What happens if we don’t close the company?
There are multiple reasons to liquidate the company in Dubai if you do not really work in it. There are legal and moral obligations associated with the same. The possible issues expected while you are running away from the country without closing the company. They are as follows:
The liquidation of free zone company in Dubai
However, the Free zone companies are independently set up in the mainland of Dubai and system is connected with immigration and other third-party government departments. Most of the free zones will send your personal information to the department of security and CID under immigration to analyze your personal background. The country has got a strong motto of national development in a clean ambience. The security department in immigration has the right to approve or disapprove the candidature at any point in time. If the approval from the security department is processed, you will be able to set up your company in Dubai, under the free zone. It can affect your security file if you have not managed to exit the legal procedures in a clean way. Therefore, we recommend you to liquidate the company in a proper way through the steps below:
- Cancel the visas from the free zone.
- Take the clearances from Etisalat (telecom provider)
- Clearance from custom
- Clearance from RTA
- Clearance from Chamber (if any)
- Liquidate the company and get No Liability Letter from Registrar of companies
- Close the corporate bank account linked with the company get No Liability letter
If you manage to do the above in a proper way, you will be free from your obligations, but in general, we highly recommend you to do the minimum the step No1 and 2 to save associated fines at immigration, and company through immigration etc. The bank account also is required to wind up to avoid personal liabilities and that might not get affected the credit score of Etihad Bureau.
Liquidation of mainland companies and winding up procedures in Dubai
The liquidation of a mainland company takes minimum of 60 days including the news-paper advertisement, legal approvals, and clearances. If you do not want to get hang on in the security departments, or any other relevant departments, we strongly recommend you to wind up the company in Dubai through the following procedures.
- Board Resolution at court for cancelling the license
- Initial approval
- Auditor’ report or appointment of auditor depends on the company status.
- Newspaper advertisements for 45 days
- Clearance from Etisalat, RTA (If you have a vehicle), Labour and immigration
- Final submission of docs.
Consequences of Not Properly Closing a Company in Dubai
Failing to officially close a company in Dubai can lead to serious legal and financial consequences. Even if business activities have stopped, the company remains active in government records, which means obligations such as license renewals, visa responsibilities, and regulatory compliance continue to apply.
Over time, this can result in accumulating fines, legal notices, and potential travel restrictions for business owners. In some cases, it may also impact your ability to start a new business in the UAE or affect your financial credibility. Properly closing a company ensures that all liabilities are cleared and protects you from future complications.
Liquidation of offshore companies
Liquidation of offshore company is not mandatory if you do not want to run the business since those companies would strike off from the active list of registered companies and eventually become a doormat. Unlike other legal entities, offshore company also have the same procedures to close the company, be it in Dubai or any emirates. The steps involved in the closing of offshore company.
- Prepare the Board resolution by partners
- Audit report
- Registered agent’s resolution and application
- Payment.
The cost of liquidation in the UAE.
Danburite Corporate the average cost of winding up a company will be roughly 10,000 AED as statutory fee and professional service fee. The liquidation service in Abu Dhabi is slightly different
Important point
Do not hold visas under cancelled or unrenewed companies due to legal barriers.
FAQs
1. What happens if you don’t close a company in the UAE?
If a company is not formally closed, authorities still consider it legally active. This can lead to accumulating fines, legal liability for directors, visa issues, and restrictions on future business activities.
2. Can I simply stop renewing my trade license instead of closing the company?
No. Stopping license renewal does not officially close the company. The business remains registered, and penalties for non-renewal may continue to accumulate until the company is formally liquidated.
3. Why is official company liquidation important in the UAE?
Proper liquidation clears outstanding debts, cancels visas, deregisters taxes, and ensures the company is legally removed from government records, protecting owners from future penalties.
