Closing a business in a free zone
According to the website of DMCC, there are three types of closures. They are:
- Summary winding up - this can be done in cases where a company has either no liabilities or is able to discharge its liabilities within 6 months and commences with a statement of solvency
- Creditors winding up - this can be done when the company passes a resolution for winding up and is followed by a meeting with the company's creditors
- Bankruptcy - this can be done by the court under UAE Commercial Transactions Law No. 18 of 1993.
Closing a business entails more than just ceasing operations. In DMCC, you need to apply for closing the business through the member portal. The authorities, duties and responsibilities of the Directors of the company will be terminated as an effect of the submission of the company termination application. The application will be reviewed and processed. This will be followed by an announcement in a local Arabic newspaper. DMCC authorities will then file the final termination of the company and issue termination letters.
In JAFZA, you must notify the authorities three months prior for the office and warehouse facility and 6 months prior for plot facility.
In all cases, you will need to cancel the employees' visas and their work permits. Dubai portal explains that this requires coordination with both Department of Naturalisation and Residency and Ministry of Human Resources and Emiratisation.
As per the UAE's Labour Law, employers are required to give their employees a two-month, paid notice period before terminating their contracts. In many cases, employees can keep their residency visas until the company's trade licence runs out. Then, the company needs to cancel utilities and telecommunication services. Collect an NOC from the utilities providing company for processing the closure.
Useful links:
FAQs
How to close a company?
You will need to notify the free zone authority in advance as per their requirement. The intention for closing the company shall be published in an Arabic newspaper. You will need NOC from utility providing companies and other applicable government/free zone departments. Once all the paperwork is cleared, you need to cancel your employees' visas and work permits and close bank accounts. Finally, you should receive an official termination letter from the free zone authority.
Updated On :
29 Oct 2024
