Liquidation Of Companies Under UAE Law: A Comprehensive Guide Based On Federal Decree-Law No. 32/2021 On Commercial Companies

• Published date: 01 April 2024
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Contracts and Commercial Law
• Law Firm: Awatif Mohammad Shoqi Advocates & Legal Consultancy
• Author: Dr. Hassan Elhais

Introduction:

The liquidation of a company is a pivotal process governed by legal regulations in the UAE. Understanding the intricacies of liquidation proceedings is essential for stakeholders involved in company dissolution. Federal Decree-Law No. 32/2021 on Commercial Companies defines the framework for liquidating companies in the UAE, providing clarity on procedures, responsibilities, and liabilities.

Reasons for Termination of Companies:

Article 302 of the Federal Decree-Law outlines general reasons for company dissolution, including term expiration, objective termination, asset loss, merger, unanimous consent of partners, or issuance of a dissolution judgment. Specific provisions apply to joint liability companies, limited partnership companies, and sole proprietorships.

Liquidation of the Company and Division of its Assets:

Upon dissolution, a company undergoes liquidation, a process governed by Article 314 onwards. The termination of managerial authority marks the start of liquidation proceedings. Liquidators, appointed by partners or through court decisions, assume responsibility for asset inventory, debt repayment, and asset division.

Appointment and Responsibilities of Liquidators:

Article 316 mandates the appointment of liquidators, ensuring they are not current or recent auditors of the company. Liquidators operate under guidelines, conducting asset evaluations, debt settlements, and representation of the company before courts.

Inventory and Debt Repayment:

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