Who Prepares the Liquidation Report?

Not every business is built to operate forever. Whether a company has fulfilled its goals, faced financial difficulties, or chosen to exit the market, proper closure requires more than stopping operations. One of the key steps is preparing a company liquidation report. This report gives a clear financial summary of the business at the time of closure and must be handled by a licensed liquidator or an approved audit firm.

The liquidation report outlines the company’s assets, liabilities, how the assets were sold, and how the proceeds were used to settle debts. It may also indicate whether there were surplus funds to be distributed to shareholders or unpaid liabilities that could not be cleared. Because of its legal and financial importance, this report cannot be prepared by the company’s own management. A company director is not allowed to prepare the liquidation report. Even if they have accounting knowledge, the report must come from an independent, licensed professional to ensure neutrality and compliance with UAE regulations.

In voluntary liquidations, shareholders appoint a licensed liquidator, often choosing someone with a strong background in bookkeeping and accounting. In compulsory liquidations, which usually occur due to insolvency, the court assigns an official liquidator. The appointed liquidator reviews financial records, including financial audit reports, and checks if the company has fulfilled tax responsibilities such as VAT registration, corporate tax registration, and necessary VAT and corporate tax filing.

Once the report is completed, it must be submitted to the appropriate authority. For mainland companies, this is the Department of Economic Development in the relevant emirate. For free zone companies, the report is submitted to the specific free zone authority. This step is essential to receive the license cancellation or closure certificate, which officially ends the business.