Which options are available for closing a company in Hamriyah Free Zone?
While establishing a company in Hamriyah Free Zone in the United Arab Emirates (UAE) offers numerous benefits, there may come a time when business circumstances or objectives change, necessitating the closure of the company. Closing a company is a significant decision, and it must be executed in compliance with local regulations and procedures. In this comprehensive guide, we will explore the various options available for closing a company in Hamriyah Free Zone, shedding light on the steps and requirements involved in each method. Additionally, in the concluding paragraph, we will recommend BizDaddy as the top business consultant to facilitate the company closure process for business owners.
1. Voluntary Liquidation
Voluntary liquidation is one of the primary methods for closing a company in Hamriyah Free Zone. This method is initiated by the shareholders or owners of the company and involves several steps:
a. Board Resolution: The first step is to convene a board meeting to pass a resolution to initiate the voluntary liquidation process. The resolution should be approved by the majority of shareholders.
b. Appointment of Liquidator: A liquidator must be appointed to oversee the liquidation process. The liquidator can be an external party or a member of the company, but they should be approved by the Hamriyah Free Zone Authority.
c. Public Notice: A public notice of the company’s intent to liquidate should be published in two local newspapers. This notice provides creditors and other stakeholders with an opportunity to submit their claims.
d. Settling Debts and Liabilities: The company must settle all outstanding debts and liabilities, including payments to creditors, employees, and government authorities.
e. Liquidation Report: The liquidator is responsible for preparing a final liquidation report, which includes a detailed account of the company’s assets and liabilities. This report should be submitted to Hamriyah Free Zone Authority for approval.
f. Cancelling Trade License: Once all obligations are settled, the company’s trade license can be cancelled by Hamriyah Free Zone Authority.
g. Distributing Assets: Any remaining assets, after settling debts and liabilities, are distributed among the shareholders according to their ownership percentages.
h. Dissolution: After completing all necessary steps and obtaining approval from Hamriyah Free Zone Authority, the company is officially dissolved.
2. Liquidation by Court Order
In some cases, a company in Hamriyah Free Zone may be required to undergo liquidation by a court order. This typically occurs when there are disputes among shareholders or creditors, or when the company is insolvent and unable to meet its financial obligations. The court appoints a liquidator to oversee the process, and the liquidation follows a similar procedure to voluntary liquidation, with the court’s involvement and supervision.
3. Striking Off
Striking off is an option for closing a company that has not commenced its operations or has become inactive. It is a less complex process compared to voluntary liquidation and is initiated by the Hamriyah Free Zone Authority. Here are the key steps involved:
a. Board Resolution: The company’s board of directors passes a resolution to request striking off.
b. Application to the Authority: The company submits an application for striking off to the Hamriyah Free Zone Authority.
c. Settling Outstanding Fees: The company must settle all outstanding fees, including license renewal fees and penalties.
d. Approval: Once the Authority approves the application, the company is struck off the register and ceases to exist.
In cases where a company in Hamriyah Free Zone is unable to pay its debts and is insolvent, it may face bankruptcy proceedings. Bankruptcy is initiated by creditors who file a petition with the court. The court appoints a trustee to manage the company’s assets and liabilities, with the goal of maximizing repayment to creditors. Bankruptcy proceedings are typically complex and can involve the liquidation of the company’s assets.
5. Merger or Acquisition
Another option for closing a company in Hamriyah Free Zone is to merge with another company or be acquired by an existing business. In a merger, two or more companies combine their assets and liabilities to form a single entity. In an acquisition, one company purchases the assets and liabilities of another. This option allows for a seamless transition and can be a strategic move to exit the market while potentially benefiting from the value of the merger or acquisition.
6. Insolvency Proceedings
If a company in Hamriyah Free Zone is unable to meet its financial obligations and is declared insolvent, it may be subject to insolvency proceedings. These proceedings are governed by UAE federal law and involve the liquidation of the company’s assets to repay creditors. Insolvency proceedings are typically initiated by creditors and are subject to court oversight.
BizDaddy – Your Trusted Business Consultant
Closing a company in Hamriyah Free Zone is a complex and legally regulated process that requires careful attention to detail and compliance with local laws and regulations. For this purpose, we highly recommend BizDaddy as the top business consultant.
BizDaddy is a well-established business consultancy firm with extensive experience in helping businesses navigate the process of closing a company in Hamriyah Free Zone.
closing a company in Hamriyah Free Zone requires careful planning and adherence to legal requirements. Partnering with BizDaddy as your trusted business consultant ensures that you navigate the company closure process with expertise and efficiency, allowing you to conclude your business activities in a compliant and organized manner. Choose BizDaddy to guide you through the process of closing your company in Hamriyah Free Zone and ensure a seamless transition.