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Business Setup and Support in the UAE (United Arab Emirates) Liquidation of the company in the UAE

Taras Miroshnychenko

Head of International Corporate Law and Fintech Practice

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miroshnychenko@prikhodko.com.ua

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Expert in fintech, crypto, and international corporate law with over 20 years of experience. Specializes in crypto licensing (VASP/CASP), iGaming business support, and international structuring, asset protection, and OSINT analytics for risk assessment and due diligence.

Liquidation of the company in the UAE

The liquidation of a company is a complex and important legal process that requires the exact fulfillment of all legal requirements.

In this article, we will consider the main aspects of the company liquidation procedure in the United Arab Emirates (UAE), paying attention to legal norms, stages of the process and features compared to other jurisdictions.

Legal framework for liquidation of companies in the UAE

In the UAE, the liquidation of companies is regulated by a set of legislative acts that establish rules and procedures for the termination of the activities of enterprises.

The main legal acts that apply to the liquidation of companies in the UAE are:

Trade Law

This law establishes general rules for the establishment, registration and operation of companies in the UAE.
It also contains provisions for closing down the business, including liquidation.

Companies Act

This law regulates in detail the structure and governance of companies in the UAE.
It defines liquidation procedures, obligations of liquidators and owners of companies during this process.

Department of Economic Development (DED) requirements

DED plays a key role in business registration and supervision of its activities in the UAE.
The department also establishes requirements for the liquidation of companies and provides the necessary documents and forms for this process.

The legal framework for the liquidation of companies in the United Arab Emirates is clearly defined and includes a number of key pieces of legislation.

Understanding and complying with these acts during the liquidation process is critical to ensuring its successful completion.

It will also be useful: Liquidation of a company (firm) in Europe

Stages of company liquidation in the UAE

Making a decision on liquidation

The decision to liquidate is usually made by the company’s owners or shareholders at a general meeting.
If the company has debts, it is necessary to resolve their settlement before starting the liquidation procedure.

Appointment of liquidator

A liquidator is usually appointed by the company’s owners or by court order if necessary.
The liquidator is responsible for managing the liquidation process and fulfilling all legal requirements.

Legal formalities and notices

Registration of liquidation

The liquidation of the company must be registered with the Department of Economic Development of the UAE.
After registration, it is necessary to publish an announcement about liquidation in official publications.

Notification of creditors

All creditors must be notified of the start of the liquidation procedure, indicating the deadlines for submitting claims.

Settlement of financial issues and property status

Completion of commercial transactions

The liquidator must complete all active operations of the company and ensure the settlement of all outstanding liabilities.

Distribution of assets

After all debts are paid, the remaining assets are distributed among the shareholders or other participants of the company according to their shares in the capital.

Alienation of corporate rights

Transfer of ownership

The process of transferring corporate rights can include the sale of shares, the exchange of shares, or the transfer of inheritance.
Corporate rights can be exchanged for shares or shares of another company in a merger or acquisition
All relevant legal acts must be registered in accordance with UAE requirements.

Also, we can offer to find buyers and implement the alienation of corporate rights of the desired company.

Alienation of the company’s corporate rights involves the transfer of ownership rights to a share or shares to another person or legal entity.

In each country, company liquidation procedures have their own characteristics, depending on local legislation and practice. The UAE is no exception, and careful compliance with all legal requirements is a key aspect of successfully completing the liquidation process.

The above steps and tips will help companies and their owners understand and effectively manage the liquidation process in the UAE.

It is important to take these differences into account when planning the liquidation of a company in an international context, and the specialists of the Prikhodko and Partners Law Firm will definitely help you with this.

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1 question

Have you chosen the method of liquidation of the company?

Yes

2 question

Have you submitted your financial statements?

Yes

3 question

Do you need advice on the procedure for liquidating a Cyprus company?

Yes

Which is better: Mainland or Free Zone?

Mainland is generally suitable for businesses planning to operate directly in the UAE domestic market, maintain a physical location, premises or a local team. Free Zone is often chosen for international services, IT, e-commerce, consulting, trade and other models with specialised infrastructure. The choice depends on the activity, clients, office, visas, account and tax model.

Can a foreigner own 100% of a company in the UAE?

Yes, Free Zones allow 100% foreign ownership, and most Mainland activities are also available for full foreign ownership. Special restrictions, approvals or ownership structure requirements may apply to certain strategic impact activities.

Does a Free Zone company pay 0% Corporate Tax?

Not automatically. The 0% rate applies to Qualifying Income of a company that meets the requirements of a Qualifying Free Zone Person. Other taxable income may be subject to the 9% rate. The company must also register for Corporate Tax, maintain records and submit returns.

When does a company need VAT registration?

For resident businesses, mandatory registration generally arises when taxable supplies and imports exceed AED 375,000 during the previous 12 months or are expected to exceed this amount within the next 30 days. Voluntary registration is possible from AED 187,500. Different rules may apply to non-residents and certain cross-border transactions.

Is it mandatory to obtain a residence visa?

Not for every structure. A company may be registered without immediately obtaining an owner’s visa if the relevant jurisdiction allows it. At the same time, a residence visa and Emirates ID may be important for living in the UAE, banking KYC, leasing, connecting certain services and demonstrating local presence.

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