DIFC Company Liquidator in UAE
DIFC Company Liquidation
The Dubai International Financial Center is one of the two Financial Free Zones recognized with a self-legislation, nevertheless, it is no exception to business liquidation. Thus, the Dubai International Financial Center companies need to outsource expert liquidation services to seamlessly carry out liquidation procedures.
FAR Consulting Middle East is an approved and reputable liquidator in the Dubai International Financial Center. In June 2019, the DIFC introduced the Insolvency Law to regulate liquidation procedures and to mitigate the financial risk of bankruptcy for companies.
Provisions of the DIFC Insolvency Law
The Dubai International Financial Center statute confers the following:
● Rehabilitation Plan Notification Ought to Be Enforced
A 120-day moratorium period has to be enforced for the liquidating business to avert any credit or provisions as per contracts from enforcing their rights.
● Appointing an Administrator in Case of Mismanagement or Fraud
Winding up a company is influenced by several reasons, which might include, fraud elements in a business, mismanagement of business conduct, and undertaking of illegal trade, among other reasons. The DIFC appoints an administrator who is an independent insolvency practitioner/executor. The specified administrator looks into the company’s functions, even throughout the moratorium period
DIFC Company Liquidation Procedure in 4 Different Ways
The four methods include:
- Voluntary winding up of the business
- De-registration of the business
- Compulsory winding up of the business
- Transfer of Incorporation
Voluntary Company Liquidation in DIFC?
The company, its board members, and the shareholders can decide on the company’s cessation of operation or winding up. In this case, a designated Power of Attorney ought to be appointed to sign on behalf of the company’s shareholders. Moreover, all the shareholders should freely consent and sign the shareholder resolution.
After this, the formal procedure of initiating voluntary winding up can be conducted. Further, the business has to appoint an approved DIFC liquidator, the shareholders’ resolution must form an agreement with a DIFC liquidator, and obtain an acceptance letter. Still more, the entity ought to submit a statutory director’s declaration along with the shareholder resolution.
- After 15 days, a notice should be published for three consecutive days after finalizing the shareholders’ resolution. However, the DIFC entity can only delay the time of notice publication for a maximum of 30 days.
- The DIFC-approved liquidator’s list is available on their website, and a DIFC entity can seek quotations for the same before appointing an approved liquidator.
- The liquidator’s report must be submitted to the DIFC Authority.
- The request to wind up the business must be submitted on the DIFC portal.
- Unless the lease agreement for the property or space rented has not expired, termination of the rental or lease contract is a requirement.
- The original Certificate of Incorporation must be returned to the DIFC Authority.
- A NOC is required from the IT department if the business is run on DIFC property.
- Once the application is submitted on the portal, the DIFC Authority will review it and may ask for further justifications.
- If all the requirements are fulfilled, the company can dissolve, and the RoC (Registrar of Companies) will issue the Liquidation Certificate.
How to Liquidate a Company in DIFC?
There is a thin line between De-registering and Voluntarily Winding up a company. De-registering involves the process of removing the company from the list of DIFC entities. Once De-registered, the company can still operate outside the DIFC-Free Zone. A voluntary winding up of business may be due to uncertain reasons; however, de-registration of a company can mean that the company wants to exclude itself from the DIFC Registrar of Companies. For this reason, a company only seeking to de-register is not necessarily required to submit a liquidator’s report. The types of Companies that can deregister are:
- Recognized Companies ( RC)
- Recognized Limited Liability Partnerships ( RLLP)
- Limited Partnerships ( LP)
- Recognized Limited Partnerships ( RLP)
- General Partnerships (GP)
- Recognized General Partnerships ( RGP)
- Recognized Foundations ( RF)
What is a Compulsory Winding Up of Business in DIFC?
A court order initiates a compulsory winding-up process. The legal order is issued due to reasons such as non-compliance by the business, illegal activities, laundering, or bankruptcy.
- The DIFC liquidator has to submit a fully analyzed report so that it can be presented before the court if required.
- The court order in a compulsory winding-up process replaces the Shareholder’s Resolution and the statutory declaration requirements.
- The online portal access, in this case, is furnished to the liquidator to undertake the compulsory winding-up procedure.
Transfer of an Incorporation from DIFC
Businesses may transfer to a different jurisdiction due to different standards and regulations. In this case, companies can apply for a Transfer of Incorporation from the DIFC body. In this vein, DIFC entities ought to consider the below points when applying for the transfer on the DIFC portal:
- Provide a Special Resolution by the Shareholders approving the company’s transfer.
- The company directors ought to declare that the company is solvent and will not enter bankruptcy shortly and also prove that there is no ongoing case in any court where the company has filed for bankruptcy or applied for liquidation.
- A rental or lease termination proof is required if the company did not operate on the DIFC premises unless the lease has expired.
- Companies ought to provide evidence that the new jurisdiction complies with the requirements set by Articles 122 of DIFC companies law and Article 55 (2) of the Limited Partnership Law.
- To provide evidence in the form of a legal opinion that the company can transfer under the new jurisdiction and continue under the laws of the new jurisdiction
- A one-day newspaper publication. The publication must be sixty days before the application of Transfer of Incorporation from DIFC.
- Clearance consent issued by the Dubai Financial Services Authority is required if the company conducts financial activities.
- A certification of continuation certified by the issuing authority has to be provided.
- DIFC authorities provide a No Objection letter for the entity to move from the DIFC jurisdiction.
Avail Top DIFC Company Liquidation Services
To combat the complexities of solely undertaking the liquidation procedure, DIFC companies need to outsource trusted and efficient liquidation services. FAR Consulting Middle East is a registered DIFC liquidator with a proven record of successfully assisting companies in executing liquidation procedures. We assist companies in enforcing liquidation compliance and strategically planning winding-up procedures.
Our expert team renders top-notch services and customer-based solutions that mitigate companies’ specified needs. Thus, call us today and we shall be happy to assist you!
Cost to Cancel Trade License in DIFC
DIFC Company Liquidation Requirements: Documents needed
Auditing of a company within the Dubai International Financial Centre (DIFC) is an organized procedure that has to be systematically prepared. Effective records will ensure that the regulations of DIFC are adhered to and will also assist in smooth audit or liquidation procedure.
The documents that are necessary in the DIFC auditing process were:
- Shareholder Resolution – This is a formal document which approves of auditing or liquidation by the shareholders and gives legal authority to do so.
- DIFC Registrar of Companies (ROC) Filings fees – Filings with the ROC will make sure that the operations and financial documents of the firm are duly registered and compliant.
- Liquidator Appointment – When the company is in the process of liquidation within the company, this document is used to assert that a licensed DIFC-approved liquidator has been brought in to manage the distribution of assets and settling debts.
- Statement of Affairs – a fine account of the financial position of the company in terms of its assets, liabilities, and current obligations which is necessary to the auditor and regulators.
- Publication of Liquidation – Publication to creditors and stakeholders to notify them that the company is in liquidation, which gives the creditors an opportunity to make claims.
- Creditors Settlement – This is a document that shows that all the due debts have been resolved and settled in compliance with the DIFC laws.
The accuracy and completeness of these documents minimizes chances of delays, penalties, and disputes in the process of carrying out the audit.
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Why FAR Consulting Middle East Should be DIFC Auditor?
- Regulatory Clearance requirements in DIFC – Their team makes sure that all auditing and reporting activities remain in line with the DIFC laws and financial standards, and thus minimises the chances of fines or litigation.
- Company Deregistration Assistance – In case of companies which are in liquidation or closure, FAR Consulting provides assistance on all ROC forms, liquidator reports, and regulatory approvals.
- Board Support and Shareholder – The company helps in drafting resolutions, coordinating board approvals, and giving advice to the shareholders regarding compliance issues and financial matters.
What are the most important Advantages of a DIFC Approved Auditor?
- Government Charges in DIFC – Recommended auditors will help to determine what is required to pay beforehand so that the business will not face any unpleasant surprises.
- Final Audit & Accounting Costs – They do in-depth audits and provide clear cost estimates, which assist companies to run their financial needs effectively.
- Registered Office Filing Fees – Auditors will make sure that the correct documents are submitted to ROC which will reduce the cases of errors and delays.
- Outstanding Fines and Penalties – DIFC-approved auditors determine all unpaid fines or penalties and help to settle them before they grow too large.
- Liquidator professional Costs – In situations of liquidation, professional costs are handled and estimated by the auditors to make the process of closure a lot easier.
FAQs
- Voluntary liquidation – wherein the shareholders decide to wind up the company following the payment of all debts.
- Compulsory liquidation – wherein the winding up is ordered by the DIFC Courts, usually owing to insolvency of the company or failure to comply with the law.
Both follow the DIFC Companies Law, but both end with the deregistration of the company formally.
- Passing a resolution for the winding up of the company.
- Appointment of a registered liquidator.
- Settlement of outstanding debts and liabilities.
- Submission of liquidation reports to the DIFC Registrar.
- Final approval and deregistration.
With the help of a professional team of company liquidation in Dubai, these steps can be initiated successfully and with fewer chances of delay.
- Board or shareholder resolution to liquidate
- Trade license and incorporation certificate
- Final audited financials
- Clearance from banks and relevant authorities
- Liquidator’s report confirming the closure
Preparing everything beforehand helps to move the process faster and avoid unnecessary costs.