Liquidation of a company in Free Zone and Mainland: what is the difference and what to choose?
Irina Ryzhakova
Sep 14, 2023
Two Main Jurisdictions in the UAE
In the United Arab Emirates, companies can register on the mainland or in a free economic zone. A mainland company obtains a license through the economic department of the respective emirate (DED, DET, ADDED) and can operate throughout the UAE. A Free Zone is a specially created area with its own rules and benefits: 100% foreign ownership, simplified registration, and tax preferences.
The choice of jurisdiction affects not only the business model but also the liquidation process. Each zone has its own rules, requirements, timelines, and costs.
Main Differences Between Mainland and Free Zone in the Liquidity Procedure
Regulatory Authorities
Mainland: DED (or DET in Dubai, ADDED in Abu Dhabi), as well as the Ministry of Economy and other agencies.
Free Zone: Its own administration (Free Zone Authority), such as DMCC, JAFZA, DIFC ROC, ADGM RA.
Appointment of Liquidator
Mainland: It is mandatory to appoint a licensed auditor-liquidator for LLCs.
Free Zone: Requirements depend on the zone. In major zones, a liquidator is mandatory. In smaller ones, simplifications or the Striking Off procedure may be possible for offshore companies.
Clearance Procedures
Mainland: Mandatory interaction with various federal and emirate authorities (FTA, MOHRE, immigration, DEWA, etc.).
Free Zone: The main interaction occurs through the administration of the respective free zone. However, permits from external authorities (DEWA, telecommunications companies, immigration services, customs if applicable) are required.
Publications and Permits
Mainland: Publication in two newspapers in English and Arabic is required. The waiting period after publication is 45 days.
Free Zone: Publication in newspapers is required, but there may be differences in requirements regarding the number of newspapers, languages of publication, or the duration of the waiting period after publication.
Timelines and Costs
These parameters can vary significantly. In some Free Zones, the procedure is fast and inexpensive, especially for small companies. In others, such as DIFC or ADGM, liquidation can be complex, lengthy, and costly due to strict requirements and the need for highly skilled professionals.
Mainland: From 60–90 days, cost from AED 15,000.
Free Zone: From 2 weeks to 2–3 months. Cost — from AED 5,000 to 20,000 and above.
Comparison Table of Key Parameters of the Liquidation Process: Mainland and Free Zone
Parameter | Mainland | Free Zone |
Regulatory Authority | DED/DET (Dubai), ADDED (Abu Dhabi), Ministry of Economy of the UAE and other federal/local authorities. | Administration of the respective free zone. |
Appointment of Liquidator | Usually mandatory for LLCs (licensed auditor/liquidator). For Sole Establishment, this may not be required. | Depends on the rules of the Free Zone. Often—mandatory (especially in major zones), but there may be exceptions or simplified procedures. |
Main Stages of Obtaining Permits | Interaction with a wide range of federal and emirate authorities: MOHRE, GDRFA/ICP, DEWA/ADDC, FTA, landlord, etc. | Primary interaction is through the Free Zone administration, but permits from external authorities are also often required: DEWA, telecom, immigration, FTA, etc. |
Publication Requirements | Typically requires publication in two local newspapers (Arabic/English), 45-day waiting period. | Publication is required, but conditions (number of newspapers, languages, waiting period) may vary in different Free Zones. |
Estimated Timelines | For LLC: 60-90 days or more. For Sole Establishment: may be faster. | From 2-6 weeks—for simple cases/offshores. Up to 2-3 months or more—for large zones or complex cases. |
Estimated Total Cost (2025) | For LLC: AED 15,000-20,000 and above. For Sole Establishment: may be cheaper. | From AED 5,000-10,000 (in some small Free Zones) Up to AED 10,000-20,000 and significantly higher (in major or financial Free Zones). |
Free zones often seem more convenient, but this is not always the case. In large and prestigious zones (DIFC, ADGM, DMCC, JAFZA), strict procedures require the involvement of accredited liquidators and can be no less expensive than on the Mainland. However, in less complex zones (SHAMS, KIZAD, DSO) the process may be faster and cheaper.
It is important to be aware of the requirements of your zone in advance, especially if your company is not actively operating or has debts.
Features of Liquidation on the Mainland
The process of closing a mainland company involves several stages:
Decision of the shareholders and appointment of the liquidator (via a notarized resolution).
Submission of documents to DED/DET/ADDED and obtaining primary approval.
Publication of a liquidation announcement in two newspapers (in Arabic and English).
Cancellation of visas, Establishment Card, closure of bank accounts.
Obtaining NOC from MOHRE, GDRFA/ICP, utility and telecom companies, FTA, etc.
Preparation of the final report by the liquidator.
Submission of the final package of documents and report to DED.
Payment of fees and receipt of the license cancellation certificate.
For Sole Establishment, the procedure is simpler: a liquidator and publication may not be required. But permits and settlements with government authorities are mandatory.
A more detailed step-by-step process of liquidation is described in our article "How to Close a Company in the UAE: A Complete Guide to Liquidation"
Features of Liquidation in Some Free Zones
Each free economic zone in the UAE establishes its own rules and procedures for company liquidation. The process varies in complexity, cost, and time expenditure depending on the specific jurisdiction.
DMCC: Dubai Multi Commodities Centre
Regulatory Authority
DMCC Authority
Stages of Liquidation
Decision: Resolution of shareholders/directors on voluntary liquidation and appointment of the liquidator.
Appointment of Liquidator: DMCC-approved auditor as the official liquidator.
Initial Submission of Documents: Resolution, letter of appointment of the liquidator, copies of the founding documents via online portal.
Cancellation of Visas: Revocation of all active visas, PIC, and TAC.
Secondary Submission: Financial documents and confirmations of visa cancellation.
Submission of Originals: Transfer of original founding documents to DMCC.
First Publication: Notification of license termination for 14 days.
Liquidator's Report: Preparation and uploading of the liquidation report.
Second Publication: Deregistration notification for 14 days.
Finalisation: Receipt of letters of cessation of license and deregistration.
Special Requirements
Appointment of an auditing firm registered in the UAE and approved by DMCC.
Submission of original documents.
Letter of no debt from the landlord.
Publication in a local newspaper (in English and Arabic) with a 45-day period for creditors' claims.
Adherence to a 30-day deadline for submission of documents.
Costs and Timelines
Official Fees: AED 4,015 (deregistration) + AED 2,000 (license termination).
Total Cost: AED 8,000–15,000+
Agent Services: AED 8,000–12,000 plus government fees.
Timeline: 45–60 days (up to 10 weeks).
Required Documents
Notarized resolution of the board of directors, letter of appointment of the liquidator, audited report, original trade license, share certificates, copies of Emirates ID and passports, newspaper announcement, letter for closing the bank account, approvals from utility services, customs certificate, landlord approval, confirmations from telecommunications companies, copy of UBO register.
JAFZA: Jebel Ali Free Zone
Regulatory Authority
JAFZA Authority
Stages of Liquidation
Resolution: Making a decision by the board of directors with the owner's personal signature in the JAFZA office.
Appointment of Liquidator: Mandatory appointment of an authorized JAFZA liquidator.
Deregistration Form: Completed and signed by the owner in person.
Return of Documents: Submission of all original founding documents.
Liquidation Report: Submission of the audited report to JAFZA.
Payment of Fee: Payment of the official deregistration fee.
Receipt of Approvals: Clearance Letters from Dubai Customs, RTA, DEWA, Etisalat/Du.
Cancellation of Visas: Revocation of all active visas.
Publication: Announcement of liquidation in newspapers.
Special Requirements
Mandatory appointment of a licensed liquidator.
Submission of final audit report.
Personal presence of the owner for signings.
Costs and Timelines
Official Fee: AED 6,500.
Total Cost: AED 10,000–15,000+
Timeline: Several weeks to several months.
Required Documents
Liquidator's trade license, lease termination form, financial clearance, approvals from RTA and DEWA, original founding documents, resolution, share certificates, approvals from Dubai Customs and Etisalat.
DIFC: Dubai International Financial Centre
Regulatory Authority
DIFC Registrar of Companies (ROC)
Stages of Liquidation
Liquidation Decision: Made by the board of directors/shareholders.
Appointment of Specialist: DIFC-approved insolvency practitioner.
Notification: Formal notice to the Registrar of Companies.
Settlement of Obligations: Repayment of all debts and loans.
Publication: Notice in two local newspapers (45-day period).
Cancellation: Revocation of visas and closure of bank accounts.
Receipt of Approvals: From MOHRE and other authorities.
Final Reports: Audit report and accounts report.
Deregistration: After obtaining all approvals.
Special Requirements
Management only by registered insolvency practitioners.
Strict regulation under the DIFC Bankruptcy Law.
High level of transparency and compliance.
Costs and Timelines
Cost: High, depending on the complexity of the case.
Timeline: Can be lengthy with complex financial issues.
ADGM: Abu Dhabi Global Market
Regulatory Authority
ADGM Registration Authority (RA)
Stages of Liquidation
Declaration of Solvency: Compiled by the directors.
Resolution: Adopted by shareholders/board of directors.
Appointment of Liquidator: ADGM-approved liquidator.
Letter of Consent: From the liquidator to ADGM RA.
Cancellation: Visas, Establishment Card, e-channels.
Termination of Lease: Return of keys.
Return of Documents: Original founding documents.
Closure of Accounts: Corporate bank accounts.
Approval of Permits: From Customs, ADDC, Etisalat/Du.
Publication: Announcement in an English-language newspaper (21-day period).
Deregistration of VAT: At FTA within 20 days.
ESR and UBO: Meeting obligations, transferring registers.
Final Report: Liquidation report to ADGM RA.
Deregistration: From the ADGM register.
Special Requirements
Mandatory appointment of an ADGM-approved liquidator.
Strict adherence to ESR and UBO requirements.
Preparing a Declaration of Solvency.
Deregistration of VAT (penalty up to AED 10,000 for noncompliance).
Costs and Timelines
Cost: Depends on the complexity and fees of specialists.
Timeline: Can be quite lengthy due to multiple stages.
RAKEZ and RAK ICC
RAKEZ
Main Steps: Notification indicating reasons, settling debts, closing accounts, submitting documents, cancelling visas.
Cost: AED 5,000–10,000+
Timeline: Up to 90 days.
RAK ICC (offshore companies)
Procedures: Standard liquidation or simplified "strike-off".
Key Stages:
Resolution adopted by the board of directors/shareholders on the liquidation (may require notarization).
Appointment of a licensed liquidator (can be a registered agent or audit firm).
Submission of closure application to RAK ICC along with founding documents, resolution, letter from liquidator, and confirmation of no obligations.
Closure of bank accounts and disposal of assets.
Submission of the final liquidation report by the liquidator.
Receipt of dissolution certificate or confirmation letter for strike-off.
Cost: AED 3,000–7,000.
Timeline: 2–6 weeks.
Other Zones
SHAMS (Sharjah Media City)
Cost: AED 2,000 (official), AED 5,000–8,000+ (total).
Timeline: About 3 weeks.
KIZAD (Khalifa Industrial Zone Abu Dhabi)
Cost: AED 2,625 (official), AED 6,000–10,000+ (total).
Timeline: About a month.
Requirements: Appointment of a liquidator-auditor, closure of visas and accounts before the process begins.
DSO (Dubai Silicon Oasis)
Cost: AED 2,000 (official), AED 5,000–9,000+ (total).
Timeline: About a month.
Features: Notification 3 months prior to liquidation, report prepared only by a Dubai auditor.
Key Factors for Planning
When choosing a liquidation strategy, consider:
Differences in official fees and overall expenses.
Timelines of procedures.
Qualification requirements for liquidators.
Need for personal presence.
Complexity of paperwork.
Mandatory publications and waiting periods.
Advance planning and involvement of professional consultants to ensure compliance with all requirements of the specific free economic zone are recommended.
Legal support from the article's author
The material was prepared by Irina Ryzhakova, a lawyer with experience in business and private matters in the UAE. Please fill out the form so we can discuss your situation and find the best solution.
