Blogs/newsletters
January 1, 2025
Closing Time: A Step-by-Step Guide to Mainland Company Liquidation in Dubai
The Dubai business journey often has a clear start, but what about the end? When a venture concludes, whether due to a strategic shift, financial reasons, or retirement, the process of company liquidation on the mainland must be handled with precision and full compliance with the Department of Economy and Tourism (DET) and other UAE authorities.
Properly closing your company—known as deregistration—is essential to avoid future legal liabilities, fines, and complications for shareholders and partners. This guide breaks down the multi-stage process for mainland companies, particularly the common Limited Liability Company (LLC) structure, to ensure a smooth exit.
Phase 1: Appointing a Liquidator and Initial Approval
For most commercial company types, including LLCs, you cannot simply close the door. The process begins with formal dissolution proceedings overseen by a licensed professional.
1. Shareholders’ Resolution and Liquidator Appointment
The shareholders must formally pass a Board Resolution (or Minutes of the General Assembly Meeting) that confirms the decision to liquidate the company. This resolution must be notarised by the Notary Public and specifies two crucial points
- The agreement to dissolve the company.
- The official appointment of a registered company liquidator (usually an audit firm licensed in the UAE).
2. Initial Application to DET
The appointed liquidator then issues a formal acceptance letter for their role. This, along with the notarised resolution and other documents, is submitted to the DET (or the licensing authority in the respective Emirate) to request initial license cancellation. The DET then issues a Liquidation Certificate (sometimes called a dissolution certificate).
Phase 2: Public Notification and Grace Period
This stage ensures all external parties, particularly creditors, are aware of the impending
closure and have an opportunity to settle claims.
3. Public Notification (Newspaper Advertisement)
The liquidator is responsible for publishing a formal notice of liquidation in two Arabic local newspapers. This announcement informs the public and creditors that the company is being dissolved.
4. The 45-Day Grace Period
Following the newspaper advertisement, a mandatory 45-day grace period begins. During this time, any creditors, suppliers, or other parties with a financial claim against the company must submit their objections or claims. This period is critical for protecting the interests of the business owners and ensuring all liabilities are accounted for.
Phase 3: Clearance, Compliance, and Final Deregistration
Once the objection period has passed, the focus shifts to securing mandatory clearances from various
government and financial entities.
5. Securing Government Clearances
Before final approval, you must obtain a series of No Objection Certificates (NOCs) and clearances:
- Ministry of Human Resources & Emiratisation (MOHRE): Clearance on all labour issues; cancellation of the Establishment Card and any company-sponsored employee Labour Cards.
- General Directorate of Residency and Foreigners Affairs (GDRFA): Cancellation of all employee and partner residency visas sponsored by the company.
- Utilities and Services: Clearance letters from authorities like DEWA (electricity/water) and telecommunications providers (Etisalat/Du).
- Tax Authorities (FTA): VAT Deregistration and clearance, as well as submitting the final Corporate Tax Return and applying for tax deregistration (if applicable).
- Banks: Closing all corporate bank accounts and obtaining an official Bank Account Closure Letter.
- Landlord: Obtaining a clearance or termination letter for the office/warehouse tenancy (Ejari).
- Customs: Clearance for trading companies.
6. The Final Liquidator’s Report
After settling all debts, liabilities, and obtaining all necessary clearances, the liquidator prepares the Final Liquidation Report. This report is submitted to the DET, along with a declaration from the liquidator and partners confirming that no claims or objections were received (or that all received claims were settled) during the 45-day notice period.
7. Final Fee Payment and Deregistration
The DET reviews the final documents and issues a final fee payment voucher. Once the final fee is paid, the DET issues the Certificate of Deregistration (or final cancellation certificate). The company’s trade license is officially cancelled, marking the formal and legal end of the business entity.
What Happens If You Skip Liquidation? (The Risk of Non-Compliance)
Attempting to simply let a license expire or abandoning a company to avoid the liquidation process is a major risk and a serious mistake. Non-compliance can lead to:
- Accumulated Fines
License renewal fees, late fines, and penalties will continue to accrue, eventually reaching significant amounts.
- Legal Liability
Shareholders and partners remain legally liable for all company debts, fines, and obligations. Creditors can file cases against the individuals.Shareholders and partners remain legally liable for all company debts, fines, and obligations. Creditors can file cases against the individuals.
- Immigration Issues
Partners or general managers may face a travel/immigration ban due to unsettled fines or liabilities, affecting future visas and residency status in the UAE.
While the closure process requires effort, time, and fees, it is the only legally sound way to fully protect yourself and your partners from future liabilities.
Estimated Timeline
Estimated Cost (Varies by Complexity)
~60 to 90 days (Including the mandatory 45-day newspaper notice period and clearance time)
AED 15,000 to AED 25,000+ (Includes government fees, liquidator charges, and advertising costs)
Pro Tip: Start the closure process well before your trade license expiry date. This prevents the added expense of unnecessary renewal fees and late renewal fines. Partnering with a corporate service provider can simplify coordination, especially with the multi-departmental clearances required for mainland entities.
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