Essential Steps For Closing Down A Company In The UAE

6 Mins read

Immense business opportunities available attract freelancers in the UAE. Considered the trade capital of the Middle East, United Arab Emirates stands out among the nations with many registered companies. Most world mega corporations have established their presence in this hub due to its strategic location to the East and western worlds. Registration of a business is a process well set under various stipulations guided by the law. 

However, when it comes to closing down a company, there is a process involved. A lot of companies incur hefty fines leading to substantial financial losses for failing to comply with the laid down company closure procedure as provided for by the law of the UAE. Other business entities may be blacklisted or may encounter restrictions, especially when seeking new licenses. Worst case scenario, a total ban is enforced. Closure of a business entity is a well-structured process in the UAE that can be well executed by a resident freelance business consultant who is conversant with the set regulations and procedures. By doing so, you will be sure of a smooth exit, which will, in turn, guarantee an easy entry in case you want to opt back in or seek any other licenses in the future. Each trading area has guidelines stipulating the process in cases when winding up a business. Consider the below as guidelines for free zone and mainland trading areas.

How To Close Down Different Types Of Companies In The UAE?

UAE has emerged as the trade capital according to various publications and studies regarding where best to do business in the Middle East. It is the preferred trading area by many businesses however, registering and closing a company in the United Arab Emirates vary on regulations depending on the trading area. Each trade jurisdiction has its licensing authority and carries the mandate with registration and deregistration of companies. Below are the steps involved when winding up a company within the UAE.

Closing A Company In A Free Zone

Free zones represent physical entities having their own set of rules and regulations. The zones attract many investors across the world by offering foreign firms world-class infrastructure, tax waivers, and asset security. In addition to all the offers and securities, the fact that they guarantee full foreign ownership of businesses just crowns the UAE free zones a success.   There are several zones, and each has its unique benefits and limitations, which set upon the rules governing operations within the area. It is good to read the regulations carefully and understand them. Consult where necessary and make comparisons with other free zones before making a final decision on where to set up. Once a company is issued a permit to trade in a particular zone, it can only transact business within the confines of that area. It cannot operate elsewhere in the UAE. However, if a company desires to trade outside in a non-free zone area, then it must enlist the services of a local distributor or an agent. Some free zones allow the transfer of companies from one zone to another. Despite limitations, the main lure for many freelancers in the UAE to set up companies in free zones is the tax benefits that are unmatched as compared in non-free zone areas. There are three main types of company closures under the free zone, namely; 

  • Bankruptcy: Filed and declared by court in line with the UAE Commercial Transactions Law No. 18 of 1993.
  • Summary winding up: In cases where a company has no liabilities or can discharge the same within six months, backed by a statement of solvency.
  • Creditors winding up: It occurs when a company holds a board meeting and passes a resolution to wind up then summons for a gathering with the creditors to ratify the same.

To close business, you must make a formal application spelling out the intention to cancel operations through the relevant free zone authority. Bearing in mind that each zone has its specified period of notification, it is, therefore, advisable to plan and initiate the company’s closure process at least three months before permit expiry to allow a sufficient period for liquidation proceedings.  The advance application also eliminates extra expenses, which might incur in case of an expired license whereby the authority will have to request a renewed permit before a claim of any nature can be received.  

Below are simple steps to follow to complete the process.

Step 1: Signed Resolution by Board or Shareholders

Have at hand a copy of duly signed board or shareholder resolution in which all members have agreed to wind up the company. Upon submission of the company’s request for closure, the mandate previously held by the company directors stands nullified.

Step 2: Formal Notification to the Authority

The intention to cancel operations has to reach the free zone authority formally. The zone then responds by issuing a cancellation form to that effect. At this point, submit a copy of the original signed board resolution together with the cancellation notice. The authority then sends a termination invoice as acknowledgment.

Upon paying the cancellation fee on the invoice, the zone invokes the legal process of liquidation.

Step 3: Non-Objective Certificates (NOCs) and Clearance

All utilities, including telecommunications belonging to the company, must be cleared and a clearance letter obtained to that effect. The same goes for any commercial space registered under the company.

Step 4: Sponsorship and Employees 

Work permits and visas secured under the company’s name for staff and dependents should face cancelation. However, it is essential to note that under the UAE Labor Law, it provides that a business must issue an employee a two-month paid notice in case of liquidation before terminating their contracts.

Step 5: Formal Announcement

Place an official announcement for fifteen days in an Arabic gazette stating that the company is undergoing liquidation. In case claims are filed and settled, then proof of settlement must be availed to the free zone authority for release of the notice confirming liquidation.

Step 6: Termination Certificate.

Upon successful completion of the steps above, the Free zone authority issues the company termination certificate.

Step 7: Corporate Bank Accounts Closure

After receiving the company termination letter, you can now proceed to the bank to close the corporate account previously held by the company. Unless otherwise stated under the board resolutions, any balance in the bank shall move to former company shareholders equally.

Closing A Mainland Company 

Mainland companies are registered and licensed under the government of a particular Emirate and sponsored by a UAE citizen as a mandatory requirement. The economic development department of each government has the mandate to issue licenses to mainland limited liability companies (LLCs) under its territorial borders. Mainland LLCs can trade within the broader United Arab Emirates and internationally. When closing down a mainland company, there are procedures to be adhered to as required by law. Failure to comply may result in hefty fines, blacklisting, or impediments when applying for a new business license in the future. Below are the steps and requirements when closing the business. 

Step 1: Dissolution Of The Company and Appointment Of A liquidator

  • Prepare minutes of the partners’ meeting confirming the company liquidation agenda and the notice of appointment of a liquidator, with all having agreed by proof of appending signature. The minutes should go through a notary. 
  • Make ready the letter issued by the liquidator accepting to facilitate in the process of liquidation of the company together with his business license copy, auditor’s registration certificate, and a notarized signature.
  • Obtain and fill out the Registration and Licensing Application form and forward the above documents through the relevant authority.
  • A legal advisor in the Department of Economic Development will review all the above documents submitted and approve the dissolution documents and nomination of the liquidator. 
  • A payment voucher for liquidation request and liquidator appointment is issued. Upon payment of the fee, the company dissolution documents will be given to the company to carry on with the next requirement as dictated by the process. 
  • Publish notice of liquidation for one day in two Arabic newspapers giving the free 45 days for submission of complaints or claims by the public.

Step 2: Deregistration Of The Company

  • Prepare the final audited report of the company
  • Upon lapse of complaints and claims announcement period, prepare a statement from the partners and liquidator declaring so.
  • Give the established card to the Ministry of Human Resource and Emiratisation for cancellation.
  • Cancel foreign visas sponsored by the company
  • Obtain company activity-specific approvals from relevant authorities (if required)
  • Seek the Ministry of Economy’s decision to rebuke the company’s permit (applies to private shareholding companies only)
  • Get the Securities and Commodities Authority verdict to cancel the company’s trading License (applies to public shareholding companies)
  • Surrender all the above documents together with documents in Step 1 to the relevant channels to receive the nod by the Department of Economic Development legal advisor.
  • You will receive the deregistration fees voucher. After paying, you will receive the certificate of deregistration.

LLCs’ closure process generally takes between sixty and sixty-five days, of which forty-five serve as notice period following publication of local, new papers. During the 45-day notice period, obtain other documents and clearance certificates. The company then moves to prepare an audit report (company liquidation report) through a legal firm or a registered auditing agency. 

Upon expiry of the notice period, the company liquidation report, together with all documents and the copy of the newspaper bearing the 45- day notice, are submitted to the relevant authority, which in turn issues a license cancellation invoice. Upon payment of the fees, the administration then moves to grant the license cancellation certificate.


There are many documents required during the closure of a company. Prior planning is vital to enable you to submit all the requirements without risking the expense of license renewal. The process can be straightforward and smooth for a freelancer in the UAE by engaging an experienced local consultant. 

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