Cancel Your Trade License in UAE: Complete Guide

Mon, 28 Oct, 2024

Closing your business in the UAE? No matter if it's the end of an exciting chapter or just a strategic pivot, understanding how to cancel your trade license is crucial.

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This guide will take you through everything you need to know about canceling your trade license in the UAE, providing you with a step-by-step approach to make the process smoother.

1. Why You Might Need to Cancel Your Trade License

Before diving into the steps, it's helpful to understand why you might need to cancel your trade license. Canceling your trade license in the UAE can be prompted by various reasons:

• Business Closure: Permanently closing down operations and winding up business activities. This might occur due to a shift in market conditions, a change in the economic landscape, or simply the decision to pursue other opportunities. Business closure is a significant decision that requires careful planning and a thorough understanding of the implications on employees, stakeholders, and financial responsibilities.
• Restructuring: Relocating your business or changing its operational framework. This could be due to a need to streamline operations, consolidate resources, or move to a location that offers better strategic advantages. Restructuring often involves revisiting your business model and adapting to new market demands or optimizing processes to enhance efficiency.
• Changing Business Activity: Modifying the fundamental nature of your business activities that may require a new trade license. Perhaps your current business model is no longer sustainable, or you are pivoting to a different industry altogether. Changing business activities can also be a response to emerging trends, consumer preferences, or technological advancements that demand a shift in focus.

Understanding your reason for cancellation helps streamline the process and ensures that you gather the correct documents and fulfill all obligations. Each reason for canceling your trade license has its unique requirements and challenges, and understanding these nuances will help you better navigate the process.

2. Types of Trade Licenses and Their Specific Requirements

Different types of trade licenses in the UAE require specific steps for cancellation. Let's look at the types and what they entail:

a. Sole Proprietorship

• Cancellation of labor cards through the Ministry of Human Resources & Emiratisation (MOHRE). As a sole proprietor, you are solely responsible for ensuring that all labor-related commitments are properly concluded. This means settling any outstanding dues, canceling employee visas, and making sure that any obligations towards employees are fulfilled in accordance with UAE labor laws. The process involves close coordination with MOHRE and other relevant authorities to ensure compliance.
• Additional Considerations: Sole proprietorships are typically simpler to cancel compared to other business structures, but it is crucial to ensure that all assets are properly liquidated and that creditors are informed. This helps avoid potential disputes or liabilities after the business has been closed. Proper planning and communication are key to ensuring a smooth transition for both the proprietor and any affected employees.

b. Civil Company

• Cancel labor cards through MOHRE. A civil company involves multiple partners, and canceling the trade license requires agreement and coordination among all partners. Each partner must agree to the cancellation and fulfill their obligations towards the employees and creditors of the company.
• A duly notarized partnership termination contract is needed. This document formalizes the decision to dissolve the partnership and serves as an official record that all partners are in agreement. The contract must be notarized to ensure its legality and enforceability. Partners must also ensure that all assets are properly distributed and that any debts or liabilities are settled before proceeding with the cancellation.
• Additional Considerations: Civil companies often have more complex structures compared to sole proprietorships, and canceling a license may require additional steps, such as notifying creditors, liquidating assets, and distributing any remaining profits among partners. It is important to follow all legal requirements to avoid potential disputes or legal issues down the line.

c. Branches of Companies

• For branches of foreign companies, you need a decision from the Ministry of Economy's register to liquidate. This involves obtaining approval from the parent company and ensuring that all obligations in the UAE are fulfilled. The Ministry of Economy plays a crucial role in overseeing the liquidation process and ensuring that the branch's activities are properly concluded.
• For branches of free zone companies, ensure you obtain an attested decision from the parent company. Free zone companies are governed by their respective authorities, and each free zone may have its own specific requirements for canceling a branch. It is important to work closely with the free zone authority to ensure compliance with all regulations and requirements.
• Additional Considerations: Canceling a branch of a company, whether foreign or local, involves coordination with both the parent company and local authorities. The process may also require the cancellation of employee visas, settling of any outstanding obligations, and ensuring that all regulatory requirements are met. Proper communication with the parent company is essential to ensure a smooth and efficient cancellation process.

These specific requirements ensure that your trade license cancellation in the UAE matches the type of business structure you have established. Understanding the nuances of each type of trade license and the specific requirements for cancellation is key to ensuring a smooth and compliant process.

3. Primary and Secondary Steps to Cancel a Trade License

Canceling your trade license in the UAE involves two significant phases:

Primary Step

1. Arrange the General Assembly Meeting: Notarize the minutes of the meeting that confirms the decision to liquidate the company and appoint a certified liquidator. This is a crucial step in the process, as it formalizes the decision to close the business and ensures that all stakeholders are informed. The minutes must be notarized to provide legal validity and to serve as an official record of the decision.
2. Official Letter from the Liquidator: The appointed liquidator will generate a letter affirming their duty. This letter is essential for proceeding with the liquidation process, as it confirms the liquidator's responsibility to manage the winding-up of the company's affairs. The liquidator's role includes settling debts, distributing assets, and ensuring compliance with all regulatory requirements.
3. Submit Application: Apply for the cancellation either through the Department of Economic Development (DED) or specific free zone channels. The application process involves submitting all necessary documents, including the notarized minutes of the general assembly and the liquidator's letter. Depending on the type of company and its location, the application may need to be submitted through different channels, such as the DED or the relevant free zone authority.
4. Publication of Liquidation Notice: Announce the company liquidation in two regional newspapers, giving creditors a grace period of 45 days to submit their claims. This step is important to ensure that all creditors are informed of the liquidation and have an opportunity to submit any claims they may have. The notice must be published in both Arabic and English newspapers to reach a broad audience and ensure compliance with regulatory requirements.

Secondary Step

1. Submit Declaration Letter: Tender a statement from the liquidator and stakeholders, showing no objections received during the 45-day period. This declaration confirms that no claims were submitted by creditors and that the company can proceed with the final steps of liquidation. It is important to ensure that all stakeholders are in agreement and that there are no outstanding objections before moving forward.
2. Obtain Government Permissions: Obtain approvals from other regulatory entities to proceed. Depending on the nature of the business, additional permissions may be required from government authorities, such as the Ministry of Human Resources & Emiratisation, the municipality, or other regulatory bodies. These permissions are necessary to ensure that all legal and regulatory requirements are met before the trade license can be canceled.
3. Cancel Visas and Labor Cards: Cancel the visas of any partners and employees sponsored by the business. This step involves working with the General Directorate of Residency & Foreigners Affairs to ensure that all visas are properly canceled. It is important to complete this step before proceeding with the final cancellation, as any outstanding visas can delay the process.
4. Submit Documents for Final Approval: Tender all the required records to procure the final approval for cancellation. This includes submitting the declaration letter, government permissions, and any other required documents to the DED or free zone authority. Once all documents are submitted and approved, the company will receive a cancellation certificate, officially concluding the process.

These steps are pivotal in ensuring that the cancellation process is properly executed and compliant with UAE regulations. Each step must be completed in the correct order, and all required documents must be submitted to avoid delays or complications. Proper planning and attention to detail are essential for a smooth and efficient cancellation process.

4. Documents Required for Cancelling Your Trade License in the UAE

The documentation needed for trade license cancellation varies based on the business type but generally includes:

• License Copy: The original trade license document. This serves as proof of your business's legitimacy and must be submitted as part of the cancellation process. The original document is required to ensure that no copies remain in circulation, which could lead to potential misuse.
• Resolution of Shareholder: Agreement from all shareholders to cancel the trade license. This document is essential for confirming that all shareholders are in agreement with the decision to cancel the license. It must be signed by all shareholders and, in some cases, notarized to provide legal validity.
• Power of Attorney: If there is any authorized representative involved. This document allows an authorized representative to act on behalf of the company during the cancellation process. The power of attorney must be properly executed and notarized to ensure that the representative has the legal authority to act on behalf of the company.
• Filled Application Form: Properly completed form for trade license cancellation. The application form must be filled out accurately and completely to avoid delays in the process. It is important to ensure that all required information is provided and that the form is signed by the appropriate parties.
• Emirates ID (EID) and Passport Copies of Shareholders: Essential for identification purposes. These documents are required to verify the identity of the shareholders and ensure that they are authorized to make decisions on behalf of the company. The EID and passport copies must be valid and up-to-date.
• Memorandum of Association (MOA): Complete with all amendments. The MOA outlines the structure and purpose of the company and must be submitted as part of the cancellation process. Any amendments to the MOA must also be included to ensure that the document accurately reflects the current state of the company.

Documentation Checklist for Different Types of Companies

Business Type	Key Documents Needed
Sole Proprietorship	Labour card cancellation, Trade license copy
Civil Company	Partnership termination contract, MOA
Branch of Foreign Company	Ministry approval, liquidation decision
Branch of Local Company	Board decision, Labour card cancellation

The documents required for canceling a trade license are critical to ensuring compliance with UAE regulations. Proper documentation is essential to avoid delays and ensure that the cancellation process proceeds smoothly.

5. Where to Apply and How to Cancel Your Trade License in the UAE

Canceling your trade license can be done through several avenues, each designed to make the process convenient:

• Online Portal: The DED online portal allows for a streamlined application for cancellation. The online portal provides a convenient and efficient way to submit your application, track the status, and receive updates. It is important to ensure that all required documents are uploaded and that the application is completed accurately to avoid delays.
• Authorized Service Centers: Visit any authorized service center for in-person assistance. The process can take as little as 10 minutes for certain submissions. Service centers provide a more personalized approach, allowing you to ask questions and receive guidance from trained professionals. This can be particularly helpful if you are unsure about any aspect of the cancellation process.
• Free Zone Authorities: If your business is located in a free zone, you will need to apply through the relevant free zone authority. Each free zone has its own specific requirements and procedures for canceling a trade license, so it is important to work closely with the authority to ensure compliance.

Make sure to check the specific requirements of your free zone if applicable, as each zone may have additional steps. Proper coordination with the relevant authorities is essential to ensure that the cancellation process is completed efficiently and without any issues.

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6. Understanding the Cost of Trade License Cancellation in Dubai

Canceling a trade license in the UAE comes with its own set of costs:

• License Cancellation Fee: AED 1,020. This fee covers the administrative costs associated with processing the cancellation. It is important to budget for this fee as part of the overall cost of winding up your business.
• Company Dissolution Fee: AED 2,520. This fee covers the cost of dissolving the company and officially concluding its activities. The dissolution fee is typically higher than the cancellation fee due to the additional steps involved in liquidating assets, settling debts, and ensuring compliance with all regulatory requirements.

You can pay these fees via direct debit at banks like Dubai Islamic Bank, Commercial Bank of Dubai, or Emirates Islamic. For cash or cheque payments, banks such as Aafaq Islamic Finance or Noor Bank are available. It is important to ensure that all fees are paid promptly to avoid delays in the cancellation process.

Breakdown of Fees

Breakdown of Fees for Trade License Cancellation

Service Type	Cost (AED)
License Cancellation	1,020
Company Dissolution	2,520

Understanding the costs involved in canceling your trade license is crucial for proper financial planning. It is important to budget for these costs and ensure that all payments are made on time to avoid any delays or complications in the cancellation process.

7. Finalizing the Cancellation with Relevant Authorities

Once you have submitted all the required documents and paid the fees, you need to confirm the cancellation with the relevant authorities. This involves:

• Awaiting Cancellation Certificate: Authorities will process your request and issue a cancellation certificate. The cancellation certificate serves as official proof that your trade license has been canceled and that the company has been dissolved. It is important to keep this certificate for your records, as it may be required for future reference.
• Verification: Ensure all business records are updated and that the trade license is officially canceled. This includes updating records with government authorities, financial institutions, and other relevant entities. Proper verification ensures that there are no outstanding obligations or liabilities associated with the company after the cancellation.
• Communication with Stakeholders: Notify all stakeholders, including employees, clients, suppliers, and partners, that the business has been officially closed. Clear communication is essential to ensure that all parties are informed and that there are no misunderstandings or disputes after the cancellation.

8. Notify Stakeholders and Settle Final Accounts

After obtaining your cancellation certificate, there are a few final administrative tasks to complete:

• Inform Stakeholders: Notify your clients, suppliers, and partners about the business closure. This step is important to maintain transparency and ensure that all stakeholders are aware of the business closure. Proper communication helps maintain good relationships and ensures that all parties are informed of any changes that may affect them.
• Close Accounts: Settle any remaining dues, including bank accounts and service agreements. Closing accounts is an important part of winding up the business and ensures that there are no outstanding financial obligations. This includes closing bank accounts, settling any outstanding debts, and terminating service agreements with suppliers and service providers.
• File Final Reports: Submit any required final documents to regulatory authorities. Final reports may include financial statements, tax filings, and other regulatory documents that are required to conclude the business activities. Properly filing these reports ensures compliance with all regulatory requirements and helps avoid potential penalties or legal issues.

Checklist for Final Tasks

• Notify clients and partners.
• Settle financial obligations and close bank accounts.
• Submit final regulatory filings.

Completing these final tasks is essential to ensure that the business is properly wound up and that there are no outstanding obligations or liabilities. Proper planning and attention to detail are key to ensuring a smooth and efficient closure.

9. Tips for Smooth Trade License Cancellation in the UAE

To ensure a hassle-free cancellation, here are some useful tips:

• Begin Early: Start preparing for the cancellation at least two months before the planned date to avoid last-minute hassles. Early preparation allows you to gather all required documents, settle any outstanding obligations, and ensure that all stakeholders are informed of the impending closure.
• Double-check Documentation: Verify that all documents are up-to-date and signed by all necessary parties. Proper documentation is crucial to avoid delays in the cancellation process. Make sure that all documents are properly signed, notarized if required, and submitted in the correct format.
• Use Professional Services: Consider hiring a professional consultant to help navigate complex procedures, especially if your company operates in multiple jurisdictions. Professional consultants have the experience and knowledge to guide you through the process, ensure compliance with all regulations, and help avoid potential pitfalls or delays.
• Communicate with Stakeholders: Keep all stakeholders informed throughout the process. Clear communication with employees, clients, suppliers, and partners helps ensure a smooth transition and minimizes the risk of misunderstandings or disputes. Proper communication is key to maintaining good relationships and ensuring that all parties are informed of any changes that may affect them.
• Settle All Financial Obligations: Ensure that all debts, employee dues, and other financial obligations are settled before initiating the cancellation process. This helps avoid potential legal issues and ensures that the company can be properly dissolved without any outstanding liabilities.
• Coordinate with Regulatory Authorities: Work closely with the relevant authorities, such as the DED, MOHRE, and free zone authorities, to ensure compliance with all regulations. Proper coordination helps ensure that the cancellation process is completed efficiently and without any issues.

10. Common Challenges When Canceling a Trade License in UAE

The cancellation process is not without challenges. Here are some obstacles that businesses commonly face:

• Outstanding Liabilities: Ensure all debts are settled before initiating the cancellation. Outstanding liabilities can delay the cancellation process and may result in legal issues. It is important to conduct a thorough review of all financial obligations and ensure that all debts are paid before proceeding with the cancellation.
• Multiple Stakeholders: Coordinating among various shareholders and partners can delay the process. Ensuring that all stakeholders are in agreement and that all required documents are properly signed can be challenging, especially in companies with multiple partners. Clear communication and proper planning are essential to ensure that all stakeholders are on the same page.
• Regulatory Permissions: Getting clearance from all government entities can be time-consuming if documentation is incomplete. Different regulatory authorities may have different requirements, and obtaining the necessary permissions can be a complex process. Proper documentation and coordination with the relevant authorities are key to ensuring a smooth and efficient cancellation.
• Employee Obligations: Canceling employee visas and settling dues can be challenging, especially if there are a large number of employees. It is important to ensure that all employee obligations are properly fulfilled and that all visas are canceled before proceeding with the final steps of the cancellation process.
• Free Zone Requirements: If your business is located in a free zone, additional steps may be required to comply with the specific regulations of the free zone authority. Each free zone has its own procedures and requirements for canceling a trade license, and it is important to work closely with the authority to ensure compliance.
• Communication with Stakeholders: Proper communication with clients, suppliers, and partners is essential to ensure a smooth transition. Failing to properly communicate the business closure can result in misunderstandings or disputes. It is important to notify all stakeholders in a timely manner and provide them with any necessary information to ensure a smooth transition.

Summary of Trade License Cancellation in UAE

Canceling a trade license in the UAE involves a structured process, requiring both careful planning and compliance with various regulatory obligations. The process is essential for businesses looking to shut down operations permanently, restructure, or change their activities. Below, we summarize the key aspects of trade license cancellation, including fees, required steps, documents, and common questions that arise throughout the procedure.

Trade license cancellation fees in Dubai vary based on business type, and they include both a license cancellation fee and a company dissolution fee. The typical costs are AED 1,020 for the cancellation and AED 2,520 for dissolution, though these can change depending on specific circumstances.

Proper preparation and adherence to all requirements are crucial to avoid delays or complications. From arranging general assembly meetings, appointing a liquidator, submitting documents, and settling dues, each step must be carried out with attention to detail. The UAE government ensures that businesses comply with regulations before officially dissolving, helping maintain the integrity of the country's business ecosystem.

UAE Trade License Cancellation

Service Type	Cost (AED)
License Cancellation	1,020
Company Dissolution	2,520

After acquiring the necessary approvals, notifying stakeholders, and concluding any financial or operational responsibilities, businesses can successfully finalize their license cancellation. Below are some common questions that arise regarding the process, along with detailed answers to help you better understand each aspect.

Canceling a trade license in the UAE requires a clear understanding of the process, proper documentation, and compliance with all regulatory obligations. From arranging general assembly meetings and appointing a liquidator to submitting documentation and obtaining clearances, every step is crucial.

By following this comprehensive guide, you can ensure that the trade license cancellation process is managed smoothly and efficiently. Remember, the key is to be organized, adhere to timelines, and address any potential issues early. Whether the decision to close is due to business restructuring or a complete shutdown, a systematic approach will help you complete the process without unnecessary delays or complications.

Proper planning, clear communication, and attention to detail are essential to ensuring a smooth and efficient trade license cancellation. By understanding the requirements, coordinating with the relevant authorities, and following the proper procedures, you can successfully wind up your business and move on to your next venture with confidence.

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Frequently Asked Questions (FAQs) on Cancelling Trade License in the UAE

How much is the cancellation fee for a license in Dubai?

The trade license cancellation fee in Dubai typically starts at AED 1,020. Additionally, the company dissolution fee is AED 2,520. These fees can vary depending on the nature and location of the business. It is important to check with the relevant authorities to confirm the exact amount required for your specific situation.

How can I cancel my UAE professional license?

To cancel a UAE professional license, follow these service steps:

• Submit an online application through the relevant government portal.
• Pay any outstanding fines related to the professional license (if applicable).
• Upon approval, the professional's license will be officially canceled.

How much is the cancellation fee for a company in Dubai?

The fees associated with canceling a company in Dubai are as follows:

• License Cancellation Fee: AED 1,020.
• Company Dissolution Fee: AED 2,520.

These fees cover the administrative costs involved in canceling the license and dissolving the company.

How do I cancel an establishment?

To cancel an establishment in the UAE, you will need:

• A sealed and signed official note from the foreign mission accredited to the UAE.
• A copy of the establishment card.
• The diplomatic or special ID of the authorized signatories.
• A clearance certificate from all relevant authorities in the UAE, such as those for housing, electricity, water, and vehicles.

How do I cancel my business license in UAE?

To cancel your business license in the UAE, you need to follow these formalities:

• Apply for cancellation through the Department of Economic Development (DED).
• Obtain clearances from the Ministry of Human Resources and Emiratisation and the Directorate of Residency and Foreigners Affairs.
• These clearances ensure that all employee visas and labor cards have been canceled and that no financial or regulatory obligations remain.

What is the cancellation fee?

A cancellation fee is a sum of money paid when canceling a reservation, contract, or service after the designated cancellation deadline. For instance, if you cancel a hotel reservation after the deadline, you will be charged a cancellation fee. However, if you cancel before the deadline, there may be no penalty.

How can I freeze my license in Dubai?

To freeze a license in Dubai temporarily, follow these steps:

• Issue a letter on your company's corporate letterhead requesting to freeze the license.
• Cancel all employment visas related to the license.
• Obtain a confirmation letter from the Ministry of Human Resources and Emiratisation, confirming that no individuals are sponsored under the license.

How can I cancel my company?

If your company is solvent, the directors may apply to Companies House to voluntarily strike it off the register. Alternatively, a members' voluntary liquidation process can be initiated. If the company is insolvent, directors can propose a creditors' voluntary liquidation to settle liabilities before canceling.

How can I cancel my business visa in UAE?

To cancel a business visa in the UAE, follow these steps:

• Visit one of the AMER service centers.
• Select the required service at the reception desk.
• Submit the necessary documents to the service representative.
• Pay the relevant fees for the service and submit the application.

Is a cancellation fee a penalty?

A cancellation fee is considered enforceable if it does not amount to a penalty. If a consumer cancels a contract beyond the 14-day cooling-off period, the cancellation fee must be reasonable and reflect the actual cost incurred by the other party, without being excessive.

How much time is needed for the trade license cancellation process?

The trade license cancellation process can vary in duration depending on the type of company and the accuracy of the submitted documentation. Once all documents are in order and any outstanding fees are paid, it generally takes between 2 to 4 weeks for the cancellation to be officially completed by the relevant authorities.

What documents are needed for trade license cancellation?

To cancel a trade license, the following documents are generally required:

• Original trade license.
• Memorandum of Association (MOA) with amendments.
• Emirates ID and passport copies of shareholders.
• Resolution of shareholders approving the cancellation.
• A filled application form for license cancellation.

These documents are critical to ensure compliance with UAE regulations.

What steps are involved in notifying stakeholders during trade license cancellation?

Notifying stakeholders is an essential part of the trade license cancellation process. This involves:

• Clients and Customers: Informing them of the closure and ceasing ongoing services.
• Suppliers: Settling any outstanding payments and canceling future orders.
• Banks and Financial Institutions: Closing business bank accounts and settling any debts.
• Employees: Ensuring all due payments and benefits are provided, including canceling work permits and visas.

Proper communication ensures a smooth transition for all parties involved.

Can I cancel a trade license online in the UAE?

Yes, you can cancel a trade license online in the UAE using the Dubai Department of Economic Development (DED) portal. The online process simplifies the submission of documents and tracking of the application status. However, depending on the business type, certain documents may still need to be submitted in person.

How do I handle outstanding liabilities when canceling a trade license?

To handle outstanding liabilities when canceling a trade license, it is crucial to:

• Settle all debts with suppliers and financial institutions.
• Cancel any remaining employee visas and labor cards.
• Obtain a clearance certificate from the relevant authorities, confirming that all obligations have been fulfilled.

This helps ensure a smooth license cancellation process without any unresolved liabilities.

What are the typical challenges faced during the trade license cancellation process?

Some common challenges businesses face when canceling a trade license include:

• Outstanding Liabilities: Ensuring all debts are settled before starting the process.
• Document Compliance: Collecting all necessary documents in the correct format and obtaining the required approvals.
• Coordination Among Stakeholders: Ensuring that shareholders, partners, and regulatory authorities are in agreement can be time-consuming.

To mitigate these challenges, it is advisable to begin the process early, ensure that all documentation is complete, and communicate effectively with all parties involved.

Disclaimer: The information provided in this article is intended for general informational purposes only. The details mentioned are based on the best available information at the time of publication and are subject to change without notice by the respective authorities. Readers are encouraged to consult the relevant offices directly for the most accurate and updated information.

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