Need to move or relocate from the UAE? Here’s how to close a business with no liabilities

The procedures, fees and documents that you need to cancel a trade licence

Dubai: Whether you are planning to relocate out of the UAE or want to shift to a new business, it is important to legally close the business entity and all related permits associated with it when you have made your decision to close it down. Here is how you can complete the formalities for closing your business and cancelling its licence properly.

Why do I need to cancel my business licence?

It is important for relevant government entities to know that you are no longer in the business so you will avoid any accumulated fines and penalties incurred upon your licence, when it is not renewed upon expiry date.

“If you do not cancel the licence, after a one-month grace period, a fine of Dh200 will be imposed every month,” Sirajudeen Ummer, Public Relations Officer at Dubai-based First Gate Business Services, told Gulf News.

If you are in a shareholding company, it is important to discharge your liabilities towards creditors and partners and protect your interests and shares.

If you do not cancel the licence, after a one-month grace period, a fine of Dh200 will be imposed every month.- Sirajudeen Ummer, Public Relations Officer at Dubai-based First Gate Business Services

It is also wise to put your goodwill and business reputation in perspective, if you decide to open a business again.

Mainland companies

Formalities for cancelling your business licence

Cancelling the licence of a mainland company depends on the form of your company. For establishments and sole proprietorships, the process is simple because all you need to do is to apply for cancellation through the economic department in your emirate and acquire all relevant clearances from:

• Ministry of Human Resources and Emiratisation

• Directorate of Residency and Foreigners Affairs

• the relevant water and electricity authority

• the leasing entity etc.

However, for companies with shares, the process is longer because it requires liquidating the shares, collecting the debts and paying the creditors before finalising with the economic department.

Who should I approach?

Each emirate has a department for economic development which issues these licences. These are the authorities for each emirate.

Abu Dhabi Department of Economic Development - https://added.gov.ae/

Dubai Department for Economic Development - https://dubaided.gov.ae/

Sharjah Department for Economic Development - https://www.sedd.ae/web/sedd/home

Ajman Department for economic development - https://www.ajmanded.ae/#openModal

Fujairah Department for Economic Development - https://fujairah.ae/ar/Pages/default.aspx

Ras Al Khaimah Department for Economic Development - http://www.ded.rak.ae/

Umm Al Quwain Department of Economic Development - http://ded.uaq.ae/en/home.html

According to information provided by First Gate Business Services you would need to follow these steps if you wish to cancel your trade licence in Dubai:

1. Cancel the work permits of all existing employees, if any.

2. Get the ‘Labour Establishment Card Cancellation form’ typed from Tas'heel Center. Cost Dh83.

3. Get seal and authorised signature of the company on the application and submit at any of the Tas'heel Center. You will get the Labour Establishment Cancellation receipt from the Tas'heel Centre.

4. You would then need to get the ‘DED licence cancellation form’ typed out from the typing centre, get the signature of the partner/sponsor and go to the DED counter at Tas'heel Centre for Licence cancellation. The Partner / PRO / Sponsor is required for submission.

If you do not have a Labour Establishment Card for your licence, follow this procedure:

• Go to the Typing Centre adjacent to Ministry of Human Resources and Emiratisation (MOHRE) in Al Qusais and get a letter typed in Arabic stating that this licence does not have an Establishment Card.

• Take this letter to MOHRE Customer Care counter and to get it sealed.

• Now get the DED licence cancellation form prepared from the typing centre, get the signature of partner/sponsor and go to the DED counter at Tas'heel Centre for Licence cancellation.

Licence Cancellation Fee:

• Dh1,020 for DED

• Dh105 Service Charge for Tas'heel/DED Service Centre

• Dh21 Afaq Commission for Aafaq Payment counter (including VAT) (This is a service charge for processing the payment)

Total cost: Dh1,146

5. Take this certificate to Immigration office in Jaffliya (or any branch) along with a request letter in Arabic and original Immigration Establishment Card. If the card is lost, you will have to get Certificate of Loss from Police. To get this certificate, prepare a request letter in Arabic and submit it at your nearest police station and pay Dh20. Certificate will be issued after two days.

NOTE: No fees are required at Immigration for cancellation, but Dh50 fine will be charged for each month after expiry of the card.

Companies which require a liquidator

You need to appoint a liquidator if the legal form of your company is one of these:

• General Partnership

• Limited Liability Company

• Simple Limited Partnership

• Public Joint Stock Company

• Private Joint Stock Company

What are the steps to dissolve all kinds of companies (except civil works companies)?

The process involves two stages:

Stage 1:

• Prepare a notarised minutes of the general assembly confirming the company liquidation and the appointment of a liquidator.

• Arrange an official letter by a registered liquidator accepting the duty.

• Apply for cancellation by filling the required form through DED or other approved channels.

• DED will issue a liquidation certificate.

• Publish the notice of liquidation in two local newspapers.

• The notice gives the debtors a grace period of 45 days from the date of issue to submit their claims.

Stage 2:

• Submit to DED a declaration letter from the liquidator and the partners indicating no objection from any other parties during the grace period.

• Collect required approvals of other government bodies to cancel a licence.

• Cancel the firm card at Ministry of Human Resources and Emiratisation.

• Cancel the foreign partners' visas sponsored by the company at the respective General Directorate of Residency & Foreigners Affairs

• Submit all the above documents to get the approval for final cancellation.

• DED will determine the fees.

• You can receive the certificate of deregistration (cancellation) after paying the requested fees.

Freezing a trade licence

Freezing a licence is different than terminating a licence completely.

In Dubai, companies may keep their trade licences inactive for three years by paying a certain freezing fee. However, they cannot extend it beyond that specific period.

What are the steps to close a civil works company?

• Fill in the required cancellation form.

• Cancel the firm card at Ministry of Human Resources and Emiratisation.

• Cancel the foreign partners' visas sponsored by the company at the respective General Directorate of Residency & Foreigners Affairs.

• Collect required approvals of other government bodies to cancel a licence.

• Prepare a partnership cancellation contract authenticated by the notary public.

• Submit the above documents and collect licence cancellation certificate.

What are the procedures and documents required to cancel a sole proprietorship licence?

For sole proprietorships, you need a no objection letter from Ministry of Human Resources and Emiratisation, in addition to a residence cancellation proof for non-Gulf nationals.

What are the conditions for freezing a licence?

You need to provide:

• a letter from the company or the institution requesting to stop the licensing temporarily

• a letter from Ministry of Human Resources and Emiratisation indicating the absence of sponsored people on the licence

• a report from the inspection division in DED.

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.

How to close a free zone 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.

- Information courtesy government.ae