How to Close and Liquidate a Freezone Company in the UAE
There is more to closing a Freezone company in UAE than just stopping operations. You must officially apply to cancel the company through the appropriate freezone authority. Each freezone may have different notification periods, for example JAFZA requests three months’ notice for the office and warehouse facilities and six months’ notice in case of a plot facility, therefore it is important that you check with the freezone in which your company is registered.
Although similar to closing a mainland company, there are numerous steps specific to freezones. According to the majority of freezone authorities, there are three main types of company closures, these include:
• Summary winding up – this is relevant to companies who have no liabilities
• Creditors winding up – this is appropriate when a business passes a resolution which is then followed up with a meeting with the company’s creditors
• Bankruptcy - this can only be requested through the official courts under UAE Commercial Transactions Law No. 18 of 1993.
What is the process of terminating a freezone company?
Terminating a freezone company is quite simple if you follow the below steps:
Step One: Signed Board or Shareholder Resolution
A signed Board or Shareholder Resolution where all partners agree to close the company is required. All authority and responsibilities of the Directors of the company will be terminated upon submission of the company termination request.
Step Two: Official Notification to the Freezone Authority
The freezone will need to be notified regarding the wish to cancel, the freezone will issue you with a cancellation form and the original signed board resolution will need to be submitted along with the cancellation notice. The freezone will then acknowledge the wish to cancel the company by sending a freezone termination invoice.
Once the cancellation payment has been made, the freezone will start the legal process of dissolving the company.
Step Three: NOC’s and Clearance
All utilities and telecommunication services under the company name must be cancelled and a clearance letter received, this also is required for any commercial space under the company name.
Step Four: Employees and Sponsorship
All visas and work permits for employees and dependents under the company name must be cancelled. However, you must bear in mind that in accordance with the UAE Labour Law, a company must provide an employee a two-month paid notice in the instance of company closure before their contracts are terminated.
Step Five: Official Announcement
An official announcement stating that the company is under closure is required in an Arabic newspaper/gazette for 15 days. If no claims are made or are settled, proof of settlement must be provided to the freezone authority for a closure confirmation to be released.
Step Six: Termination Confirmation
Once all the above-mentioned steps are completed, the Freezone authority will release the company termination certificate. You must bear in mind that the whole process of officially cancelling a freezone company can typically take 2 months.
Step Seven: Corporate Bank Accounts
Once the company termination letter has been issued, this can be taken to the bank to cancel the corporate bank account. Any remaining bank balance will be divided between the former company partners unless otherwise stated in the board resolution.
If you are considering officially closing your Freezone LLC or Branch in Dubai, Abu Dhabi or the wider UAE, PRO Partner Group can assist you with this process and all the relevant steps above. For more information on FZE Company or Branch closure please contact Haydee Gimenez at PRO Partner Group direct on +971 54 792 4598 or firstname.lastname@example.org or please contact a member of the team on email@example.com in Abu Dhabi +971 (0)2 448 5120, or Dubai +971 (0)4 456 1761.