Business Liquidation in UAE and the role of Auditor

ABU DHABI, UAE - March 23, 2017 - PRLog -- Liquidation is a term coined for a company being divested. The company's assets and shares are sold and the money is used to clear the dues to creditors and pay off the shareholders. The economy and rules and regulations of UAE ensure that only authorised personnel are allowed to carry out liquidation processes, hence there are only certified agencies helping with liquidation services in UAE.

Liquidation of a company might occur pertaining to many reasons other than bankruptcy. A company can undergo liquidation when there is an uncertain future due to improper planning of business operations, involvement of the company in fraudulent activities, inadequate amount of working capital, frequent changes in government policies, high levels of competition in market, continuous losses for several years etc. Upon liquidation, the company's operations are brought to an end, and all of the company assets are converted to cash to pay the liabilities and then pay off to the shareholders according to priority of their claims.

Liquidation may either be compulsory or voluntary. Under the voluntary liquidation, a company might wind up its business, if it is unable to carry on its business or if it was formed only for a limited purpose at the first place. Compulsory liquidation calls for court order to initiate the winding up process. Here, usually a creditor presents a winding up petition in lieu of the pending dues by the company.

UAE being a dynamic business environment, where businesses open and close at a high frequency, gives room for many agencies providing liquidation services in UAE to bloom. Authorities of UAE have placed audit firms with greater powers in certifying financial aspects of companies, both, while closing and opening. The auditor has to balance the books and conclude a value to the existing assets and stock of the company and then assess how much money has to come in and what are the total dues.

An auditor is different from a liquidator. A liquidator is the officer who is appointed to collect all the assets of the company and settle all the claims of creditors and shareholders against the company. On the other hand, the auditor's role is to verify and report all financial aspects of the company at the time of liquidation. The Auditors in UAE need to list all the assets of the company that are there to be dissolved. In the post liquidation audit, the auditor has to check whether all the liabilities and dues were settled fairly among the creditors and shareholders.

Company liquidation in UAE calls for strict adherence to formal procedures. There are many issues which need to be attended while planning for liquidation, i.e., Debt recovery, Claims management, Asset disinvestment, compliance issues and due diligence and liquidation costs. Liquidation audit is a mandate before any company can be closed in Dubai or any other free zone of Dubai. Auditing firms holding official certification from UAE financial authorities are approved for liquidation audit, followed by the liquidation process carried out by agencies providing liquidation services in Dubai. Only approved auditors in Dubai (http://www.aaa-cas.com/) are authorised to prepare and submit liquidation audit report for a company under liquidation.

Once the liquidation is over, the company is no longer in existence and is deregistered.

Contact: Ahemad Alagbari Chartered Accountants

Call: +97142287774

Email: info@aaa-cas.com