We have been three partners in a limited liability company for the last four years. Recently, we unanimously decided to close down the company. What is the legal way to ensure this closure? Is it sufficient only to cancel the commercial licence and close the company’s bank account? Please advise.
A limited liability company shall be dissolved under the following circumstances:
1. Expiry of the period specified in the Memorandum and Articles of Association, unless this period is renewed in accordance with the rules stated in the company’s Memorandum and Articles of Association.
2. Expiry of the purpose for which the company had been established.
3. Loss of all or most of the funds of the company in a way that makes the investment of funds unprofitable.
4. Transfer of all shares to a number of shareholders or partners less than the minimum legally prescribed, unless the company, within a period of six months from the date of transfer, converts to another type of company or the number of partners or shareholders is increased.
5. Merger in accordance with the law.
6. Unanimous agreement between partners to terminate the company unless a certain majority is provided for in the company’s Memorandum of Association.
7. A court order to dissolve the company.
Article (304) states that (2) If the partners have agreed to dissolve the company, the agreement shall include the liquidation method and the name of the liquidator. (3) No partner or shareholder is entitled to any part of the company’s capital, when dissolved or liquidated, unless all debts of the company are paid off.
It is a requirement that a valid resolution for dissolution be adopted by the partners by the same majority required for the amendment of the company’s Memorandum of Association and they should have a liquidator. The resolution should be attested by the notary public and then, according to Article (305), the company’s managers, board chairman or the liquidator, as the case may be, shall enter the dissolution resolution in the commercial register with the competent authority and the dissolution resolution shall be published in two local daily newspapers, one of which has to be Arabic. The dissolution resolution may be invoked against third party only form the date of entry in the commercial register. When the company is dissolved in the commercial register and all is done, you can close the bank account.