What Happens to Businesses During Company Liquidation In UAE

When a company in UAE has bills that exceed the available cash flow or has debts that outweigh its assets, it’s legally insolvent and has to undergo company liquidation.

 What is involved in the process of company liquidation in UAE?

The UAE has issued Federal Decree Law (No 19) of 2019 related to Insolvency in UAE, which provides sufficient protections to businesses who are unable to settle liabilities and are currently facing financial distress. There are two kinds of company liquidation: voluntary liquidation and compulsory liquidation as ordered by the court. For more info visit

 Voluntary Liquidation Process

  • Contact an insolvency practitioner in Dubai or anywhere in UAE for a consultation
  • The company director proposes a Standard Resolution for Company Liquidation to the shareholders, a precursor to the process of voluntary liquidation
  • Upon the appointment, the liquidator will assume responsibility for the creditor communication while the powers of the directors’ ceases
  • Documents are prepared with the assistance of the company directors which summarize the situation of the company and likely returns from the voluntary liquidation
  • The liquidator will sell or realize the company assets to give the creditors the best return possible
  • As soon as the process is completed successfully, directors can start any new business or seek directorship in another company

Compulsory Liquidation Process

  • Submission of the application for winding up the company along with the necessary documents
  • Payment of the judicial fees and other expenses
  • Taking measures to preserve the funds of the debtor until financial obligations of the company are settled or until the Court has decided on the application
  • Assignment of a company liquidator in UAE to assist the insolvent company
  • Submission of the debt documents within the period that is specified in the Decree Law, including statements and collaterals, if applicable
  • Preparation of a list of creditors, including their addresses, amount owed to them by the insolvent company, and debt maturity date
  • Presentation of the liquidation plan to the creditors
  • Implementation of the plan
  • Management of the liquidation proceedings
  • Distribution of sale proceeds of debtor’s funds
  • Closure of the liquidation and insolvency procedures

What are the requirements for company liquidation in UAE?




Board resolution of the parent company or corporate shareholder

  • To be signed by the authorized signatory, legalized and notarized by the UAE Consulate or Embassy of place of execution for the document
  • Only applicable to companies with branches or a corporate shareholder
Certificate of incumbency (for the parent company or corporate shareholder)
  • Only applicable to companies with branches or corporate shareholder (must be disregarded if not applicable)
  • The certificate of incumbency has to be issued recently and not more than one year. The certificate has to be legalized and notarized by the UAE Consulate or Embassy of place of issuance
Shareholder’s Resolution
  • This is only applicable for a company with individual shareholders (must be disregarded if not applicable)
  • Resolution must be signed by a shareholder or the power of attorney holder, legalized and notarized
Joint shareholder’s Resolution
  • Only applicable for a joint venture company
  • To be signed by all of the shareholders or each of their authorized representatives notarized
  • Must be submitted together with the other required Resolutions from the corporate shareholders
Power of attorney
  • Only if applicable
  • If it was issued in the UAE, the validity has to be verified with the UAE Court
  • The original POA is required for verification, and it has to be legalized and notarized by the UAE Consulate or Embassy from the place of issuance
  • The POA must provide specifically authority in winding up a company or removing a branch
Passport of the power of attorney holder
  • Only if applicable
  • The original passport is required for verification
Declaration of solvency
  • This is only applicable for companies in DMCC
  • Doesn’t require signing in DMCC or attested and notarized
  • The original signed document has to be presented
  • The declaration has to be signed by company directors
Appointment of a company liquidator
  • The liquidator shall be from an audit firm that’s registered and licensed in UAE by a competent authority
Confirmation of the appointment liquidator
  • The original document is required
Undertaking letter of the parent company
  • To be duly signed by director of the parent company, only applicable for branches
  • No need for legalization and notarization, but the original signed document has to be presented
Appointment of a liquidation committee
  • Only applicable for insolvent companies
Customs clearance
  • Applicable only for companies with industrial and trading license
Memorandum & Articles of Association
  • Applicable for all the companies that are registered and licensed in UAE
  • All original issued MOA and AOA are required for submission
Proof of branch parent liquidation and notarized copy of the appointment of liquidator
  • For parent company of branch being removed will be dissolved or liquidated
  • Only applicable for branches
  • In case branch parent directors can’t pass a resolution, an appointed liquidator in a branch parent liquidator has to pass a resolution (legalized and notarized)
Articles of Association
  • Applicable for companies licensed and registered in UAE
  • All original issued Articles are required for submission
Certificate of Registration
  • Applicable for companies with issued certificate of registration
Share certificate
  • Only applicable for companies with issued share certificates (original)
  • All originals that are issued to company shareholders are to be submitted
Liquidation report
  • Only applicable to companies
  • Must be issued by an appointed liquidator
  • The original document is mandatory for submission
  • For liquidation reports that come with financial statements from the previous FY period, shareholders or company directors must sign the financial statements
Visa cancellation and cancellation of permits and access
  • Only applicable to companies with active visas, permits, and access issued by local authorities
Personnel Secondment Agreement
  • Applicable only for companies with issued personnel secondment agreement (originals)
  • Disregard if none has been issued

There are substantive prerequisites for liquidation proceedings, and the laws on insolvency and bankruptcy are complicated. Seasoned company liquidators in UAE such as Farahat & Co can help you navigate the complexities of the process of company liquidation in UAE.

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