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LEGAL MEANS & PROCEDURES OF DISSOLVING A COMPANY IN THE UAE
Also referred to as “winding up”, dissolution of a company could be:
- voluntary, for reasons such as bankruptcy, wherein the shareholders of a company agree upon the dissolution, or
- compulsory, such as in furtherance of a court order, wherein one of the shareholders may apply for dissolution without the consent of the others, or a creditor to the company may initiate the procedure.
- Dissolution as per the Company Laws in the UAE
- The authority of the managers or the board of directors will be terminated (Article 315)
- A liquidator will be appointed for determining the assets of the company (Article 316)
- Any liabilities on the company will become immediately payable (Article 324)
- Upon payment of debts, the assets of the company will be divided among the partners (Article 333)
- Once appointed, the liquidator will prepare an inventory of the assets and liabilities of the company, under Article 320 of the law. He will prepare a detailed list of such assets and liabilities along with a balance sheet for the company, and get it signed by the managers/chairman.
- Article 322 states that the liquidator is required to take measures in order to maintain the assets and debts of the company, collect debts from third parties and get them deposited in the bank accounts of the company for the purpose of liquidation.
- As per Article 323 of the law, the liquidator is required to represent the company before the courts, pay the outstanding debts, sell the assets or movables of the company, and do any other act as may be necessary for the purpose of liquidation.
- The liquidator is also supposed to notify the creditors to the company of the liquidation, as well as for the submission of their claims, under Article 324 of the law.
- Article 328 stipulates that the liquidator is required to finish his tasks within the time frame afforded to him in the document of his appointment.
- While the liquidation is underway, the liquidator must submit an interim account of the process to the partners after every 3 months, under Article 329 of the law.
- Once the liquidation process is complete, Article 330 mandates the liquidator to submit a final account of the whole process. Completion of the process will be entered into the commercial register by the liquidator himself.
- Dissolution as per the Bankruptcy Laws in the UAE
- Companies subject to the Commercial Companies Law
- Companies not established as per the Commercial Companies Law and owned by the federal or local government, and them being subject to the Bankruptcy Law as per their legal documents
- Companies and establishments in the Free Zones which do not have their own legislation regarding insolvency and bankruptcy
- A person having the capacity of a merchant under this law
- Licensed civil companies of a professional nature
- The company, if it is unable to pay its debts for a period of 30 working days after the due dates, due to its financial inability (Article 68)
- The creditor(s) to the company, provided their debt amount is not less than 100,000 dirhams (Article 69)
- The Public Prosecution, for public interest requirements, provided that it is proved that the company is insolvent (Article 72)
- Termination of preventive composition procedures under Article 64 of the Bankruptcy Law
- Application on behalf of the company acting in bad faith or intending to stall or escape the financial liabilities
- Restructuring procedures rendered inappropriate for the company
- Failure to reach majority on part of the creditors to the company in terms of restructuring
- Rejection of the restructuring plan by the court as per Article 109 of the law
- Invalidation or termination of the restructuring plan by the court according to Articles 117 and 118 of the law
- Dissolution of Companies in the Free Zones