Commonly, the firm passes from this phase upon becoming insolvent and by finishing its trading operations. Therefore, it is a difficult procedure for any business. The liquidation solicitors can assist companies with their liquidation process. The first step in the procedure consists of creating a resolution for ending the company. It would be best if you attest the resolution from the notary public and assign a liquidator. Firms must also file important documents to the relevant authority and receive clearance from plenty of government authorities. The first file of documents, consisting of license copy, Memorandum of Association, and shareholders resolution, must be given to the Department of Economic Development with initial payment. The department then provides a main liquidation certificate to the firm. Afterward, the companies should then publish an advertisement in a public newspaper for a specific duration. During this interval, the liquidation attorneys gain clearance from plenty of departments and government offices. They also close down the firm’s bank account.
What is the Primary Law Controlling the Liquidation According to Liquidation Lawyers
Federal Law No.9/2016, also known as the Bankruptcy law, is the main law controlling the rules of insolvency procedure in the UAE as per the liquidation attorneys. The Bankruptcy Law covers most UAE firms, including all firms created as per the UAE Commercial Companies Law (Federal Law No.2 of 2015) and the majority of free zone firms while excluding some free zones with their specific bankruptcy and liquidation procedure. The firms not covered in this law consist of firms in the Dubai International Finance Centre and the Abu Dhabi Global Market.
How to Start a Liquidation Process with the Help of Liquidation Solicitors in Dubai
In short, the Bankruptcy Law offers two main types of choices for businesses experiencing financial setbacks. The first option is preventive composition and the second one is bankruptcy. You can start both these procedures with the help of an application that your liquidation lawyers in Dubai send to the court.
While the preventive composition is a procedure started by the debtor to enquire about the court’s help in making debt settlements with the creditors, the primary aim of this process is to find a remedy to tackle the financial setback while making the business workable. In comparison, the bankruptcy option in settling financial hardships consists of a process that holds directors responsible for filing bankruptcy for the company.
Categories of Company Liquidation
There are categories of company liquidations. They are voluntary/mandatory liquidation and close down/insolvency by the court.
1. Mandatory Liquidation
Moreover, the firms can close down by voluntary liquidation. That can result from its shareholders’ and creditors’ requests. After which, they can take an authentic shareholder’s decision. A legal liquidator is assigned at the shareholder’s meetings. This type of liquidation can also be known as mandatory liquidation. The Liquidation lawyers in Dubai can help in this process.
These documents must be submitted to the Dubai Trade Register and Dubai Economic Dept. for liquidation to take place:
Shareholders notarized decision copy.
A statement assigning liquidator and requesting for liquidation.
There should be a set of certified copies of the documents finalizing liquidation by the company’s directors. Attestation of these copies takes place by the liquidator.
The firm’s registration certificate.
The company’s trade license.
There should be the liquidator’s license along with the letter of acceptance. The liquidation lawyers can help with the liquidation paperwork.
Impact on Employees:
Termination of employees occurs, and they are referred to as main creditors. Therefore, paying their dues might become necessary for some firms.
2. Close down by the Court
When a firm’s financial system comes to a halt, and the firm experiences a financial setback that leads to insolvency so that it cannot pay its debts, the company might file a request to the court to close it down. The creditors of the firm commonly start this procedure. They may initiate this process on behalf of a firm’s director or shareholder with a request to wind up the company.
What happens to the Employees?
Termination of employees occurs with the payment of their end-of-service benefits.