What are the different types of company closure (winding up)?
The winding up of the company may either be:
1) Summary Winding Up:
A summary winding up applies in cases where a company either has no liabilities or is able to discharge its liabilities within 6 months, and commences with a statement of solvency.
2) Creditors Winding Up:
A Creditors Winding Up commences when the company passes a resolution for winding up and is followed by a meeting with the company’s creditors.
3) Court Winding Up
Court winding up under UAE Commercial Transactions Law No. 18 of 1993 (Volume 5, Bankruptcy and Preventive Composition) and other applicable legislation
What are the two stages in the liquidation process?
1. First is the termination of the company’s license/s
2. Second is the company deregistration or dissolution
Both of these stages involve submission of resolutions, and may include a public notification process.
How to make Summary winding up?
If you think your business is not doing well and you plan to liquidate the company. Then you can start up with summary winding up. If a company which has no liabilities or which is able to discharge its liabilities in full within six months after the commencement of the winding up and such a winding up is called summary winding up.
We have highlighted here some main procedures. There are plenty of sub procedures that can be done with the help of the liquidator.
1. Making a statement of solvency
A statement of solvency shall be signed by each of the directors and state that, having made full inquiry into the company’s affairs, each of them is satisfied:-
(1) that the company has no assets and no liabilities; or
(2) that the company has assets and no liabilities; or
(3) that the company will be able to discharge its liabilities in full within six months after the commencement of the winding up, as the case may be.
2. Passing a Resolution
By passing a Resolution, within 28 days after the statement has been signed by each of the directors of the company, that the company be wound up summarily;
3. Delivering to Legal Registrar
By delivering to the Legal Registrar, within 21 days after the Resolution has been passed, a copy of it together with the statement.
4. Appointment of liquidator
On or after the date of commencement of a summary winding up, the company by passing a Resolution, should appoint a person to be liquidator for the purposes of the winding up.
On the appointment of a liquidator all the powers of the directors cease except so far as the Resolution appointing the liquidator or any subsequent Resolution otherwise provides and, subject to any such Resolution and to Regulation.
All those powers shall thereafter be exercisable by the liquidator.
Why is it mandatory to appoint a Liquidator in the winding up of a company?
It is mandatory to appoint a Liquidator for winding up a company, as the Liquidator carries out an important duty by determining the assets and liabilities of the company and settling those liabilities in a proper manner.
All powers of the Shareholders/Directors of the company shall cease upon the appointment of the Liquidator for winding up. The Liquidator shall determine the financial standing of the company at the time of liquidation and shall be responsible in the discharge of the assets and liabilities of the company. All these will be included in the Liquidation Report to be provided by the Liquidator during the winding up process.
Who can be appointed as a Liquidator of the company?
Any chartered accountant (audit firm) or law firm registered in UAE can be appointed as Liquidator. The Legal Registrar may, however prescribe the qualifications required for a Liquidator.
5. Application of assets and settling
A statement should be delivered to Legal Registrar confirming that the company has no assets and no liabilities. The statement should be signed by each of the directors or, if the distribution has been completed by a liquidator, should be signed by the liquidator, that each director or (as the case may be) the liquidator, having made full inquiry into the company’s affairs, is satisfied that the company has no assets and no liabilities and, upon the registration of the statement, the company is dissolved.
6. Clearance letter from service providers and others
Clearance letters and NOCs should be obtained from various organizations.
Example – Etisalat, Du, DEWA and Banks, NOC from Customs (For all trading license holders only), Clearance letter from the landlord, Clearance letter from 3rd party Authorities as required (i.e. DGCX, KHDA, RERA, DHA, etc.)
7. Liquidator Report and Closed Audit Report
Finally liquidator report and final closed audit report should be submitted to DMCC. If the liquidator is an audit firm, both reports can be prepared by them and will submit to DMCC.
8. End of Liquidation
Upon completion of the requirements and process, DMCC shall issue the following to be collected through DMCC Client Service Centre Counters:
• License Termination Letter
• De-registration Letter
45 to 60 days upon completion of requirements inclusive of 14-day publication twice.
Are you looking for close your company at DMCC? Do you require proper advices and instructions to carry out liquidation? Are you looking for a qualified and experienced liquidator?
We, Parker Randall UAE, are here to help you. We have a team of liquidators who have vast knowledge and experience in liquidation services in DMCC. Currently we are working as liquidator for many companies. We will assist and guide you to carry out your liquidation procedure from A to Z expeditiously and effectively. Our fee is competitive & cost-effective.
If you need further information or clarification, you may contact us:
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