The idea of “deregistration” of a business, or alternatively, “licence cancellation,” is frequently used by the UAE’s licencing agencies to terminate limited liability firms. This essay will focus on the execution of “deregistration,” with specific attention paid to the significant liabilities involved with the transaction, regardless of the debate over the concept’s meaning and legal foundation. The practical implementation of the notion will be covered in the first portion of this essay, while responsibility and other legal ramifications will be covered in the second half.

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The primary conditions for deregistration and the primary distinction between deregistration and the idea of liquidation will be covered in this section.

Deregistration is a practical practices implemented by some of the concerned licensing agencies in the various Emirates with the ultimate goal of cancelling a license and closing down a firm. It is not an established concept under a particular rule in the UAE. The advantage of deregistration is that it is a short procedure with fewer onerous criteria than the liquidation process, which, according to UAE legislation, is the standard and only method for winding down businesses at the majority of licensing bodies. Therefore, it’s critical to recognize the differences between the liquidation and deregistration operations and comprehend the prerequisites for each.

Deregistration

The internal regulations and directives provided by the pertinent licensing agencies often control the deregistration requirements. The following are generally the prerequisites for deregistration:

It will be necessary to get approvals from the necessary authorities (such as the tele-communication provider, SEWA, Emirates Post, etc.), revoke the Memorandum of Association, and issue a resolution from the firm authorizing the cancellation of the license and closing it down.

The authorities will issue a final certificate verifying the deregistration and cancellation of a company’s license after the completed application (as described above) is submitted together with the deregistration payments.

Liquidation

According to the requirements of Federal Law No. 2 of 2015 on Commercial Companies (the “2015 Law”), the idea of liquidation is firmly established. The liquidation procedure shall be carried out in accordance with the default conditions outlined in the 2015 law, unless the company’s memorandum of association or articles of association contain exceptional terms or measures that are in conflict with the 2015 Law.

There are two types of liquidation: voluntary and required (through a court order). A voluntary liquidation occurs when the company’s shareholders decide to dissolve it and appoint a liquidator by a resolution of the shareholders. The appropriate court will choose the manner of liquidation to be employed and formally appoint a liquidator if there is a disagreement between the shareholder(s) and the shareholder(s) requests the liquidation through the courts.

In any case, even if the liquidator is chosen by the partners, the job of the liquidator is not ended by death, a declaration of bankruptcy or insolvency, or an order of interdiction against the partners.

In particular, voluntary liquidation has the following primary requirements:

  • clearances will be needed from the necessary authorities (such as the telecommunications provider, SEWA, Emirates Post, etc.); an announcement or notice must be published in two local daily newspapers (one of which is published in Arabic) for a period of at least 45 days; and the appointed liquidator should prepare and submit a liquidation report to the appropriate licencing body.
  • The relevant licencing body will issue a liquidation certificate notifying the completion of the liquidation and closure of the firm when the liquidation procedure is complete and the liquidator submits the liquidation report to it.

Responsibility and Related Legal Ramifications

In actuality, and taking the aforementioned factors into account, a business can be deregistered without going through a liquidation procedure, and more precisely, without appointing a liquidator who would be required to inform the creditors and create a liquidation report.

Appointment of a liquidator and dissolution:

It is unclear if the appointment of a liquidator, as well as more broadly the adoption of the dissolution and liquidation measures, will still be necessary even if the business is deregistered due to the lack of a liquidator and the liquidation report in the deregistration process.

According to Section 308 of the 2015 law:

“The liquidation shall be carried out by one or more liquidators appointed by the partners or pursuant to a Decision by the General Assembly or any other similar body, provided that the liquidator is not currently employed as an auditor of the company or has previously audited the company’s accounts within five years prior to the appointment.”

As well as the role of the licencing authority and the amount of its participation in the liquidation actions that may be started before or after the completion of the deregistration, questions are raised about the responsibilities and functions of the company’s managers and shareholders. It is important to note that some liquidation acts, such publishing in a newspaper, cannot be carried out without the authority’s approval since the request for publication must be addressed to the appropriate media through the applicable licencing body.

Conclusion

The idea of deregistration came from basic procedural practices that different licensing authorities in the UAE implemented.

The deregistration path can be viewed as a means of facilitating the cancellation of a limited liability company’s license and ensuring its closure in the shortest amount of time possible, leaving the shareholders to decide on the dissolution and liquidation formalities based on the circumstances of the company. Sara Advocates and Legal Consultants helps you with the liquidation and deregistration of the company. Our lawyers will help you fulfill all the legal requirements so there are no legal issues arising in the future.