There are several benefits to operating a business in the Dubai Multi Commodities Centre (DMCC) free zone, but occasionally, entrepreneurs may have to shut down their activities. The official legal procedure to dissolve a DMCC corporation, pay off its debts, and remove it from the DMCC registration is called liquidation. A seamless and legal closure can be ensured by being aware of the regulations, procedures, and related expenses.
This blog offers a complete guide to the process of liquidation of DMCC Company in Dubai. Read on to learn more –
The Types of Company Liquidation in DMCC
Here are some of the types of liquidation of DMCC company to proceed with the liquidation –
- Solvent Winding Up: The directors of the company affirm that the business can be completely liquidated in a year. The procedure entails the equitable division of assets and the orderly payment of debts.
- In-brief Winding Up: When it’s time to close the company, directors also start this quicker liquidation process, which is completed in six months.
- Insolvent Voluntary Winding Up: When a business becomes insolvent, it starts this process, which incorporates creditor participation to guarantee a just settlement of obligations.
- Involuntary Wind Up By Competent Court: The competent court’s involuntary winding up is a court-mandated liquidation brought on by major infractions, insolvency, or the company’s dissolution.
This classification aids in defining the legal course that the liquidation will follow based on the company’s financial situation and unique circumstances.
Step-by-Step Liquidation Process of a DMCC Company
If you wish to liquidate your DMCC company, here are guidelines on company liquidation for a hassle-free wind-up. Here’s a detailed DMCC liquidation process –
Board Resolution
In order to begin the process of company liquidation, the shareholders must formally adopt a resolution. The decision made at this meeting is crucial since it helps to proceed with liquidation.
Liquidator Appointment
The business selects a liquidator, who needs to be a DMCC approved, regulated auditor. The liquidator is in charge of all aspects of the liquidation, including asset allocation, debt settlement, and financial reporting.
Publication and Notification
Two local newspapers must publish a summary of the board resolution and liquidation determination, announcing the company’s termination. Within a given timeframe, creditors are encouraged to file claims or objections. It’s an important step when closing down a company.
Document Submission
In order to liquidate the company, the business uses the internet portal where all documents are submitted to DMCC. The liquidation application, board decision, statement of the company’s assets and liabilities, liquidator’s appointment letter, landlord lease clearance letter, business license, and pertinent company certificates are usually among the required documents.
DMCC Review and Approval
To ensure compliance and voluntary liquidation, DMCC authorities examine the application and supporting documentation. If it’s feasible, they might get in touch with the business to discuss options for continuing operations. DMCC sends out a notification to move forward after approval, ensuring a smooth transition.
Cancellations of Visas and Permits
For successful company liquidation in DMCC, all work permits, employee and shareholder visas, and associated identification documents connected to the business are revoked.
14-Day Publication
For a seamless liquidation and to accommodate last-minute claims or objections, a statutory 14-day notice period is observed. Within this time period, any company may make claims of any pending debt.
Final Report Submission
A thorough liquidation report detailing the voluntary winding-up procedure, liability settlement, financial records, and distribution of assets is submitted to the DMCC portal by the liquidator.
Deregistration Certificate
The insolvent winding-up procedure is concluded when DMCC gives the formal deregistration and closure certificate following acceptable completion.
Some Key Requirements for DMCC Company Liquidation
All legal requirements and DMCC regulations must be met by the appointed liquidator. DMCC company liquidation requires careful planning and should be compliant with a few legal and practical requirements. Here are some of them:
- To ensure a smooth summary winding-up, the business must be debt-free or have enough money set up to pay off debts.
- The liquidator must be a DMCC-approved auditor specializing in insolvent voluntary winding-up.
- Before closing, all business debts, such as rent contracts and employee salaries, must be paid in full.
- It is necessary to obtain the required clearances from the DMCC and other pertinent government agencies. This is only possible when you submit the required documentation and statement that the company is dissolving.
- To safeguard creditors, workers, and other stakeholders, transparency is crucial at every stage of the process.
What is The Cost of the Company Liquidation Process in DMCC?
The size and complexity of the business, together with the types of assets and liabilities involved, can all affect the cost of a liquidation. Common cost elements consist of:
DMCC Processing Costs: The auditor must pay a non-refundable registration fee and service costs to DMCC, such as AED 2,000* for auditor registration.
Liquidator Costs: Expert fees for managing the full winding-up process that are assessed by the liquidator/auditor who has been approved by the DMCC.
Debts and Liabilities: Payments to landlords, employees, creditors, and other parties constitute the settlement of debts and liabilities.
Additional Costs: Additional administrative expenses include legal notice publication fees, visa and permit cancellation fees, and other regulatory fees.
In Dubai, the overall cost of a company’s bankruptcy might vary greatly. Depending on complexity, medium-sized and large businesses may have expenses ranging from AED 15,000 to AED 50,000* or more, while small businesses may suffer charges as low as AED 5,000 to AED 10,000*.
How Much Time Does It Take To Complete the Liquidation Procedure?
Depending on the speed at which documents are submitted, the clearance of creditors, and DMCC approval, the liquidation procedure normally takes four to eight weeks. The length of the process is mostly determined by how quickly the required permissions are obtained and liabilities are settled. Here, an approved liquidator can play a vital role in speeding up the process.
Final Takeaway
To guarantee legal compliance and the safety of all parties, DMCC-approved authorities in Dubai control the organized process of liquidation of DMCC company. To reduce risks, business owners thinking about liquidation should make thorough plans, follow all instructions, and get expert help. This guarantees that financial and legal obligations are met while leaving the market legally.
If you’re considering reaching out for expert advice and assistance for company liquidation, Xpert Advisory can be your partner. We’ve gained enough experience and have the right knowledge to deliver efficient liquidation services. If the entire process is overwhelming, contact us for assistance! We’re here to help you every step of the way.
FAQs
How Long Does It Typically Take To Liquidate A DMCC Company?
After all conditions, including clearances and publication periods, are satisfied, the liquidation procedure normally takes 45 to 60 days. The process requires careful planning and execution, based on which your company can be wound up within six months at max.
Who Is Qualified To Serve As A Dmcc Company’s Liquidator?
The liquidator can only be an audit or accounting company licensed by the UAE or permitted by the DMCC.
Do Work Permits And Employee Visas Become Automatically Revoked After Liquidation?
Yes, as part of the liquidation process, all employee visas and work permits associated with the company are revoked.
