Liquidation of the company in the United Arab Emirates (UAE)
Often business owners and managers are obsessed with liquidating the company, under the pressure of difficult financial circumstances and challenges faced by the business. The UAE Companies Law, Law No. 2 of 2015 devotes a wide area to liquidation and stipulates specific cases. In the event that one or more of them is realized, the company may liquidate itself or file a lawsuit requesting its dissolution and liquidation.
There is no doubt that one of the most prominent of these requirements is what was stipulated in Article 301 of the said law, which states that the company suffers losses of more than half of the company’s capital, or in the worst cases, more than three-quarters of its capital, and there are other reasons such as the partners’ agreement to dissolve The company and its liquidation, or the issuance of a judicial ruling to dissolve and liquidate the company, and other reasons stipulated exclusively in the aforementioned law
When thinking of liquidation, the owners/managers of the company should reflect on the technical and legal challenges that accompany the liquidation process in the UAE, including whether the company is liquidated through the court, or is liquidated by appointing a company liquidator outside the court? And ponder upon other such questions.
Experts do not advise liquidating the company outside the court for several reasons, including:
1- When the company liquidation is under the umbrella of the court, i.e., through a lawsuit, and as soon as the ruling is issued for its dissolution and liquidation, it will be possible for the company liquidator to request the suspension of the implementation of the judgments issued against the company or its managers who have been sentenced in cases related to the company
2- When the liquidation is under the company, it will be very easy for the liquidator to represent the company under liquidation in the issues facing it.
3- When the liquidation is under the umbrella of the court, it will be easy for the company liquidator to obtain from the court the official correspondences necessary to inquire about certain facts or matters that belong to the company or the company is a party to it, such as to inquire about its status with the Federal Tax Authority, or at the customs. Or the labour office, or at the committees for settling and settling disputes, or at other courts in whose jurisdiction the company is not under liquidation, or with free zones, or with banks and other bodies.
4- And when the company liquidation is under the umbrella of the court, the ruling for its liquidation is valid and has no right.
5- When the liquidation is under the umbrella of the court, the work and procedures of the liquidator are under the control of the court, and the liquidator himself has the legal status derived from the fact that the liquidation is carried out by a court decision.
6- When the liquidation is under the umbrella of the court, the liquidator will be able to collect the judgments issued against the company in one execution file, which will facilitate the liquidation procedures on the one hand and facilitate the completion of them on the other hand.
7- In the end, the company liquidator will be able to close the execution file /files, by a court decision.
