Dubai is an ever-growing business destination and a huge number of entrepreneurs have made the best out of the business opportunities here. However, not all can achieve their business goals and some of them fail to sustain their business growth. In such cases, the entrepreneurs or investors may opt for the process of company liquidation in Dubai. As per Federal Law No.2 of 2015, articles 306 to 326, an LLC in Dubai mainland may go into liquidation when it completes its objective; its duration is expired or suffers a loss of assets. The liquidation process is as crucial as the company formation and the businesses need to hire a one-stop service from business setup consultants that also offers company liquidation services in Dubai.
As per the Federal Law No.2 of 2015, there are two scenarios when an LLC in Dubai mainland can call for dissolving the company:
In this case, the Managers or the directors of the LLC are required to put forward the issue of dissolution before the General Meeting of the partners. The applicable majority will then pass the decision to liquidate the company.
In this situation, a demand to dissolve the company would be put forward by the partners who hold one-quarter of the capital.
The LLC is one of the legal structures that require the appointment of liquidators to dissolve the company. One or more liquidators can be appointed as per the decision of the General Assembly of the LLC partners.
The cancellation of the trade license is a major step in the liquidation process of an LLC company in Dubai. The cancellation process lets the government authorities know that the company is no longer doing business in Dubai. By cancelling the trade license, the LLC can avoid the accumulation of fines on the license for not renewing it on the date of expiry.
The entrepreneurs need to ensure that they have to discharge their liability towards the creditors and partners in the company. If the business owner has plans to set up a new business in the future, the cancellation of the license helps to sustain the goodwill and reputation of the business.
For cancelling the business license, an application should be submitted to the Dubai DED. In addition, clearances should be obtained from the following departments:
The process of winding up an LLC in Dubai mainland involves two stages:
VAT deregistration is mandatory for the taxable companies in Dubai when they decide to liquidate. An LLC is required to apply for VAT deregistration with the Federal Tax authority (FTA). The FTA will deregister the VAT registration once the application is submitted with all the required documents. The companies that are winding up the business would incur penalties if they fail to apply for VAT deregistration.
Trademarks are one of the most valuable assets a company can own and therefore registered trademarks carry immense significance during the insolvency of a business entity in Dubai. Before the LLC liquidation, the registered trademarks of the company should be transferred to a new owner or entity.
A company will be forced to wind up its business in Dubai when it fails to sustain the growth or a continuous decline in profits. If the losses are accumulating, the businesses will be forced to go for the company liquidation process. However, just like the incorporation process, expert guidance is required for the company’s insolvency procedures as well. The processes including cancellation of license and VAT deregistration require the assistance of a reputed company liquidation service provider in Dubai, UAE. Jitendra Business Consultants (JBC) is one of the top company liquidation service providers in Dubai with years of experience in helping businesses in insolvency procedures. JBC’s highly qualified company liquidators will be assisting the LLCs in all steps like cancellation of license, deregistration of VAT account and will ensure that all the documentation is in proper order for a quick and smooth liquidation process.
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