It is broadly realized that the primary reason for incorporating a business is to achieve financial targets and to realize these objectives it pertinent to have financial stability in the company.
However, Company Lawyer of Dubai have often seen partners failing to undertake preventive measures to protect the company and ensures its perpetuity. Any dispute between the partners may lead to termination of relationship resulting into liquidation or dissolution of company due to failure in fulfilling their financial obligations.
In such circumstances, it is inevitable for companies to file for liquidation in order to settle the debt of creditor and dissolve the company. Under UAE Commercial Companies Law, liquidation of an LLC company can be either voluntary initiated by the shareholders of the company or compulsory from an order to the creditors. Albeit, the procedure of liquidation is mentioned under the law, it can be cumbersome and lengthy to cancel the license of a company registered in UAE. The company prior to filing an application should settle down outstanding dues with primarily all the governmental organizations such as telecommunications bills, utility bills, close the bank account of the company. Furthermore, an auditor shall draft an audit report to determine the assets and liabilities of the company.
Liquidation Procedure
A. Resolution for dissolution
In order to cancel the trade license of the company, the first and foremost step is to pass a shareholder’s resolution disclosing the consent of the shareholders to terminate company’s license in shareholders’ meeting. The resolution shall be duly notarized through public notary and other relevant institutes in case the resolution was passed in another country.
B. Appointment of Liquidator
A liquidator shall be appointed who will act as a representative for the court and for all the creditors of the company. The major responsibility of the liquidator is pay off all the outstanding debt of the company by selling its movable or immovable assets or as agreed between the shareholders by passing a board’s resolution.
C. Notice period
Upon submitting the relevant documents requested by the concerned department, Department of Economic Development (DED) in case of mainland LLC companies, a liquidation certificate is issued to the liquidating company to proceed with the process. Post obtaining the liquidation certificate, the company shall publish an advertisement in the Arabic newspaper for 30 (thirty) days for any creditor to seek their outstanding claim.
D. Cancellation of Visa
The last step in the liquidation process is to cancel the visa of the all the partners and the employees and to obtain a clearance certificate from various government departments such as Ministry of Labor, Ministry of Immigration, DEWA and Etisalat.
Lawyers of Dubai that it is pertinent for the shareholders to analyze company’s financial position in right time to prevent any undue costs or subsequent loses.
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