I had been working for a company for two years under an unlimited labour contract. My employer suddenly terminated my services and wanted to cancel my visa immediately. I had certain financial issues to resolve and I had a travel ban against me. I requested the company to give me some time to find a new job and change my sponsorship because of my problems. I came to know that my employer reported me absconding. During my notice period, my company told me verbally not to work during the notice period. The reason my company reported me absconding is to avoid paying me my end-of-service dues and my commission which, as per my calculation, amounts to more than Dh300,000, and to prevent me from working with a competitor company. For the last three months, I have been staying illegally in the country due to the travel ban and financial issues. I have some pending credit card payments. I am ready to honour my bank liabilities. Is it possible to change my status without exiting the country? Will there be any life ban on me due to the unfair absconder complaint lodged against me by the employer? Can the ban be legally lifted through any authority? My employer is willing to withdraw the absconder complaint filed with the Ministry of Labour if I do not ask for my end-of-service dues. Will the ministry accept the withdrawal of the complaint and lift my ban?
I would advise the questioner that the Labour Ministry will not accept the withdrawal of the absconder complaint by the employer. Therefore, I advise the questioner to file a complaint with the Labour Ministry against the employer demanding his rights like the end-of-service dues and commission. The questioner may insist with the Labour Ministry to refer the case to the labour court only if he has proof that the employer reported him falsely to avoid paying him his pending salary and his end-of-service dues. If the labour court passes a judgement in the questioner’s favour and mention that the questioner is not an absconder and is entitled to his rights, the questioner can submit the judgement copy to the ministry, which will accordingly quash the absconder complaint.
Readers from Dubai ask: We are partners in a limited liability company, but due to financial problems, we are not in a position to run the company anymore. We want to close down the company as per the UAE company law. What is the procedure for this? The company’s licence has expired. As per the UAE Labour Law, do we need to appoint auditors? In case one of the partners is outside the UAE, do we still have the right to go ahead? What is the procedure for cancelling the visas of the partners and employees? Can we go for liquidation?
I would like to clarify to the questioners that no matter what type of business you own in the UAE, you must cancel your business licence and all permits associated with it when you have made your decision to close it down or when your company is facing a bad financial situation. It is important for relevant government entities to know that you are no longer in the business, so that you will avoid any accumulated fines and penalties incurred when your licence is not renewed upon its expiry date. If you are in a shareholding company, it is important to discharge your liabilities towards creditors and partners and protect the interests of you and your shareholders. There are basically two types of company liquidation — voluntary and compulsory, which can be requested by the shareholders or the creditors.
Procedures for cancelling a limited liability company in the UAE will be according to Federal Law No. 2 of 2015 (the Commercial Companies’ Law), articles 306 to 326. The law provides that a company can be dissolved for any of the following reasons: expiry of its duration cited in the articles of incorporation or association; completion of the objective for which the company was established; or loss of all or most of the company’s assets.
For the dissolution of the company, in case the share capital of an LLC company is half, directors have to put the matter of dissolution before a general meeting. In case the losses suffered by the company amount to more than half of the capital, the partners who hold one-fourth of the capital may request dissolution. Liquidation is to be carried out by one or more liquidators to be appointed by the partners or the general meeting. Further, a notice has to be given about the dissolution by entering the same in the Commercial Register and publication of the dissolution notice in two Arabic newspapers. A company has a legal personality only to the extent required by the liquidation process and it is thereby required that the name of the company should have the suffix “under liquidation” added. Apart from the above-mentioned procedure, a company can also be dissolved due to it being declared bankrupt. Bankruptcy and composition of liability with creditors are separately governed by provisions of the Commercial Transactions Law. The new bankruptcy law in the UAE is a complete legal framework meant to assist financially troubled companies to avoid collapse. It took effect on December 29, 2016. It is part of the global wave of insolvency reform referred to as the “rescue culture”. A commercial company may be declared bankrupt if it ceases to pay its commercial debts at the time they fall because of a disruption of its financial operations. A company may be declared bankrupt even if it is in the process of liquidation. In case of public joint stock companies and limited liability companies, if the declaration of bankruptcy is requested, then the liquidation proceedings are suspended, and it may not be liquidated before the completion of the bankruptcy process. In case of compulsory liquidation, the procedure commences with a court order and when any partner files the case without all partners in attendance. This type of liquidation also happens when the creditors of the company file for the dissolution of the company. If you want to take the option of voluntary liquidation, a meeting shall be held by the shareholders during which a resolution must be passed regarding the process of liquidation to begin. A liquidator must be appointed. It can happen any time when the shareholders decide to end the business activity.
Questions answered by lawyer Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.