Understanding Company Liquidation in Dubai
Whether due to strategic shifts, market changes, or business closure, properly liquidating a company in Dubai is a legal requirement. It ensures that all government, financial, and legal obligations are fulfilled, avoiding future liabilities or penalties. The liquidation process differs for Mainland and Free Zone companies, and understanding those differences is key to a smooth closure.
What Is Company Liquidation?
Company liquidation is the formal process of shutting down a business, settling debts, cancelling licenses, employee visas, and deregistering the entity with relevant authorities. Failure to liquidate properly can result in fines, legal complications, and difficulty starting future ventures.
Liquidation Process for Dubai Mainland Companies
Mainland companies are regulated by the Dubai Department of Economy and Tourism (DET). Liquidation here involves direct coordination with various government departments.
Step-by-Step Mainland Liquidation:
1. Board Resolution
Draft and notarize a resolution confirming the decision to liquidate.
2. Appoint a Liquidator
For LLCs, appoint a registered liquidator and obtain their confirmation letter.
3. Apply for Liquidation with DET
Submit the application, board resolution, and liquidator letter.
4. Publish Liquidation Notice
DET requires a 45-day public notice in two local newspapers to allow for creditor objections.
5. Visa and Labor Clearance
Cancel all employee visas and labor contracts through MOHRE and Immigration.
6. Clearances from Government Bodies
Obtain clearance from:
• DEWA (electricity/water)
• Telecommunications provider (Du/Etisalat)
• Dubai Municipality
• Landlord (Ejari cancellation)
• Federal Tax Authority (VAT deregistration)
7. Final Liquidator Report
Submit a final report by the liquidator confirming all dues are cleared.
8. License Cancellation
Apply for final license cancellation from DET.
Liquidation Process for Free Zone Companies
Each Free Zone in Dubai operates under its own authority, so the liquidation process may differ slightly between zones such as DMCC, DAFZA, Dubai Silicon Oasis, etc.
Common Free Zone Liquidation Steps:
1. Board Resolution
Submit a board resolution to the Free Zone authority requesting liquidation.
2. Settle Dues
Clear all outstanding payments to the Free Zone authority, utilities, and landlords.
3. Cancel Visas and Labor Cards
Cancel all company-sponsored visas (employees and partners).
4. No Objection Certificates (NOCs)
Obtain NOCs from:
• Free Zone authority
• Customs (if applicable)
• Utilities (DEWA, etc.)
• Bank (confirming account closure)
5. Audit and Final Accounts (if required)
Submit an audit report or financial statement depending on Free Zone regulations.
6. License Cancellation
Once all conditions are met, the Free Zone authority will cancel the license and issue a certificate of deregistration.
Key Differences: Mainland vs. Free Zone Liquidation
• Governing Authority: Mainland (Dubai Economy/DET) vs. Free Zone (Respective Free Zone Authority)
• Liquidation Notice: Required for Mainland (45 days in newspapers) vs. Not required in most Free Zones
• Liquidator Appointment: Mandatory for LLCs in Mainland vs. Not always required in Free Zones
• VAT Deregistration: Required if registered in both cases
• Office Lease Cancellation: Required via Ejari in Mainland vs. Required via Free Zone system
• Visa Cancellation: Through MOHRE & Immigration in Mainland vs. Through Free Zone portal
How Connectin Business Services LLC Can Assist
Whether you're liquidating a Mainland or Free Zone company, Connectin Business Services LLC provides end-to-end support:
• Drafting resolutions and legal notices
• Coordinating with DET or Free Zone authorities
• Managing visa and labor cancellations
• Liaising with auditors and liquidators
• Handling VAT deregistration and financial clearances
• Ensuring full compliance to avoid penalties
📱 Call us at: 050 987 4636
📧 Email: info@connectinlegal.com
Connectin Business Services LLC – Your reliable partner for smooth, compliant company liquidation in Dubai.