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Company Liquidation in the UAE

March 16, 2023

Closure refers to the process of winding up of a business. It involves selling off the company's assets, paying off creditors, and distributing the remaining funds to shareholders.

It is a formal procedure that is typically started when a company’s a specific purpose for which it has been incorporated is fulfilled or the company becomes bankrupt and is unable to make its debt payments on time.

The liquidation process in the UAE is governed by the UAE Federal Decree Law Number 32 of 2021 on Commercial Companies (the Companies Law) and the bankruptcy is regulated by the UAE Federal Decree Law Number 9 of 2016 on Bankruptcy (the Bankruptcy Law). Bankruptcy happens in cases when the company is not able to pay its debts or does not have enough funds to continue its operations.

It is important to note that liquidation can have significant legal and financial implications. There are numerous events that could result in a company being liquidated. Among the most typical situations are insolvency, end of business, shareholder disputes, fraud or misconduct, regulatory requirements and fraud or misconduct.

Companies operating in a Free Zone are subject to regulations specific to that Free Zone that specify the conditions and procedures for a company's liquidation there.

Liquidation can be initiated voluntarily by the company's shareholders or involuntarily by the courts or creditors. The two main types of liquidation in the United Arab Emirates (UAE) are voluntary liquidation and compulsory liquidation.

Deregistration

The notion of ‘company deregistration,' also known as 'license cancellation,' was adopted by several licensing bodies in the UAE to close down branch of a foreign companies or representative offices. Deregistration shall be performed in line with Companies Law.

The advantage of deregistration is that it is a short process with fewer severe standards when compared to the liquidation process, which is the normal and only means for closing down corporations at most licensing bodies under UAE law. As a result, it is critical to distinguish between the liquidation and deregistration processes and to understand the requirements of each.

How can we help!

MBG Corporate Services has an experienced team of legal professionals, fully dedicated for managing company liquidation services in the UAE. As part of our continued patronage we are committed to keep our clients fully updated on the necessary procedure and documentation to be carried out during the Liquidation.

The whole process of a company's closure can be handled by MBG in its capacity as a liquidator and represent the Client before the relevant authority to submit the liquidation application. Further, we can assist in obtaining clearance letters from relevant authority, advising on bank closure process and others that are essential for the liquidation process. For all UAE entities, including LLCs, free zone entities and offshore corporations, MBG provides liquidation services that range from a full assistance with a section or parts of the process, depending on the client's needs.

Our team of legal professionals can guide clients through the process and ensure that all necessary documentation and procedures are followed correctly. We can also provide advice on the advantages and disadvantages of deregistration versus liquidation, helping clients make an informed decision that is best suited to their specific circumstances.

Our goal is to ensure that the process of closing a business in the UAE is as smooth and efficient as possible for our clients. We understand that this can be a challenging and stressful time, and we strive to provide expert guidance and support every step of the way


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