For any company in the United Arab Emirates (UAE), that intends to shut down its business permanently, it is pertinent to liquidate the company as per the procedures provided by the laws governing the establishment and dissolution of the companies. There are majorly two culprits that make the liquidation of a company in the UAE mandatory:
- The original objective behind the company establishment is accomplished and the entity is not required anymore;
- The entity is considered to be bankrupt.
The liquidation process should be duly completed failing which could lead you to confront serious consequences later if you have plans to get involved in other businesses or set up another company. Even if you don’t owe anything to your creditors, you still should formally liquidate a company rather before your trade licence expires. As there are numerous procedures to be followed on liquidation and avoiding or procrastinating these may cause various penalties and could also lead to the ‘blacklisting’ of your company (along with its directors and shareholders) by government authorities in the UAE.