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Company liquidation in the United Arab Emirates (UAE) is the formal process of winding up a business, settling debts, and distributing assets. Whether due to financial difficulties, strategic restructuring, or voluntary closure, strict compliance with UAE laws and regulations is required. One of the important steps in this process, applicable to both free zone and LLC entities, is the mandatory publication of a newspaper advertisement.
Public notice of the liquidation intent of the company is given by the advertisement by the newspaper to creditors, stakeholders, and the public at large. In such a case, this may open up a transparent information channel that would keep all parties abreast of the liquidation procedures, which may enable parties to raise claims or objections within the stipulated time. In this article, we will provide further details regarding the requirements of company liquidation through a newspaper advertisement in UAE: purpose, content, costs, and timeline.
Requirements for Newspaper Advertisement for Liquidation in UAE
To write liquidation newspaper ads, information or requirements for English and Arabic language advertisements are as follows:
Content Requirements
- Company Name: Write the name of the company to be liquidated clearly.
- Liquidation Information: State the facts that are relevant such as:
- Why is the company being liquidated?
- When are they liquidating?
- Applicable instructions or notices over the liquidation process.
- Contact Information: Write a number or email for contact in case there are queries.
Advertisement Specifications
- Language: Publish the notice in two local newspapers, typically one Arabic and one English, to reach all stakeholders.
- Publication: Choose the best local newspapers with the highest readership to obtain maximum visibility.
- Ad Type: Decide on the format of the ad:
- Text Ads: A simple text will usually appear in the classified sections
- Display Ads: These are larger, more eye-catching ads that can be laden with images.
Steps to Ad Publication
- Choose Newspapers: Decide which local newspapers that will best help you target your audience.
- Draft Copy: Well-written clear copy, made to the newspaper's specifications
- Ad: Use ad agency help if required to place and design an advertisement
- Publication Schedule: Decide on dates to run ads and dates to publish.
Purpose Of Newspaper Advertisement for Liquidation in UAE
Liquidation newspaper advertisements have the following critical purposes:
- Providing Information to Creditors and Stakeholders: A company provides a means of formal notification for creditors, stakeholders, as well as the public through liquidation. Thus, people will know of its status and the actions that may be needed.
- Public Advertisement of Liquidation: A business satisfies the formal requirements for giving public notice of liquidation through advertisement in neighborhood newspapers. It plays an essential role in publicity and will reach more people like potential customers and members of the general public whose interest might be in the company's assets or service.
- Compliance with UAE Laws: The legal requirements of the UAE have instructed the companies that are in the process of liquidation. It is issued notices relating to liquidation in newspapers. Therefore, the necessity of compliance is a very essential factor in avoiding any lawful consequences while ensuring the process of liquidation is conducted under regulatory standards.
Documentation For Liquidation in UAE
- Liquidation Resolution: A resolution of the board or shareholders to effect liquidation.
- Board Resolution: A resolution by the board of directors directing the liquidation and appointing a liquidator.
- Certificate of Registration: This is evidence that the company is registered, which could be required for determining its legal existence.
Other Relevant Documents:
- Declaration of solvency if applicable
- List of creditors and their claims
- Financial statements and records.
- All resolutions pertaining to the company's financial situation.
Costs And Timeframe
- Advertisement Costs: Typical costs (indicative) for placing such an ad in UAE local dailies may range around AED 1,000–1,300, depending on the newspaper, size, and format. However, the actual cost should always be confirmed directly with the newspaper or media agency.
- Publication Timeline: It usually takes around 1-2 weeks for the advertisement to come out in the newspapers to give sufficient notice to all.
Difference Between Free Zone and LLC Liquidation in the UAE
The liquidation processes of Freezone companies and LLCs in the UAE are highly dissimilar. In the case of an LLC, it would have a board resolution followed by authentication through courts. License cancellation at the DED includes clear settlement of outstanding fees, cancellation of visas, and publishing notice in local newspapers, which could take approximately 45 days if executed promptly. On the other hand, free zone companies must follow a much more streamlined procedure than one authority administers. Other than requiring a board resolution and registered liquidator, they must obtain clearances from departments such as customs and telecommunication, amongst other things, as well as pay all dues to the free zone authority. Specific requirements of Freezone companies include zero liabilities, cancellation of all active visas, and submission of a liquidation letter by a registered auditor. Overall, while both types of companies have a structured procedure to follow regarding liquidation, Freezone companies generally experience an efficient process due to centralized governance and fewer bureaucratic hurdles.
Conclusion
The liquidation process in the UAE follows specific steps to ensure that all necessary procedures are completed by the company. Among these steps is publishing a liquidation notice in two local newspapers, typically one in Arabic and one in English. For mainland companies, this notice must remain published for 45 days to allow creditors to submit their claims before the closure becomes effective. The duration may vary slightly in some free zones, depending on their specific regulations.
This step ensures that all interested parties involved in the business are properly notified and have the opportunity to clear their claims before the company’s effective closure. Considering the complexities involved in liquidation, especially for free zone companies, professional assistance is highly recommended to ensure full compliance with legal and regulatory requirements.
Reyson Badger specializes in providing comprehensive liquidation services tailored for businesses across free zones, the mainland, and offshore jurisdictions, ensuring a smooth and hassle-free process. Their expertise helps minimize the challenges associated with business closure and allows company owners to focus on other important aspects of their operations during this period.
