Deregistration is also known as cancellation of the license, which is a term used in the context of closing limited liability companies primarily by licensing authorities in the UAE. Despite continued legal debates regarding the definition and the legal bases of this concept, this article highlights the practical implementation of deregistration, particularly as it applies to company liquidation in Dubai. It showcases the big contingencies associated with this process. The first part discusses the pros and cons of applying deregistration, whereas the second part will touch upon the liability and related legal issues.
Company Liquidation: Process and Key Insights
The concept of company liquidation in UAE is specifically mentioned and regulated in Federal Law No. 2 of 2015 on Commercial Companies (‘2015 Law’). Unless a company’s Memorandum of Association or Articles of Association contains any special or contrary provisions, the liquidation process will be governed by the default rules of the 2015 Law. This legal framework also governs company liquidation in Dubai, which provides consistency and clarity in the process.
Liquidation can either be in the form of a voluntary, or compulsory appointment by a court. Voluntary liquidation begins with a resolution from shareholders to wind up the company, simultaneously appointing a liquidator. By contrast, where shareholders challenge the liquidation and seek the assistance of courts, the competent court determines the process for liquidation and officially appoints a liquidator.
Regardless of the circumstances, the liquidator’s role remains uninterrupted, even if a partner dies, declares bankruptcy, becomes insolvent, or faces interdiction, including cases where partners appoint the liquidator.
For businesses navigating company liquidation in Dubai or other parts of the UAE, understanding these procedures ensures compliance and smooth execution.
When a company decides to enter into voluntary liquidation, there are certain stages that need to be undertaken. The following are the key company liquidation requirements in Dubai and the UAE:
- Pass a Resolution: The company needs to pass a resolution to approve the liquidation and appoint a liquidator to carry it out.
- Establish Clearances: The company should obtain the required clearances from telecommunication providers, such as SEWA, Emirates Post, etc
. - Publish Notice: The liquidation notice has to be published for not less than 45 days in two local daily newspapers (one of which should be in Arabic) to inform creditors and stakeholders.
- File a Liquidation Report: The liquidator must prepare and file a liquidation report with the relevant licensing authority.
Once the liquidator completes these steps and submits the liquidation report, the licensing authority will issue a liquidation certificate. This certificate formally announces the completion of the company liquidation in Dubai or elsewhere in the UAE and confirms the company’s closure.
Deregistration: A Guide to Company Liquidation in Dubai
Primarily, the deregistration procedure is determined by the internal rules and regulations of the governing licensing authorities. The following are the key requirements that companies are to fulfill for company liquidation in Dubai:
- Adopt a Resolution: A resolution to cancel the license and officially close the business must be passed by the company.
- Get Your Clearances: Clearances from all concerned entities—such as the telecommunication provider, SEWA, Emirates Post, etc.
- Cancel Memorandum of Association: To complete the deregistration process, the company must cancel its Memorandum of Association.
The licensing authority will issue a final certificate upon receipt of the completed application and any required de-registration fees. The certificate indicates the deregistration of the company and the cancellation of its license — the final step in officially closing an enterprise.
By adhering to these steps, businesses can ensure a seamless and compliant company liquidation in Dubai. Moreover, understanding relevant regulations under the bankruptcy law in UAE and the procedures for liquidation in UAE can help companies navigate the process effectively while meeting all legal and regulatory requirements.
Liability and Other Legal Considerations
In practice, a company can be deregistered without undergoing a liquidation process. Specifically, this means the company does not need to appoint a liquidator, who would typically be responsible for notifying creditors and preparing a liquidation report.
Conclusion
Company liquidation in Dubai is a systematic process regulated by the bankruptcy law in UAE. The Companies will need to pass a resolution, get clearances, publish notices, and file a liquidation report. Deregistration without a liquidator is possible, but it would require ample understanding of the legal procedures and conditions to be met at the time of closing the business such as cancellation of a business license under the sector of liquidation in UAE. Always consult top law firms in Dubai like Khairallah Law Firm for their expert services pertinent to your property transaction to ensure all legal procedures are complied with.
Having said that, Contact Khairallah Advocates & Legal Consultants and benefit from our free 30-min legal consultation.
*Disclaimer: our blogs, law updates and FAQ’s are freely distributed for educational purposes and to showcase recent updates and regulations in the UAE’s framework.
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