Following the growing trend of companies participating in acquisitions and corporate restructurings, the rigorous procedure resulting from liquidation becomes incumbent to fully understand before a company’s directors and shareholders propose to walk through this route.
Introducing Liquidation
Liquidation is a process of winding up the affairs of a company. It can be done either voluntarily by the company for the purposes of a merger, acquisition and corporate restructuring or through an order of the court, in the case of insolvency. The laws of the United Arab Emirates (UAE) in respect of factors triggering the liquidation of a limited liability company (LLC) are deemed to be stringent and applications are processed by the Department of Economic Development of the emirate of Dubai (Economic Department). A LLC must therefore exhaust the procedural requirements set out below before they can officially wind up their business and properly cancel their trade license. For the purposes of this article we will be focusing on LLC’s incorporated through the Economic Department. Furthermore, we shall not be considering the application for bankruptcy which involves separate procedures and the involvement of local courts.
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