Liquidation Process in Free Zone Companies
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Liquidation Process in Free Zone Companies


The free zone companies operate independently on Dubai’s mainland. The free zones generally send your personal information to the department of security and the CID under immigration.

If you do not exit out by following the prescribed degeneration procedures, you may have to face legal consequences.

What is Liquidation of a Company in a Free Zone?

When a solvent business decides to shut down its operation in any of the free zones in the UAE, it liquidates its assets and pays them to the company’s claimants. By claimants, we mean the company’s creditors and shareholders.

If the company is insolvent, it cannot pay its claimants. The creditors and shareholders will receive the money due to them as a priority from whatever assets are remaining with the company.

The terms dissolution, winding up, or closure also mean liquidation of a company.

Types of Business Closures in a Free Zone

You can close a business in UAE free zone in the following three ways:

  • Summary Winding Up is when a corporation has no liabilities or can discharge its liabilities within six months and begins with a solvency statement.
  • Creditors winding up is when the company passes a resolution for the same and follows it up with its creditor’s meeting.
  • Bankruptcy – The court can do this under UAE Commercial Transactions Law No. 18 of 1993.

Liquidation Process in Free Zone Companies: Requirements

The Dubai Free Zone company liquidation process consists of a series of preliminary processes that the owner must do to ensure a smooth company liquidation in the UAE.

  • Have zero liabilities
  • Cancel all existing and active visas.
  • Close all its existing corporate Bank Accounts
  • Distribute its assets at the time of liquidation among the shareholders or creditors
  • Pay all fees due to the free zone authority in full.
  • Secure immigration clearance from the Free Zone Authority
  • Draft a resolution to liquidate
  • Appoint a licensed liquidator to carry on the liquidation process.
  • By creating a final Audit Report/Liquidation Letter, the liquidator must approve the course of action for the business’s liquidation and send confirmation that the company has no assets or obligations/liabilities.

Liquidation Process in Free Zone Companies: Essential Clearance Certificates

Dissolving free zone companies must essentially obtain the following clearance certificates:

  • The relevant free zone authority
  • Business unit
  • All utilities
  • Any other authorities relevant to the regulated activity
  • Customs

Liquidation Process in Free Zone Companies: Final Steps

Closing a company includes more than simply discontinuing operations. These are the final steps of the closure:

  • Apply for a business closure through the member portal.
  • The submission of the company termination application terminates the Directors’ authority, duties, and responsibilities.
  • After the assessment and processing of the application, publish the news of the termination in a local Arabic newspaper.
  • The DMCC authorities will immediately approve the company’s termination and issue termination letters.
  • A company in JAFZA jurisdiction needs to notify the authorities three months for office and warehouse facilities and six months in advance for plot facilities.
  • Cancel all employees’ visas and work permits by collaborating with the relevant departments (Department of Naturalisation and Residency and the Ministry of Human Resources and Emiratisation).
  • The law binds employers in the UAE to provide their employees with a two-month paid notice period before terminating their contracts.
  • Employees can often keep their resident visas until the company’s trade license expires.
  • The business must then cancel its utilities and telecommunications services.
  • Finally, obtain a NOC from the utility company before proceeding with the closure.


To avoid future penalties or entry bans, entrepreneurs must close their companies as soon as possible according to the legal guidelines of UAE Free Zone authorities.

Flyingcolour can help you with the whole liquidation process and all of the methods mentioned above without any trouble while also ensuring that the company liquidation procedure is 100% compatible with UAE Company Law standards.

Get connect with Flyingcolour for Business Setup In Dubai Free Zone

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