Many entrepreneurs think that closing a company in the UAE is simply stopping work and leaving. In reality, informal closure can be more costly than proper liquidation.

Without official closure, fines accumulate, legal liabilities arise for owners, and problems occur with future businesses and even entry into the country.

Why the UAE requires formal liquidation

The UAE positions itself as a global business hub. This requires clear rules at all stages — from registration to company closure.

Formal liquidation guarantees:

• Fulfilment of obligations to creditors and employees.

• Payment of all taxes and fees to the government.

• No 'abandoned' companies with debts.

Strict liquidation procedures are part of the strategy for creating a reliable investment climate.

Two methods of liquidation: voluntary and compulsory

Voluntary Liquidation

Initiated by the owners or shareholders themselves. The reasons vary:

• business goals achieved,

• market conditions have changed,

• business has become unprofitable,

• want to exit the business.

In certain areas, such as DMCC, there are subtypes:

• Solvent Winding-Up — liquidation of a solvent company.

• Summary Winding-Up — simplified liquidation within a short timeframe.

Compulsory Liquidation

Initiated by external parties without the consent of the owners. This can include:

• Creditors through the courts — if the company cannot pay its debts (i.e., in case of insolvency).

• Regulatory authorities — in cases of serious or systematic violations of legislation or licensing rules.

Compulsory liquidation is less controllable, takes longer, and is more expensive for the owners.

It is important to understand: even if you plan to close the company voluntarily, delays or unpaid debts could lead to compulsory liquidation through the courts.

Step-by-step liquidation process

The liquidation process varies depending on jurisdiction and type of company, but the main stages are the same for all. The detailed differences between Mainland and Free Zone will be discussed in the article Liquidation of a company in Free Zone and Mainland: what is the difference and what to choose.

Step 1: Decision-making and appointment of the liquidator

What to do:

• Hold a general meeting of shareholders or board of directors.

• Make a decision on liquidation and formalise the minutes or resolution.

• Notarise the minutes (for mainland companies).

• Appoint a liquidator.

• Receive a letter from the liquidator confirming their consent.

Who can be a liquidator:

• Licensed auditing firm.

• Qualified specialist approved by regulators.

Step 2: Notify regulatory authorities and publication in media

The company is required to notify the relevant registering authority about the start of the liquidation process. Along with the notification, a package of primary documents must be submitted, including the minutes/resolution of liquidation and a letter from the liquidator.

Where to submit notifications:

• Mainland companies: Department of Economic Development (DED) or Dubai Economy and Tourism (DET)

• Free Zone companies: administration of the respective zone

Mandatory publication:

• Announcement in two newspapers — in Arabic and English.

• Deadline for creditor claims — 45 days from the publication date.

Step 3: Settle liabilities and obtain clearances

The most labor-intensive step, which includes fulfilling all company obligations and obtaining confirmations of no outstanding debts. Key actions at this stage:

Close all visas and accounts:

• Cancel the residency visas of employees, founders, and managers.

• Cancel the Establishment Card.

• Close corporate bank accounts and obtain closure confirmation letters (Bank Account Closure Letters).

Obtain clearance certificates of no outstanding debts (NOCs/Clearance Certificates) from:

• Utility services (DEWA in Dubai, SEWA in Sharjah, FEWA, ADDC in Abu Dhabi).

• Telecommunication companies (Etisalat, Du).

• Ministry of Human Resources and Emiratisation (MOHRE).

• Immigration authorities (GDRFA/ICP).

• Customs authorities (if the company was involved in import-export).

• Landlord.

• Federal Tax Authority (FTA) for VAT and corporate tax.

Step 4: Final report of the liquidator

After the 45-day waiting period, the liquidator:

• conducts the final audit,

• prepares a liquidation report,

• confirms no debts or impediments to closure,

• submits the report with documents to the registering authority.

Step 5: Obtain a certificate of liquidation

The registering authority issues:

• Certificate of license termination (License Termination Letter/Certificate).

• Certificate of company liquidation (De-registration Letter/Certificate).

From the moment these documents are issued, the company is officially considered liquidated, and its name is removed from the register.

Required documents

A large package of documents is required for the liquidation of a company in the UAE. Here is a general list that applies to most areas — Mainland and Free Zone. However, specific requirements may vary, so it is best to clarify the current list with the registering authority in your zone.

The large list of documents reflects the serious approach of UAE regulators to company liquidation. Each document confirms the completion of a specific step in the process. Such detailed verification of each step protects against future disputes and claims against former owners.

Role and responsibilities of the liquidator

The liquidator is the central figure in the process, responsible for the correctness of all procedures. Their main duties include:

• coordinating all stages of liquidation,

• inventory and realisation of assets,

• identifying and settling debts to creditors,

• interacting with government authorities,

• preparing the final report,

• distributing remaining assets among shareholders.

Errors by the liquidator can lead to delays, fines, and legal issues. Only licensed and qualified liquidators can fulfil this role. The speed and success of the entire procedure depend on their competence.

Qualified liquidators ensure:

• knowledge of current requirements across all jurisdictions,

• experience in interacting with regulators,

• assistance in avoiding common mistakes,

• planning and coordinating all stages.

Liquidation timelines

General timeframes: from a few weeks to several months. 

Approximate timelines by jurisdictions:

• DMCC: 45-60 days

• Mainland LLC in Dubai: 60-90 days

• JAFZA: several weeks to several months

• ADGM: a minimum of 21 days just for notifying creditors

• Offshore companies: 2-6 weeks

Factors affecting liquidation timelines include:

• type and form of company,

• registration jurisdiction,

• debts owed,

• speed of document collection,

• mandatory 45-day waiting period.

Key to successful liquidation

Liquidation is a legal necessity, not a choice. The process is complex: many documents, different government authorities, strict deadlines. Attempting to close a business independently without experience can lead to costly mistakes — both financially and in terms of reputation. Be mindful of the following risks:

• fines for violations,

• the need to redo procedures,

• accumulation of debts due to delays,

• problems for owners and directors,

• complications for future businesses.

Key principles of successful liquidation:

• Plan ahead. Early planning allows for calm document collection, settling obligations, and financial preparation.

• Seek professional help. Investment in qualified assistance pays off by reducing risks and saving time.

Liquidation is a managed project, not just filling out forms. The right approach from the start will protect you from future problems.