Stages and Procedures of Company Liquidation in the UAE⚖️
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The process of company liquidation involves a series of legal and administrative steps aimed at terminating the company’s legal personality, assessing its assets, and settling its liabilities. This process is conducted according to the following stages:
I. Primary Stages of Liquidation Issuance of the Dissolution Resolution: The process begins with an official resolution to dissolve and liquidate the company, whether it is a voluntary resolution by the General Assembly (partners) or a judicial ruling issued by the competent court.
Appointment of a Legal Liquidator: A certified liquidator registered with the regulatory authorities must be appointed. Their powers and fees must be accurately defined within the appointment resolution.
Registration of the Liquidation Resolution: The resolution is officially registered with the relevant licensing authority (such as the Department of Economy and Tourism or the Free Zone Authority) to obtain a "Company Under Liquidation" certificate.
Public Notice and Publication: The law requires the company to publish the liquidation notice in two local daily newspapers (typically in Arabic and English) to notify creditors and third parties.
Inventory of Assets and Liabilities: The liquidator performs a comprehensive audit of all assets (real estate, bank accounts, receivables) versus the debts and obligations owed by the company.
Settlement of Debts: Financial obligations are paid according to the order of priority stipulated under UAE law.
Distribution of Surplus: After settling all debts, the remaining funds are distributed among the partners based on their respective shares in the capital.
Final Deregistration: The process concludes with the submission of the liquidator's final report, the final strike-off from the Commercial Register, and the cancellation of trade licenses.
II. The Pivotal Role of the Legal Liquidator The liquidator is the primary person responsible for managing the company’s transition. Their duties include:
Legal Representation: Representing the company before government entities, the judiciary, and third parties.
Asset Management: Protecting company assets and selling them legally to convert them into liquidity.
Collection and Payment: Collecting company dues from third parties and settling outstanding debts.
Reporting: Submitting periodic reports and a final report detailing all financial operations during the liquidation period.
Note: The liquidator bears full legal liability towards the company, partners, and third parties for any error or negligence committed during their duties.
III. Protection of Creditors and Employees The UAE legislator has prioritized the protection of affected parties through:
Priority of Payment: Employee entitlements (unpaid wages and end-of-service benefits) are classified as "Preferential Debts," which have priority in payment from the company’s assets.
Legal Notice Period: The law grants creditors a specific period (usually 45 days from the publication date) to submit their financial claims supported by documentation.
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