How to Close a Business in Dubai?

How to Close a Business in Dubai?

The closure of a business is the last stage of a company’s existence and it must be said that shutting down a company is more difficult than building it up. However, sometimes business owners may decide to close, sell, or transfer their businesses years in advance and have plenty of time to plan their exit strategies and in other situations, business owners for circumstances beyond their control may be forced to halt their operations for good.

Dubai, with its strategic location between Europe, Asia and Africa is an economic hub for business owners setting up their enterprises. If a business owner wishes to discontinue their business, they must follow the regulatory procedure of closing the business and not simply abandon their operations to save time and money. If the set regulatory framework is not complied with it, it will become next to impossible to re-establish or reopen operations in Dubai at a later stage.

The closure of a business in Dubai can be voluntary (shareholder’s liquidation) or compulsory (creditor’s liquidation) and requires a lot of documentation, attestations, and approvals from Government Authorities.

Closing of Business on the Mainland

The closing of a business on the mainland requires the appointment of a liquidator if the legal form of the company is any one of the following: General Partnership, Limited Liability Company, Simple Liability Company, Public Joint Stock Company and Private Stock company.

The process will need to be followed in two stages with Stage 1 focusing on the submission of the notarized minutes of the general assembly confirming the company liquidation, appointment of a liquidator, cancellation request to be applied through the Department of Economic Development (DED) etc.

In Stage 2, a declaration letter to the DED from the liquidator and the partners shall be submitted and approvals from other government bodies for the cancellation of license/s; firm card foreign partners’ visas sponsored by the company etc. shall be obtained. The DED will be the final determining authority of the deregistration and to ensure that all regulatory compliances have been met with.

The cancellation of the business license is strongly recommended whilst closing a business. This is done to keep government entities informed that the company is no longer in business and to avoid any accumulated fines and penalties incurred upon a license when it is not renewed. Cancelling the license depends on the form of the company, for instance for establishments and sole proprietorship, the process is relatively simple and straightforward, as the first step is to obtain a no objection letter from Ministry of Human Resources and Emiratization. After that, a residence cancellation proof from the Directorate of Residency and Foreigners Affairs, cancellations received from the relevant water and electricity authorities, the leasing entity etc., will be required. However, for a company with a shareholding, it is important to discharge their liabilities towards creditors and partners and to protect the company interests and shares before finalizing the cancellation with DED.

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Closing a business in a Free Zone

Closing a business in a Free Zone, as a first step towards the closure of business in a free zone, a notification to the free zone authority is required to be made in advance. The intention for closing the company shall be published in an Arabic newspaper and a No Objection Certificate will be required to be obtained from utility companies and other applicable government/free zone departments. Once all of the paperwork is cleared, a cancellation of the employees’ visas, work permits, and closure of bank accounts shall be done. Finally, an official termination letter from the free zone authority shall be issued.

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It is best to initiate the closing of business in Dubai by taking the assistance of experienced business consultants to save time and effort and to adhere to all regulatory compliances.

We at D’Andrea and Partners have a team of experts who are continually monitoring the changes in laws and regulations in the UAE. Reach out to us on if you have any questions.

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