Can A Company Liquidation Be Reversed in UAE?

A major legal and financial procedure that signifies the conclusion of business operations is company liquidation. Liquidation in the UAE includes a company’s formal closure, payment of its debts, revocation of its licenses, and distribution of any assets that remain. 

However, can a company liquidation be reversed in UAE? This is a crucial question for many shareholders and business owners. 

To understand this, read the blog below. 

Understanding Company Liquidation in the UAE 

In the United Arab Emirates, liquidation is the official process of closing a business. This applies to both mainland and free zone businesses. A board resolution must be passed, a liquidator must be appointed, creditors must be notified, debts must be paid, permits and visas must be revoked, and the company must deregister from the appropriate free zone authorities or the Department of Economic Development (DED). Creditors have a statutory deadline (usually 30 to 45 days) to file claims once a liquidation notice is published.

Before the liquidation process is finalized, companies need to secure several clearances, which involve submitting final VAT and corporate tax returns as well as deregistration. With the engagement of an authorized liquidator, the process is guaranteed to be transparent and fair, while also adhering to UAE legislation. The whole process usually ends with the issuance of a liquidation certificate that verifies the company’s closure.

Can Liquidation Be Reversed in the UAE?

Can a company liquidation be reversed in UAE? Well, here’s what you need to understand –

Reversal Before Finalization 

In the UAE, it is possible to reverse liquidation, but this mainly depends on the stage at which one seeks the reversal. Before the liquidation is finalized, usually before the payment voucher or final liquidation certificate is issued, a company can formally request to stop or cancel its liquidation process. The company is not yet completely dissolved at this stage, allowing stakeholders like shareholders to opt for continued operations by passing a new resolution to reverse the liquidation and annul any liquidation notices that have been issued.

Cooperation from government authorities, such as the Department of Economic Development, is necessary for this early-stage reversal. It may also involve submitting suitable documents that demonstrate the cessation of liquidation. When licenses and visas are still valid, this process is quite simple. However, when it comes to official actions like canceling visas or licenses or deregistering individuals, reversing these actions becomes more complicated and less practical.

Some Key Considerations Include:

• A new resolution must be passed by shareholders to confirm the company will keep operating and to withdraw the liquidation notice.
• All liquidation notices that have been published must be cancelled or retracted officially via announcements.
• If the liquidation is reversed, the appointed liquidator may resign or be relieved of their duties.
• The company must guarantee that all parties, such as creditors and government agencies, receive formal notification of the reversal.
• If the liquidation process has advanced past initial actions like canceling visas or revoking trade licenses, reversing it becomes considerably more difficult and might necessitate new licensing or approval processes.

Since a branch cannot lawfully exist apart from its parent business, the dissolution of the branch must also be overturned in circumstances where the company owned a branch in another emirate.

Steps To Reverse Company Liquidation in UAE

If you’re wondering, can a company liquidation be reversed in UAE. Yes, it can. However, follow the steps below –

1. Put An Immediate Stop To The Process: You have to take action before the appropriate authority (such as the Department of Economic Development or a Free Zone Authority) issues the final liquidation certificate.
2. Hire Legal Counsel: Legal experts with knowledge of UAE corporation law are what you’ll need to recruit. They can give you advice on the chances of success and the particular requirements of the jurisdiction in which your business operates.
3. Speak With The Appropriate Authority: The authority handling the liquidation will require a formal application from your attorneys outlining the reasons for the reversal. 
4. Pay Off All Debts And Liabilities: All unpaid debts need to be paid off. It will be necessary to resolve any disputes and satisfy any claims made by creditors.

5. Obtain A Court Order, If Required: A court order will be necessary to restore the firm’s legal existence during a formal liquidation procedure or in situations where the company has already been dissolved.

Practical Tips For Business Owners

Here are some practical tips to keep in mind when reversing the company liquidation process in UAE:

• Move Swiftly: You have a better chance of success if you seek reversal early in the liquidation process.
• Hire Experts: Complex regulatory procedures can be navigated by legal and business advisors with expertise in UAE corporate law. Xpert Advisory is adept at providing company restructuring and liquidation services that can help reverse liquidation and reestablish your company in the Emirates. Call our experts today to know how we can help you in the reversal process!
• Preserve A Good Position: Good standing by making sure all obligations and debts are paid in full or by reaching settlements with creditors to avoid lawsuits.
• Examine Other Options For Restructuring: If financial hardship led to the consideration of liquidation, look into alternatives, including mergers, conversions, or inactive status.

Final Takeaway

The good news is that you can successfully reverse your liquidation process if you have changed your mind and wish to sustain your business in the UAE. It is possible to reverse a company’s liquidation in the United Arab Emirates, but only if irreversible steps are taken early in the process. 

It necessitates meticulous administrative measures, coordination with government authorities, and formal shareholder approval. Owners of businesses that must make liquidation decisions should get expert counsel as soon as possible to examine their options and maybe prevent expensive or irreversible closure.

FAQs

After A Liquidation Reversal, Can A Dissolved Firm Get Its Tax Registrations Back In The UAE?

The corporation may keep its tax registrations in the event of an early liquidation reversal and unfinished tax deregistration. If not, you might need to re-register with the Federal Tax Authority.

Does the UAE have A Deadline For Requesting A Liquidation Reversal?

Although the statute has no set time restriction, in practice, reversal must take place prior to the authorities issuing final clearance or canceling a license.

Does The Reversal Of Liquidation Impact The Visa Status Of Employees?

Resuming visa sponsorship through the Ministry of Human Resources and Emiratization is necessary to reinstate visas that have been terminated as part of liquidation; this frequently entails new applications and costs.