered companies operating under DDA must apply for de-registration before applying for liquidation. The UAE VAT Law stipulates that a VAT registered entity should apply for de-registration within 20 days of becoming eligible. Hefty fines up to AED 10,000 will be incurred if a company fails to apply for de-registration within the stipulated time.
8. Economic Substance Regulations
Companies undergoing liquidation in DDA must assess whether they fall within the scope of ESR. If the company has conducted any of the nine Relevant Activities, they are liable to meet the ESR requirements, including ESR notification filing, submission of ESR Report and meeting the ESR test. The Relevant Activities under ESR 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. Assessing ESR applicability before applying for liquidation in DDA will save the companies from incurring hefty penalties.
9. Ultimate Beneficial Ownership Regulations
Companies undergoing liquidation in the UAE are required to meet their obligations under Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO). The companies must 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. Moreover, the liquidator or administrator must maintain the registers for at least five years from the date of liquidation of the company. Assessing UBO compliance status before liquidation will save the companies from attracting a significant amount of penalties.
10. Submission of Liquidation Report
The process of liquidation of the DDA-licensed company will conclude when the company liquidator submits the final liquidation report to the free zone authority. The name of the company will be removed from the DDA register, and the Authority will cancel the trade license of the liquidated company.
List of Free Zones Regulated by Dubai Development Authority
The below is free zones come under the regulation of DDA:
- Dubai Internet City
- Dubai Media City
- Dubai Outsource City
- Dubai Production City
- Dubai Knowledge Park
- Dubai Studio City
- Dubai Design District
- Dubai International Academic City
- Dubai Science Park
Work with the Best Company Liquidators in Dubai, UAE
Business owners thinking of shutting down the operations of their companies in DDA must opt for a voluntary liquidation process. The process of company liquidation in Dubai has become more complex since the introduction of new compliance requirements such as VAT, ESR, UBO etc. To navigate the process successfully, business owners must appoint company liquidators in Dubai such as Jitendra Business Consultants (JBC), who are experienced in dealing with ESR, UBO etc. JBC has adequate resources and experience in helping business owners wind up a company with zero hassle. Avail of JBC’s company liquidation services in Dubai to close down a company without any complexities.