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

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Awatif Mohammad Shoqi Advocates & Legal Consultancy

Contributor

Awatif Mohammad Shoqi Advocates & Legal Consultancy is fully accredited to offer legal services and representation in the UAE, catering to both local and international clientele based in the UAE. Our firm specializes in a diverse range of practice areas, including family law, criminal law, and civil law, as well as corporate and commercial law. We also have expertise in banking, maritime and transport, labour law, litigation and arbitration, and real estate. Leveraging our deep understanding and extensive experience in these fields, we are committed to providing our clients with tailored solutions and exceptional service.
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.
United Arab Emirates Corporate/Commercial Law
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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:

Liquidators prepare detailed asset and liability lists, facilitating debt repayment through systematic procedures outlined in Articles 320 to 326. Creditors are notified of the liquidation commencement, with provisions for disputed debts and judicial deposits.

Liquidation Period and Reporting:

Liquidation timelines are specified, subject to extensions based on partners' decisions or court orders. Liquidators provide regular interim accounts and a final report of liquidation proceedings for approval by partners or the general assembly.

Division of Assets and Liability Lawsuits:

Upon debt settlement, assets are divided among partners, ensuring equitable distribution in accordance with Articles 333 and 334. Liability lawsuits against liquidators, partners, managers, or auditors are subject to statutory time limits.

Conclusion:

Federal Decree-Law No. 32/2021 on Commercial Companies ensures the orderly dissolution of companies in the UAE. Compliance with legal provisions and diligent execution of liquidation proceedings safeguard stakeholders' interests and uphold commercial integrity in the UAE.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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

United Arab Emirates Corporate/Commercial Law

Contributor

Awatif Mohammad Shoqi Advocates & Legal Consultancy is fully accredited to offer legal services and representation in the UAE, catering to both local and international clientele based in the UAE. Our firm specializes in a diverse range of practice areas, including family law, criminal law, and civil law, as well as corporate and commercial law. We also have expertise in banking, maritime and transport, labour law, litigation and arbitration, and real estate. Leveraging our deep understanding and extensive experience in these fields, we are committed to providing our clients with tailored solutions and exceptional service.
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