Company Liquidation and Closure in the UAE: Mainland, Free Zone, and Offshore Procedures

Closing a business in the United Arab Emirates requires compliance with a formal legal process. To ensure compliance, all financial and regulatory obligations must be settled, including the cancellation of licenses, visas, and permits, and formal de-registration with the relevant authorities. This guide provides a comprehensive overview of the required steps for closing a business across UAE jurisdictions.

Closing a Mainland Business in the UAE

Mainland companies in the UAE (licensed through the Department of Economic Development, DED, in each emirate) must undergo a government-supervised liquidation process. This typically involves two stages – an initial liquidation notice period and a final license cancellation. In practice, closing a mainland company usually takes around 2–3 months, largely due to the required 45-day notice period and time needed to gather clearances.  Below are the key steps for closing a mainland business:

1. Shareholder Resolution & Liquidator Appointment: Owners must pass a notarized resolution to liquidate the company and appoint a licensed liquidator (required for LLCs and most entities)​. The resolution is attested by a notary and the liquidator provides an official acceptance letter of their appointment.
2. Apply for License Cancellation (Stage 1): Submit the liquidation application to DED along with the resolution and the liquidator’s letter. The DED (or relevant economic department) issues an initial liquidation certificate or approval, allowing the closure process to proceed.
3. Publish Liquidation Notice: Announce the company’s liquidation in two local newspapers (as legally required) and allow a 45-day notice period for any creditors to come forward with claims. This public notice protects third-party rights by giving advance warning of the closure.
4. Clearances from Government Departments: Cancel the company’s establishment card and employee visas through MOHRE and immigration. File final tax returns and apply for VAT de-registration, if applicable. Close utility and telecom accounts, and cancel any municipal licenses or leases after settling outstanding dues.
5. Settling Debts and Liquidator’s Final Report: Ensure all financial obligations are settled before finalizing the closure. This includes paying off any outstanding supplier invoices, bank loans or credit facilities, employee end-of-service benefits, and government fines. Close the company’s bank accounts and obtain closure confirmation letters from the bank.
6. Final License Cancellation (Stage 2): Submit the liquidator’s final report along with all clearance letters to the DED to complete the deregistration. The DED will review the documents and, upon approval, issue a Certificate of Deregistration (license cancellation), officially confirming that the company is closed​.

Closing a Free Zone Company in the UAE

Each free zone in the UAE has its own procedures for company deregistration, but the overall process is similar: you must notify the free zone authority, settle all obligations, and obtain a termination approval. Free zone company closures are typically more straightforward than mainland, as they are managed directly by the free zone authority. However, their procedures must still be followed carefully. Below are the general steps:

1. Notify the Free Zone and Review Exit Requirements: Inform the free zone authority of your intent to close the company, following any advance notice period they require. Ensure the trade license is still valid at the time you initiate the closure (you generally cannot liquidate an expired license).
2. Board Resolution to Dissolve the Company: The shareholders (or sole owner) must pass a resolution to liquidate the free zone company. This resolution should state the company name, license number, confirm the decision to close, and (if needed) appoint a liquidator​.
3. Appoint a Liquidator (If Required): Many free zones mandate appointing a licensed liquidator, especially if the company has multiple shareholders, outstanding liabilities, or employees on its visa​. Free zones like DMCC and JAFZA, for instance, require a liquidator who will issue a final liquidation report and handle any creditor notification.
4. Cancel Visas and Work Permits: Before the license can be canceled, all residencies under the company must be cleared. Provide employees with the legally required notice period (commonly two months) and settle their final salaries and end-of-service gratuities.
5. Settle Financial Obligations: Clear all outstanding payments, including lease, utilities, telecom services, and any free zone fees or penalties.
6. Tax Deregistration (if applicable): If your free zone company is registered for VAT, you need to file a final VAT return and apply to deregister the tax registration as part of the closure process. Submit a VAT deregistration request through the FTA online portal and settle any payable tax.
7. Submit the Closure Application to the Free Zone Authority: With all clearances and documents in hand, file an official application to cancel the company’s license. Attach all required documents, which usually include: the shareholder resolution, the liquidator’s final report, and copies of all NOC/clearance letters from each department.
8. Obtain the De-registration Certificate: Once all requirements are fulfilled, the free zone authority will issue an official De-registration or License Cancellation Certificate confirming that the company has been removed from the free zone registry that serves as final proof of de-registration.

The timeframe for free zone company liquidation is typically between one to two months​. Simpler cases (no employees or leases) can be faster, while companies with many moving parts may take closer to the higher end of that range.

Closing an Offshore Company in the UAE

Offshore companies in the UAE—such as those under RAK ICC, JAFZA Offshore, or Ajman Offshore—follow a distinct process, as they don’t operate within the mainland or free zones. Termination can occur either through striking off or voluntary liquidation, with the latter being the preferred method to properly settle affairs and avoid ongoing liabilities. Below are the steps to voluntarily close an offshore company:

1. Shareholder Resolution to Liquidate: The owners of the offshore company must sign a board resolution or written shareholder consent agreeing to wind up the company. Offshore registries typically require this document to be notarized (and if shareholders are abroad, it may need attestation up to UAE embassy, depending on the jurisdiction’s rules).
2. Appoint a Licensed Liquidator: In offshore jurisdictions, a licensed liquidator (or an approved accounting firm) must oversee the dissolution. The liquidator will be responsible for preparing liquidation documents, notifying any creditors, and eventually issuing a liquidation report.
3. Submit a Liquidation Application to the Offshore Registrar: File the official application for company closure with the offshore registry (e.g., RAK ICC or JAFZA Offshore department). This involves submitting all required documentation through the registered agent to the registrar.
4. Settle Liabilities and Close Accounts: Ensure all financial matters are concluded, including the closure of corporate bank accounts and proper disposal or transfer of company assets.
5. Liquidator’s Statement: After the notice period and once all matters are settled, the liquidator prepares a final report or liquidation statement confirming that the company has been fully wound up, with no remaining assets or liabilities​.
6. Deregistration and Dissolution Certificate: Once all requirements are met, the offshore registrar will remove the company from the register and issue an official Certificate of Dissolution. This document confirms the company is legally dissolved and should be retained for any future reference.

Offshore company liquidations are generally faster than mainland or free zone – typically on the order of a few weeks. If all papers are in order, the process can take as little as 2–6 weeks.

Conclusion

Whether operating on the mainland, in a free zone, or offshore, it is critical to initiate the closure process early to allow sufficient time for mandatory notice periods, approvals, and deregistration procedures, including VAT and corporate tax, in line with the latest UAE regulations.

A formal liquidation ensures that all obligations — including employee settlements, creditor payments, and government record updates — are properly addressed, enabling a clean and liability-free exit. It is equally important to retain all closure-related documentation, such as cancellation certificates and clearance letters, as proof of compliance for any future reference.

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