August 17, 2020

Company Liquidation in Dubai – Closing a Company

Company Liquidation in Dubai – Closing a Company

The provisions of the Company Law about the liquidation are to be applied unless the company’s MOA (Memorandum of Association) or AOA (Articles of Association) give a specific process for its liquidation, upon resolving the organization’s dissolution an agreement is reached between the partners as to its liquidation’s procedure

Upon the dissolution of the organization, it’s considered to be in the liquidation stage. While the liquidation process is being implemented the organization will retain its legal capacity for the implementation of its liquidation. It is imperative to affix the term ‘In Liquidation’ to the company name. As a consequence of the dissolution of the company the authority of its managers or board of directors will also come to an end, they should continue to manage the company but as far as third parties are concerned, they will be considered as liquidators until a liquidator is appointed. During the liquidation, the organization’s administrative structure shall continue to exist, however, it will just perform functions which are not inside the jurisdiction of the liquidators.

The partners of the company’s general assembly by majority resolution must appoint one or more liquidators. If the liquidation is decreed following a Court Order, the Court will appoint the liquidator.

The death, insolvency, interdiction, or bankruptcy of a partner, even by such a partner had appointed the liquidator, would not affect the liquidator’s functions. Additionally, the liquidator should enroll his/her appointment as well as the method of liquidation with the Commercial Register.

In coordination with the manager or chairman of the company, the liquidator must create an inventory of assets as well as liabilities of the company. The chairman and managers have a statutory duty to hand over the organization’s accounts, documents, books as well as assets to the liquidator.

The liquidator must:
  • Prepare a detailed statement of company assets and liabilities as well as a balance sheet to be signed by him and manager or chairman of the company
  • A book of accounts should be kept for the liquidation of transactions
  • Preserve the assets of the company and its rights as well as the company debts
  • Open a bank account in the name of the company ‘in liquidation’ and deposit company funds.

The liquidator shall be the representative of the company in any litigation regarding the company. He/she must satisfy the creditors of the organization by selling its moveable assets or real estate in an auction or any other method specified in the liquidation process. The liquidator should not embark on new business unless it is necessary for the completion of previous works, otherwise, he will be personally liable for the consequences.

The liquidator must notify all the creditors by registered letters of the commencement of the liquidation. Such notice has to be published in local newspapers and also provides not less than 45 days during which the creditors must present their claims.

Certain debts of the company have to be prioritized and settled before others such as; employees’ salaries or wages, or debts accrued while the company is in liquidation. Any amounts remaining after the settlement of the company debts will be proportionately disbursed amongst the partners. If the net proceeds of liquidation were insufficient to cover the repayment of all partners’ shares, the losses will also be divided proportionately amongst the partners.

At the end of the liquidation, a final account must be prepared and then presented to the general assembly or the partners. The liquidators will then get the record at the end of the liquidation in the Commercial Register as well as request that the company be removed from the registration

Contact

We at MSZ corporate services provider are one of the leading liquidators in Dubai UAE with a wide experience in the field. We have guided our clients with the company liquidation process in Dubai, UAE. MSZ corporate services provider can help you to deregister your company smoothly within a short period. Call us now +971562181007 or mail at info@msz.ae