Common non-compliances that Delay Company Liquidation in ADGM
When it comes to the process of voluntary company liquidation Abu Dhabi Global Market Free Zone (ADGM), business owners would like to wind up the procedures without any delay while meeting the mandatory requirements. However, unlike in the past, you need to meet additional regulatory requirements to ensure companies are shut down without any delay.
ADGM-approved company liquidators can offer assistance in expediting the voluntary liquidation process.
Most business owners, due to a lack of knowledge, unwittingly ignore the latest compliance requirements to wind up a company in the UAE. This will lead to compliance failure, resulting in hefty penalties as well as unnecessarily delaying the process of shutting down a company in the UAE.
To avoid such a situation, we have listed here some of the commonly seen non-compliance situations that might delay the process of company liquidation in ADGM:
Failing to apply for VAT Deregistration
Business owners may often forget to meet certain regulatory requirements while trying to shut down a company in the UAE. VAT deregistration is such a mandatory requirement that business owners forget during the ADGM liquidation process.
If your company is an active VAT registrant, you must apply for VAT deregistration within 20 days of cessation. Failing to apply for VAT deregistration will lead to a penalty of AED 10,000 and it will delay the process of company liquidation in ADGM.
Non-compliance with Economic Substance Regulations
Most entrepreneurs think the ESR requirements apply only to companies that are operational. However, an ADGM company under liquidation is also required to meet the ESR requirements if it carries out any of the nine relevant activities.
The company must meet all of its ESR requirements for the period up to liquidation. Compliance failure will lead to hefty penalties and reputation damage.
Ignoring Ultimate Beneficial Ownership Requirements
The Cabinet Decision No. (58) of 2020 on Ultimate Beneficial Ownership (UBO) also applies to companies under liquidation in the UAE. Before winding up, the company must hand over the Real Beneficiary Register (RBR) and Partners or Shareholders Register (PSR) to the ADGM Authority within 30 days of appointing the liquidator.
Moreover, the ADGM-approved liquidator or administrator needs to maintain the RBR and PSR for at least five years from the date of liquidation. Failing to honour this requirement will delay the liquidation process. The company will also incur hefty penalties.
Hire ADGM-Approved Liquidators
Business owners undertaking voluntary company liquidation in ADGM need to navigate a series of complex compliance requirements such as VAT deregistration, ESR and UBO obligations. Most business owners fail to comply with these regulations leading to penalties and last-minute surprises. Leading company liquidators in the UAE such as Jitendra Chartered Accountants (JCA) can help you wind up your company without any hassle.
We are listed with ADGM and can execute the liquidation process seamlessly and in compliance with the existing regulations. We have liquidated both mainland and free zone companies across the UAE. JCA’s experience and learning curve will allow you to complete the process fairly quickly.