All good things come to an end; as such, you may find yourself in a situation where you need to close your business and go back home. There are several tasks involved in closing a business, and it can seem daunting, but it’s important to work through them to make sure everything is done properly. Leaving a business closing task undone can result in problems if you travel again through Dubai. In the worst-case scenario, debt collectors could go after you in your home country due to outstanding liabilities and fines.
The business closing type that is described in this article is not bankruptcy; it’s what is known as “dissolution,” dissolving of the business as a legal entity. The first step in the dissolution of your company is to check if you have any outstanding liabilities. Settle all bills with suppliers and vendors. Keep enough funds so you can clear any outstanding payments to staff and any third parties assisting you with closing your business.
Closing Business: License Issued by the Dubai Department of Economic Development (DED)
For companies with shares, the process requires liquidating the shares, collecting debts and paying creditors before finalizing the closure with DED.
You will need to acquire clearances from:
- Ministry of Human Resources and Emiratisation
- General Directorate of Residency and Foreigners Affairs Dubai
- Dubai Electricity and Water Authority (DEWA)
- Etisalat or Du
- Company bank account firm
- Your leasing company or landlord
You should appoint a liquidator if the legal form of your company is one of these:
- General Partnership
- Limited Liability Company
- Simple Limited Partnership
- Public Joint Stock Company
- Private Joint Stock Company
You will need to prepare a notarized document from all shareholders confirming the company liquidation and the appointment of a liquidator. The liquidator will produce a letter accepting his or her responsibilities as a liquidator for your firm. At this stage, you will lodge an application for license cancellation with the DED; in turn, they will provide you with a liquidation certificate. Publish the notice of liquidation in two Dubai newspapers. The newspaper advert gives debtors a grace period of 45 days from the date of issue to submit their claims.
If the liquidator receives no objections, they will produce a written declaration that is submitted to the DED. Proceed to cancel the firm’s establishment card at the Ministry of Human Resources and Emiratisation. Subsequently, cancel any visas sponsored by the company at Dubai’s General Directorate of Residency & Foreigners Affairs. Once you’ve received clearance from all the aforementioned departments, then you submit them to the DED which will give you your final bill. Settle the bill and you will receive your Certificate of Deregistration.
Once you have received your ‘Certificate of Deregistration’ you have completed all the formalities regarding the company. Before leaving Dubai, you should settle all your personal affairs. Once you have completed everything, you can then focus on your new life back home.
Closing Business: Freezone Company in Dubai
Most Dubai based freezone jurisdictions require the same steps that the DED Dubai requires except that they act as the DED, General Directorate of Residency and Foreigners Affairs Dubai, and Ministry of Human Resources and Emiratisation and often are the landlord. Therefore, you interact with fewer agencies as you have a central point of contact.
Some of the freezone jurisdictions have streamlined the process where you provide them with a set fee, and they will even publish the relevant newspaper advert and find you a liquidator from an approved list. The added value of a freezone jurisdiction is that they provide you with a timeline and are more responsive to client inquiries. However, most freezones will retain your passport after visa cancellation and will only deliver it to you at the airport to make sure you leave the country.
Leave the Hassle of Liquidation to the Professionals
While you can complete most formalities on your own, it’s not uncommon for expats to leave it in the hands of a professional business consultancy to complete the company’s dissolution formalities. The consultancy firm has access to a network of trusted liquidators that work swiftly and have familiarity with objections raised by the DED or freezone authorities. It depends on how quickly you want to exit, a consultancy firm can finalize all formalities in 2 to 3 months, whereas if you do it on your own, it can drag into 3 to 5 months.
If you are considering closing your company, speak to one of our consultants for a free consultation.