Steps to Follow for Trade License Cancellation

Cancelling your trade license is essential if you have decided to close your business in the UAE. Here, we have explained all the formalities and processes you need to follow while closing your business and cancelling your license in Mainland and Free Zone without any complications.

Closing a Business on the Mainland

It does not matter what business you own in the UAE; if you decide to close your business, you must cancel your business licence and all related permissions.

Why is Cancellation of License Essential When Business is closing?

Relevant government entities must know that you are no longer in the business, so you will avoid any accumulated fines and penalties incurred upon your license when it is not renewed upon the expiry date.
If you are in a shareholding company, it is essential to discharge your liabilities towards creditors and partners and protect your interests and shares.
It is also wise to put your goodwill and business reputation in perspective if you decide to open a business again.

Formalities to Cancel your Business Licence

Cancelling the license depends on the form of your company. For establishments and sole proprietorships, the process is simple because all you need to do is to apply for cancellation through DED and acquire all relevant clearances from:-

• Ministry of Human Resources and Emiratisation
• Directorate of Residency and Foreigners Affairs
• Concerned water and electricity authority
• Leasing entity etc.

However, the process is longer for companies with shares because it requires liquidating the shares, collecting the debts, and paying the creditors before finalising with DED.

Companies that Need a Liquidator

You need a liquidator if the legal form of your company is any of the below listed:-

• General Partnership
• Limited Liability Company
• Simple Limited Partnership
• Public Joint Stock Company
• Private Joint Stock Company

Steps to Liquidate All Companies (except civil companies)?

There are two stages in this process:
Stage 1:

• Draft notarised minutes of the general assembly approving the company liquidation and the appointment of a liquidator.
• Get an official letter from a registered liquidator assuming the duty.
• Apply for license cancellation. Fill the trade license cancellation form through DED or other authorised mediums.
• DED issues a liquidation certificate.
• The notice of liquidation should be published in two local newspapers.
• The notice allows the debtors a grace period of 45 days from the date of liquidation issue to submit their trade license cancellation claims.

• You must submit a declaration letter from the liquidator and the partners implying no objection from any other parties during the grace period to DED.
• Gather all necessary permission from other government bodies to cancel a trade license.
• Cancel the company card at the Ministry of Human Resources and Emiratisation.
• Cancel the foreign partners' visas sponsored by the company at the respective General Directorate of Residency & Foreigners Affairs
• Submit all the above documents to obtain clearance for final cancellation.
• DED determines the charges.
• You will get the certificate of cancellation after paying the determined fees.

Closing a Business in a Free Zone

According to the website of DMCC, there are three types of closures. They are:-

• Summary Winding up: When a company has either no liabilities or can discharge its liabilities within 6 months and initiates with a statement of solvency.
• Creditors Winding up: When the company passes a resolution to wind up and is followed by a meeting with the company's creditors.
• Bankruptcy: Done by the court under UAE Commercial Transactions Law No. 18 of 1993.

Closing a business in a free zone means more than just ceasing operations. Follow the rules and regulations as per your jurisdiction, as they vary for different free zones. However, the basic steps remain the same.

Want to Close Your Free Zone Company?

If you are sure you want to close your company, you will need to inform the free zone authority in advance as per the rules of your free zone. Following are the steps you need to follow:-

• The purpose for shutting the company should be published in an Arabic newspaper.
• No Objection Certificate from the companies that provide you utility service.
• No Objection Certificate from all concerned government bodies and free zone departments.
• Once all the paperwork is done, cancel your employees' visas and work permits.
• Close bank accounts.
• After all the above is cleared, you will get an official termination letter from the free zone authority.