Understanding the role of liquidator in Dubai
Business owners in the UAE may plan to close their business due to various reasons like loss, disagreements, market competition, or business goals are achieved. When a company decides to liquidate themselves, a liquidator is appointed to help in the liquidation process. The liquidator role is to review company’s assets and outstanding debts. They also handle any creditor’s claim and liabilities according to the applicable legal requirements. The required liquidation reports and documents are prepared after settlement of assets and liabilities. The exact responsibility can vary depending on company’s structure and whether it’s located in free zone or mainland.
What to Check before Appointing a Liquidator
Liquidator appointment is important step during liquidation as they are mainly responsible for the major steps involved during the process. Before selecting a liquidator make sure to review the liquidator’s qualifications, experience, fees, and responsibilities. Checking these factors can make it easy for the owners to make a decision.
Approval and Eligibility
Mainland and free zone may have different rules set regarding the approval of the liquidator. It is better to get verified from the authority if any specific approval or documents are required for the appointment of the liquidator. Also, business owners should communicate clearly with the professionals if they will be able to handle liquidation process for their specific business structure.
Relevant Experience
Professionals who have worked with similar businesses may better understand the document requirement and process involved. It is also better to check if the firm has past experience in handling company closure effectively.
Scope of Work and Responsibilities
Usually liquidator are handed over all the responsibilities of the liquidation process but it is better to discuss and verify the scope of work a liquidator is going to handle. The main responsibilities can be reviewing company’s financial records, identify its assets and debts, handle creditor claims, and prepare the liquidation documents.
Fees and Additional Charges
Businesses should be aware of what will be the total fees of the liquidation process before making the appointment. They should make sure if any additional charges are to be paid after the total fees for other documents and reports. Understanding the total breakdown will help the owner to decide their budget and avoid any unexpected expenses.
Expected Timeline
Government approvals may take unexpected time but business should still ask how long the liquidation process may take. The timeline will vary depending on the company’s structure, pending documents, debts and liabilities to be cleared.
Communication and Reporting
Businesses should also ask how the reports will be shared to them during the liquidation process. Clear communication is important as it allows the owners to understand the status of the process and know if any action is needed from their side.
Documents to Confirm Before Appointment
Before the appointment of the appointment, it’s important to make sure all required documents are ready with the business.
- Liquidator’s Acceptance Letter
- Appointment Related Documents
- Relevant Authority Requirements
The exact requirement may vary depending upon the company’s legal structure and registration authority. Business should verify before appointment from the relevant authority.
Common Mistakes Businesses should Avoid
The common mistakes which can cause problems in your liquidation process are
Choosing Liquidator Based on Low Fee –
Liquidation is important process for the company’s closure. So, it’s important to appoint a liquidator based on their experience and service.
Submitting inaccurate or incomplete financial data –
Business should provide correct and updated data to the liquidator. Missing expenses, transaction, incorrect records, or incomplete data can cause error which can lead to penalties and delay the liquidation process.
Hiring an unapproved or unlicensed liquidator
Appointing a liquidator who is unapproved by the authority and is unlicensed can lead to rejection of the liquidation process. You will have to again restart the whole process and it may cause extra expenses.
Liquidation Support from Everest Chartered Accountants LLC
Everest Chartered Accountants LLC is a Dubai based firm which provides liquidation support all across UAE for mainland, free zone, and off shore companies. Our professionals help with the documentation and regulatory requirements involved in closing a company.
Everest can assist with visa cancellation, settlement of liabilities, and final audit and liquidation report preparation. We also support with VAT deregistration and trade license cancellation which is also a important part of the closure process.
Businesses planning to wind up their company in the UAE can contact Everest Chartered Accountants LLC to discuss their requirement and get guidance for the liquidation process.