How to cancel your company license in Dubai?
Most readers are confused between two concepts being liquidation and license cancellation of businesses registered either in Dubai mainland or other emirates or other free zone authorities. The Commercial lawyers of Dubai have written multiple articles on liquidation of a company registered in Dubai mainland or procedure to file for bankruptcy as per the new laws issued by the government. Nevertheless, the current article speaks about the procedure of license cancellation before relevant authorities and how it is different from liquidation.
In another terms the cancellation of license is also referred to as deregistration of a company with the license issuing authority. The preliminary procedure to this step is to approach the relevant authority for initiating the process of de-registration or cancelling the license issued by them. The process of cancellation of a license is not mentioned under any law in the country, yet it is a procedure adopted by the authorities issuing licenses such as Department of Economic Development for all companies registered in the mainland of Dubai. The process of cancelling the license is an easy way to close the company in UAE in comparison with liquidation. However, it is important for some companies to close the company through liquidation depending upon its circumstances, therefore, it is very much important for the owners of the companies in UAE to understand the difference between liquidation and de-registration.
As clearly defined by the Corporate Lawyers of Dubai, the process of deregistration involves filing an application to terminate or cancel the license of the company along with the relevant documents as requested by the licensing authorities. The primary document wherein shall be the board resolution issued by the board of directors of the company to cancel the trade license of the company. Secondly, the company shall submit a no-objection certificate from several authorities such as DEWA, TRA (Telecommunication Regulatory Authority) and others as requested by the licensing authority. The company shall thereafter cancel the memorandum of association of the company.
Upon reviewing the relevant documents submitted by the company, the Department of Economic Development or other relevant authority shall request the company to pay the fees for de-registration and will post the cancellation of the company’s license in two local newspaper for a minimum of thirty days for any objections to be received by any creditor. In case no one objects the licensing authority may issue the license cancellation certificate.
On the other hand, liquidation of a company is an application registered before the court authorities under a resolution of the shareholders or on the order of the court. Under the said process the court appoints a liquidator to prepare the financial statements of the company to pay off the creditors of the company.
In comparison, the process of license cancellation is the fastest way to close or shut down a limited liability company without informing the creditors of the company and leaving the decisions of liquidating assets of the company to the partners or shareholders of the company rather than the liquidator or the court. Nonetheless, the companies shall be very careful while undergoing the process of deregistration with regards to following procedural steps properly and failure to adhere with such steps can pose personal liabilities on managers or directors of the company.