Liquidating a company in Dubai is a legal process that requires careful planning and compliance with government regulations. Whether due to financial challenges, restructuring, or a strategic business decision, closing a company in Dubai involves multiple steps, including obtaining approvals, settling debts, and canceling trade licenses.
In this detailed guide, we will walk you through the company liquidation process in Dubai, covering both mainland and free zone companies, along with the necessary requirements and timelines.
What is Company Liquidation?
Company liquidation is the formal closure of a business, where assets are sold to pay off liabilities, and the company is officially deregistered. In Dubai, businesses must follow specific legal procedures to ensure compliance with UAE laws and avoid future liabilities.
There are two types of liquidation:
- Voluntary Liquidation – When shareholders or owners decide to close the business due to financial reasons or restructuring.
- Compulsory Liquidation – When a court orders a company to close due to insolvency, fraud, or non-compliance with regulations.
Regardless of the reason, liquidation must be handled properly to prevent legal consequences or fines.
Step-by-Step Guide to Company Liquidation in Dubai
Step 1: Board Resolution for Liquidation
The first step in closing a company is to pass a board resolution confirming the decision to liquidate. This resolution must be:
✅ Signed by shareholders
✅ Notarized by a UAE public notary (for mainland companies)
✅ Attested by the relevant free zone authority (for free zone companies)
Step 2: Notify the Licensing Authority
Once the resolution is passed, you need to inform the relevant licensing authority about the liquidation process.
- For mainland companies: Notify the Department of Economic Development (DED) in Dubai.
- For free zone companies: Inform the respective free zone authority, such as DMCC, JAFZA, DAFZA, etc.
You will need to submit an initial liquidation request and obtain a confirmation letter from the licensing authority.
Step 3: Appoint a Liquidator
A licensed liquidator must be appointed to oversee the liquidation process.
- The liquidator will prepare a liquidation report and issue an official letter of acceptance to the authorities.
- For mainland companies, the liquidator must be a registered audit firm in Dubai.
- Some free zones may not require a liquidator, depending on the type of company.
Once the liquidator is appointed, you can move on to the legal and financial clearances.
Step 4: Cancel Visas and Work Permits
Before finalizing the liquidation, you must:
✅ Cancel all employee work visas and residence visas under the company’s sponsorship.
✅ Clear outstanding payments with the Ministry of Human Resources and Emiratisation (MOHRE).
✅ Settle gratuity and end-of-service benefits for employees.
If the company is in a free zone, you must follow the visa cancellation procedures of that particular free zone authority.
Step 5: Settle Outstanding Debts and Close Bank Accounts
A company cannot be liquidated if it has outstanding loans, fines, or unpaid bills. Ensure that:
✅ All creditors and suppliers are paid.
✅ All government dues and penalties are settled.
✅ The company’s corporate bank account is officially closed, and a closure letter is obtained from the bank.
For tax-registered businesses, VAT deregistration is also required from the Federal Tax Authority (FTA).
Step 6: Publish a Notice of Liquidation
For mainland companies, a 45-day liquidation notice must be published in at least two local newspapers in Arabic.
- This allows creditors to raise any claims before the company is officially deregistered.
- If no claims are received after 45 days, the process moves forward.
Free zone companies may have different requirements regarding public notices, depending on their regulatory body.
Step 7: Obtain Final Clearance Certificates
To complete the liquidation process, you must obtain clearance certificates from:
✅ Dubai Electricity & Water Authority (DEWA)
✅ Telecom providers (Etisalat/Du)
✅ Lease termination and landlord NOC (if applicable)
✅ Dubai Customs (if the company was involved in imports/exports)
✅ Federal Tax Authority (FTA) for VAT deregistration
Step 8: Submit the Final Liquidation Report
The liquidator prepares a final liquidation report and submits it to the relevant authority along with all required clearance certificates. Once reviewed, the authority will issue an official company deregistration certificate.
For free zone companies, additional steps may be required based on the free zone regulations.
How Long Does Company Liquidation Take in Dubai?
The liquidation process typically takes 2 to 6 months, depending on the company structure and pending liabilities.
- Mainland companies: Around 3 to 6 months, including the 45-day notice period.
- Free zone companies: Can be completed within 2 to 4 months, depending on the authority.
What Happens After Liquidation?
Once the company is liquidated:
✅ The business is officially removed from the trade register.
✅ The owner or shareholders are no longer liable for any company debts.
✅ The trade license is canceled, and no further business activities can be conducted under the same name.
Failure to properly liquidate a company can lead to penalties, legal issues, or restrictions on future business activities in the UAE.
Conclusion: Secure a Hassle-Free Liquidation in Dubai
Company liquidation is a complex legal process that requires careful handling of government approvals, financial settlements, and employee clearances. To avoid delays and legal risks, it's highly recommended to work with experienced business consultants or legal advisors who can guide you through the entire process.
If you need assistance with company liquidation in Dubai, contact our experts today for a free consultation and ensure a smooth, hassle-free closure of your business.
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