In the most catastrophic situation, a company experiencing financial difficulties comes to the point when it becomes unable to settle its debts. The result is that the company goes bankrupt. When a business goes bankrupt, its creditors and investors eventually bear the burden. Financially distressed companies are liquidated for this reason.
The process of liquidating a firm entails selling its property to pay off debts. It’s a methodical procedure that results in the closure of the corporation in question. Although the overall process of insolvency is the same throughout the world, local laws and regulations may differ. Every free zone in the UAE follows its own rules surrounding the closure of a corporation.
Role of Liquidators in Terminating Trade License in DAFZA
When proceeding through winding up, businesses in the Dubai Airport Free Zone must abide by the rules of the local government. Free zone firm dissolution can be challenging because each free zone has its own unique set of regulations. Fortunately, DAFZA approved liquidators always enlist qualified outside support to aid in bankruptcy proceedings. In DAFZA, the government has mandated that engaging a DAFZA approved liquidator needs to be done for guidance and supervision.
Read More : Trade License Cancellation in DIFC.
Process of DAFZA License Termination
A variety of measures must be taken by business owners to liquidate their organizations. All of these rules are intended to alert the appropriate authorities about a company’s impending closure. Additionally, they aid in ensuring that all parties connected to the firm are allowed to resolve their disputes before the organization’s demise.
What you must do as a business owner for Trade license cancellation in DAFZA company is as follows:
- Releasing Board or Shareholder Resolution to Inform About Your Intention: A formal declaration of your intention to liquidate your firm must be made before you start the procedure. The form of this declaration is a board or shareholder resolution. This declaration must be signed by all of the company’s owners and also witnessed by a notary public.
- Selecting a DAFZA Approved Liquidator: To oversee the liquidation procedure, an outside approved liquidator must be hired. The chosen liquidator must obtain an authorized formal request from the firm and file an authorized acceptance note if they agree to deliver professional services to the corporation.
- Announcing of Winding Up in Public: Whenever a corporation begins the insolvency process, it is required to place an announcement in the public newspaper. This advertising process, which announces the company’s intention to dissolve itself, is broadcasted for six weeks. Any person who wants to complain against the corporation has these six weeks to file it.
- Deregister with VAT to Avoid Penalty: This relates to businesses that are VAT registered or have branches. These businesses must confirm that all of their branches have already been dissolved before starting the liquidation process. An essential stage in the liquidation of a corporation is to deregister for VAT. Companies in DAFZA have 20 days from the start of the liquidation procedure to de-register for VAT. If the company does not deregister within these business days, a punishment of AED 10,000 may be levied against it. To make sure FTA has corrected the records after the business is deregistered, a TRN check must be carried out.
- Service Providers and Customs Should Be Evidently Clear: Every service provider must present clearance documents to your business. This serves as evidence that the business has paid all outstanding bills to all service providers. Additionally, evidence of clearance by Dubai Customs is necessary.
- Closure of Bank Account and Cancellation of All Visas: Your corporation must terminate all banking and invalidate any visas issued under its trade license.
- Report of Liquidator: Submitting a liquidator’s report is the last stage in the procedure. The appointed liquidator creates this report, which contains information about the liquidating procedure and the asset of the company.
Companies can present their documentation to the DAFZA government once they have complied with all of the aforementioned conditions. All paperwork must be approved before the business may begin winding up. After all this, it is clear that the firm has successfully ended its license and will remain closed from now on.
It is important to consider that a firm must first renew its trade license if it has already elapsed at the time of dissolution. If you try to operate with an outdated business license, the authority may impose a penalty of at least 1,000 AED.
Choose DAFZA Approved Liquidators
If you’re considering getting through business liquidation in DAFZA, keep in mind that you might do it without declaring bankruptcy only with the assistance of an external liquidation provider in the UAE. We recommend that you maintain your account books in order so that you remain compliant with the rules. By choosing Farahat & Co, your company need simply a liquidation document, and the remaining work is handled by our field professionals. We serve as one of the most frequently utilized licensed liquidators in DAFZA and the rest of the UAE.
Read More : A Guide to Trade License Cancellation in Dubai.