Dubai Design District is a premium free zone in Dubai managed by Tecom Group. Companies operating in Dubai Design District can opt for a voluntary liquidation process to closes down a company. The process of company liquidation in Dubai Design District allows the owners to legally shut down operations by cancelling the license and settling the dues to creditors, employees and all other stakeholders.
Company liquidation involves a series of steps, which requires the appointment of the best company liquidators in Dubai. To wind up the company without any hassle, the entrepreneurs need to understand each of these steps. The knowledge of the process has become critical after the introduction of regulatory requirements such as Economic Substance Regulation (ESR) and Ultimate Beneficial Ownership (UBO). Business owners can get a glimpse of such requirements from this article. Let’s explore.
Resolution to Dissolve the Company
To begin with the process of company liquidation in Dubai Design District, the shareholders should notify the free zone authority about the decision to wind up. The shareholders should then pass a resolution to shut down the company. The resolution should be signed by all the shareholders and notarized by the Notary Public.
Appointment of Liquidator
A liquidator should be appointed to oversee the process of liquidation. The liquidator must be an audit firm holding a license to operate in the UAE. The appointment of the liquidator must be stated in the shareholder’s resolution. The liquidator should submit a letter confirming his acceptance of the role.
Apply for VAT De-registration
VAT De-registration is one of the most critical requirements associated with the process of company liquidation in the UAE. If the company is a VAT registrant at the time of liquidation, it must apply for VAT de-registration. The application for VAT de-registration must be filed within 20 days of becoming eligible for it. Failing to apply within the stipulated time frame will attract a penalty of AED 10,000. Considering the penalty and potential delays, we suggest the business owners check their VAT registration status immediately after the decision to close down the company is made.
Economic Substance Requirements
While undergoing company liquidation in Dubai Design District, a company should its obligation towards meeting ESR requirements. The owners should assess whether they have conducted any of the nine Relevant Activities such as Banking business, Insurance business, Lease-Finance business, Investment Fund Management business, Holding Company business, Headquarters business, Shipping business, Intellectual Property business and Distribution & Service Centre business.
If yes, they need to meet ESR obligations such as notification filing, ESR report filing and Economic Substance Test. If the company falls under exempted licensee category, only ESR notification filing will be necessary provided they submit documents to substantiate exempted licensee status. Other companies must meet all three ESR requirements. Failing to meet the ESR obligations in the UAE will attract hefty penalties.
Ultimate Beneficial Ownership Regulations
Companies operating in Dubai Design District must meet UBO requirements while undergoing the liquidation process. According to Cabinet Decision No. (58) of 2020, companies are required to hand over the Real Beneficiary Register and Partners or Shareholders Register to the free zone authority within 30 days of appointing the liquidator. Furthermore, the liquidator or company administrator must ensure that the registers are maintained for at least five years from the date of liquidation of the company. Companies undergoing liquidation in Dubai Design District will be subject to huge penalties if the requirements are not met.
Cancellation of Visas & Bank Accounts
You must ensure that the visas of all the employees are cancelled. Along with that, their ID cards and immigration cards should also be cancelled to quickly wind up the liquidation process. The company’s bank account must be cancelled and you shouldn’t forget to obtain a closure letter from the bank.
Clearance from Customs & Utility Providers
You should obtain clearance letters from Dubai Customs to show that the company doesn’t have any pending Customs duty amount. Similarly, NOC should be obtained from utility service providers such as Etisalat, DEWA, and RTA (if any vehicle is registered under the company’s name).
Cancel the Licenses of Branches
If your company has any branches or subsidiaries, you must close them first. A board resolution is mandatory to dissolve a company in Dubai. However, the powers of the board cease once the company liquidators in Dubai are appointed. This means you can’t dissolve the branches if the parent company is liquidated first.
Notification of Liquidation
An advertisement needs to be placed in local English & Arabic Newspaper notifying the company’s liquidation. There should be a notice period of 45 days during which creditors or clients can raise their claims or objections towards the company’s liquidation.
Submission of Liquidation Report
Marking the end of the liquidation process, the liquidator should submit the final liquidation report to the free zone authority. The Registrar will then cancel the company’s trade license and remove the company’s name from the free zone register.
Hire the Best Company Liquidators in Dubai, UAE
The process of voluntary company liquidation in Dubai Design District is the best way to shut down your entity’s operations without any legal hassle. The liquidation will help all the stakeholders including employees, creditors and clients to have an amicable settlement. However, the evolving regulatory landscape in the UAE has increased the compliance requirement for companies. Since ESR, VAT and UBO have become an important part of the liquidation, hiring the best company liquidators in Dubai such as Jitendra Business Consultants (JBC) has become inevitable.
JBC has the right resources and sufficient experience in helping the companies conclude liquidation by meeting all the legal requirements. Since JBC offers ESR, VAT and UBO compliance services, it will be easier for us to help you out during liquidation. JBC’s company liquidation services in Dubai will help you exit the operations without any complexities.