After the company’s affairs are entirely wound up, the liquidator is required to compile a winding-up account known as The Liquidator’s Final Statement of Account. The liquidator is needed to keep adequate accounts to document receipt and payment in every winding-up method, which is known as the liquidator’s final statement. The “Liquidator’s Final statement of Account” is a statement made by the liquidator that shows cash receipts and payments in the event of voluntary winding up.
What is the Liquidation of a Company in the UAE?
In the United Arab Emirates, liquidating a business takes a long time. Closing a business in the UAE may be a time-consuming and confusing process. Still, our knowledgeable and influential liquidators in the UAE can simplify all legal requirements and assist you with the process.
Firm liquidation in Dubai UAE occurs when a company lacks the cash to carry out its daily responsibilities and operations or does not generate enough profit to break even and is in debt. If a corporation commits a crime or serious violation, such as fraud or a breach of rules and regulations, it is almost certain to be liquidated.
Reasons for the Liquidation of a Company
There might be one or several reasons for a company’s liquidation. The following are some of the most typical causes of a company’s liquidation:
- The corporation no longer owns any assets or owns a few;
- The business is unable to pay its debtors;
- The firm does not have enough capital or liquidity to keep itself afloat.
- The corporation is unable to generate any money or generate any business;
- The corporation makes money, but the losses (including, but not limited to, losses incurred as a result of previous mistakes) are much too high;
- At the board meeting, the directors decide to vote for liquidation lawfully.
Liquidation of a Company: Role of Liquidator in Dubai
A liquidator is a UAE-registered agency or firm, generally an accounting or audit firm, responsible for liquidating the company’s assets to generate cash and pay off any outstanding obligations. The liquidators in Dubai will provide an official acceptance letter as soon as they have been selected. They will continue to compose a statement of affairs and the liquidator’s reports until they have completed all of the required tasks to complete the liquidation process.
The Duties of Liquidators in Dubai are as follows:
- Examine the assets and liabilities of the business. The company’s leftover earnings from the asset sale will be divided by a Liquidator.
- Regularly provide information to the company’s creditors.
- Ascertain that business assets are correctly gathered and dispersed.
- Preparation of a Statement of Affairs: The liquidator’s report and a statement of affairs are also created to complete the liquidation procedure.
What is a Statement of Affairs (SOFA)?
A statement of affairs (SOFA) is a structured document that contains crucial information about a company’s assets and obligations at a specific point in time and any other relevant information about its financial condition.
This document is often created when a firm is approaching insolvency, and its creditors want information on the company’s financial situation. The SOFA will show how much money is available to repay creditors. The document will be put together by an insolvency practitioner or turnaround specialist with the aid of the directors.
Who is Responsible for Preparing the Statement of Affairs?
The company’s directors must either create the Statement of Affairs themselves or furnish the liquidator with all the information needed to complete the report. Before presenting the document to the company’s creditors and shareholders, the directors must swear that it accurately depicts its affairs, whether the directors or the liquidator created it.
The company’s directors must either create the Statement of Affairs themselves or furnish the liquidator with all the information needed to complete the report. Before presenting the document to the company’s creditors and shareholders, the directors must swear that it accurately depicts the company’s affairs, whether the directors or the liquidator created it.
What Information Must be Included in the Statement of Affairs?
A defined format for the Statement of Affairs must be followed. Its objective is to provide shareholders and creditors with information about the company’s current financial situation. As a result, it must include (but is not limited to) the following information:
- Details of the company’s assets and liabilities;
- Specifics of the company’s creditors and their contact information; and
- Any security held by the company’s creditors over its assets and the details of such securities.
An expert opinion on the amount that may be realized from the sale of the company’s assets is usually included.
The company’s creditors should be able to indicate the amounts that will be left to distribute to them during the liquidation process since the Statement of Affairs should also reflect on the company’s debts and obligations. The liquidation costs are not included in the Statement of Affairs and will be subtracted before any payments to creditors are paid.
How Company Liquidation Services Providers in Dubai Help?
To organize things on time, companies must contact various other parties/authorities, and the liquidation process can be time-consuming and costly. Any overlooked step or document will result in wasted time and effort.
Many companies like Farahat & Co. offers liquidation services for all UAE entities, including LLCs, free zone firms, and offshore corporations, ranging from complete liquidation to assisting with a portion or sections of the process, depending on the client’s needs.