Freezing License or Liquidating Company in Dubai?

Running a business in Dubai can be exciting and rewarding, but sometimes things don’t go as planned. You may need to take a break from operations or permanently close the business. That’s when two options come into play—freezing your license or liquidating your company.

This comprehensive guide will help you understand the differences between freezing a license or liquidating company in Dubai, the steps involved, costs, required documents, and when to choose either option. Whether you’re a small startup or an established business, this article will guide you in simple, clear terms.

Freezing a license in Dubai means temporarily halting your business operations without permanently canceling your trade license. It allows business owners to legally pause their company’s activities for a specific period—typically up to one year at a time, renewable for up to three years—while maintaining the legal status of the business. This is a practical solution for entrepreneurs who are going through temporary challenges such as financial difficulties, seasonal downturns, restructuring, or personal reasons like travel or health issues.

Think of it as “pressing the pause button” on your business rather than shutting it down completely. It gives you time to reorganize, plan new strategies, and recover without the stress of paying for license renewals or facing government fines.

The Dubai freezing license option is especially popular among small business owners and startups who are waiting for better market conditions before restarting operations. By freezing your trade license, you avoid unnecessary expenses like office rent, visa renewals, and regulatory fees during the period of inactivity. More importantly, your business name remains reserved, giving you the freedom to return whenever you’re ready—without starting the company formation process from scratch. It’s a smart and cost-effective solution when you need time to pause.

There are many reasons for freezing a trade license in Dubai, including:

• Low market demand or sales
• Business owner relocating temporarily
• Need to restructure business operations
• Financial difficulties
• Waiting for investment or partnerships

Instead of cancelling the license, freezing allows business owners to legally pause without extra fees or fines piling up.

Freezing license has many advantages:

• No penalties for non-renewal during the freeze
• Preserves the business name for future use
• Lowers operational costs (you don’t pay rent, salaries, or service fees)
• Gives time to reassess the market or business strategy
• Legal protection from fines for inactivity

Let’s walk through the procedure to freeze a trade license in Dubai step by step. This applies to companies under the Dubai Department of Economic Development (DED):

Step 1: Board Resolution

Prepare a board resolution that officially states the company’s decision to freeze the license. All business partners or shareholders must sign this.

Step 2: Cancel Visas

Cancel all active visas under the business, including employee and investor visas.

Step 3: Clear All Dues

Settle any fines, outstanding payments, or government service fees.

Step 4: Get Clearance Certificates

Obtain clearance from utilities such as DEWA, Etisalat/DU, and the leasing office, if applicable, for a physical location.

Step 5: Submit Freezing Request to DED

Submit the freezing request to the DED along with the necessary documents. The request will be reviewed before it is approved.

Step 6: Pay the Freezing Fee

Pay the freezing fee, which is generally around AED 2,000 to AED 3,000 per year.

Here’s what you’ll need:

• Valid trade license
• Passport copies of all shareholders
• Emirates ID copies
• Visa cancellation documents
• Clearance letters (DEWA, telecom, office lease)
• Board resolution
• No Objection Certificate (if required)

If you need a sample of a freeze license Dubai letter, here’s a simple version to guide you:

Subject: Request to Freeze Trade License

To Whom It May Concern,

We, [Company Name], holding trade license number [XXXXXX], wish to temporarily freeze our license for a period of [X] year(s) due to [Reason – e.g., Restructuring, market analysis, financial review].

We confirm that all dues have been cleared and no employees are currently under our sponsorship.

Kindly process our request and issue the confirmation accordingly.

Regards,

[Authorized Signatory]

[Designation]

[Contact Information]

• You can freeze your trade license for up to three years, in increments of one year at a time.
• You must renew the freeze every year by submitting a new request.
• To resume operations, you must reactivate the license and pay the standard renewal fee.

Now, let’s discuss the second option—liquidating a company in Dubai. This means permanently shutting down your business and canceling your license for good.

Company liquidation is the legal process of closing a business, settling any outstanding debts, and distributing the remaining assets to the owners or shareholders.

There are several reasons why a company might choose liquidation:

• Continuous losses
• Bankruptcy or financial trouble
• Owner retirement or relocation
• Merger or acquisition
• Market exit

Unlike freezing, liquidation means the business will never reopen under the same license.

When it comes to closing or pausing a business in the UAE, business owners often wonder whether they should choose freezing the license or liquidating the company in Dubai. The right choice depends on your business goals, financial situation, and future plans. Let’s first understand the two main types of company liquidation:

1. Voluntary Liquidation

Voluntary liquidation happens when the owners or shareholders of the company decide on their own to shut down the business. This is often the case when the business is no longer profitable, when the partners wish to part ways, or when the company’s goals have been completed.

If you’re planning on liquidating a company in Dubai voluntarily, you’ll need to follow the proper legal steps, including passing a board resolution, settling debts, publishing a liquidation notice, and canceling your trade license. In some cases, business owners might consider the freezing license option instead if they plan to reopen the business in the future.

2. Compulsory Liquidation

Compulsory liquidation is ordered by the court. This usually happens when a company has unpaid debts, is involved in legal disputes, or is unable to pay employees and suppliers. In such cases, the court steps in and forces the business to close, settle its liabilities, and liquidate its assets. This type of liquidating company in Dubai is more serious and may involve legal consequences for directors.

When to Freeze vs. Liquidate a Trade License

Before making a final decision, it’s important to compare the options of freezing license or liquidating company. Freezing your license allows you to temporarily pause operations without canceling your business entirely. It’s a smart move if you’re going through temporary challenges or need time to restructure.

On the other hand, if you’re certain that the business will not continue, liquidating the company in Dubai is the more appropriate option.

Many business owners in Dubai are now choosing to freeze their trade license instead of canceling it immediately. The Dubai freezing license option helps you keep your business legally registered while avoiding renewal fees and government penalties during your downtime.

If you want to know how to do this properly, it’s essential to understand the procedure to freeze a trade license in Dubai. It involves notifying the relevant authorities, clearing minor obligations, and submitting a formal application. For business owners seeking guidance, requesting a sample of freeze license Dubai form can help make the process clearer and more organized.

Whether you choose to freeze license Dubai temporarily or go through the liquidation process, understanding your options can help you save time, money, and legal stress.

Suppose you plan with a liquidating company in Dubai. In that case, it’s essential to follow each step carefully to ensure your business is officially and legally closed. The process involves more than just shutting the doors—it includes obtaining legal approvals, settling financial obligations, and properly canceling your trade license.

Step 1: Board Resolution

Begin by holding a meeting with the company’s directors or partners to pass a board resolution approving the company’s liquidation. This document should clearly state the decision to dissolve the business and must be notarized.

Step 2: Cancel All Visas

You must cancel all visas under the company, including those of employees, partners, and investors. This step must be done before proceeding with license cancellation.

Step 3: Settle All Liabilities

Before closing, the company must settle all outstanding liabilities—this includes paying off debts, utility bills, supplier payments, government fees, taxes, and terminating lease agreements.

Step 4: Hire a Liquidator (if required)

For LLCs and larger businesses, you’ll need to appoint a registered liquidator to prepare the final liquidation report and audit. This is mandatory for companies with complex financial structures.

Step 5: Publish a Liquidation Notice

A notice announcing the company’s liquidation must be published in two local newspapers, in both Arabic and English. This notice must remain in effect for 30 to 45 days, allowing the public an opportunity to raise any objections.

Step 6: Get Final Clearance

Once the notice period ends, you must obtain final clearances from various authorities such as the Department of Economic Development (DED), General Directorate of Residency and Foreigners Affairs (GDRFA), Etisalat or DU, and Dubai Customs (if applicable).

Step 7: Cancel the Trade License

After all clearances and requirements are fulfilled, submit the final documents to the licensing authority to officially cancel your trade license. This marks the legal closure of your business.

• Trade license copy
• Shareholder passport copies
• Board resolution for closure
• Final audit report (if required)
• Visa cancellation proof
• NOC from landlord, DEWA, telecom providers
• Clearance letters from banks and other departments

Liquidating company in Dubai costs vary depending on the type and size of the company. On average:

• Small businesses: AED 8,000 to AED 12,000
• Medium to large companies: AED 12,000 to AED 20,000 or more
• Newspaper publication: AED 1,000 to AED 2,000
• Auditor’s fee: Based on complexity (AED 2,000 to AED 5,000)

CriteriaFreezing License Liquidating Company in Dubai
Purpose: Temporary pause, Permanent closure
Cost Lower (AED 2,000–3,000 per year) Higher (AED 8,000–20,000)
Duration Up to 3 years Final, one-time process
Visa Requirement All visas must be canceled All visas must be canceled
Business Resumption Possible, not allowed under the same license
Suitable For Restructuring or waiting for better times, ending the business permanently

Deciding between freezing the license or liquidating the company depends on your current situation and future plans.

Choose a Dubai freezing license if:

• You plan to resume operations later.
• You want to keep your business name.
• You’re going through a short-term issue.

Choose liquidating company in Dubai if:

• You are leaving the market for good.
• Your business has large debts or legal problems.
• You’re merging with another company.

Both freezing and liquidation involve paperwork, government approvals, and strict procedures. A simple mistake can cause fines or delays.

That’s why many business owners work with professionals like Dahhan Business Services to handle the whole process from start to finish. With years of experience in company formation, license freezing, and liquidation, they ensure your business complies with Dubai regulations.

Freezing or liquidating your business is never an easy decision. But knowing the rules and understanding the process helps you make the best choice.

• If you’re facing a temporary slowdown, consider freezing your license and returning when you’re ready.
• If you’re closing down completely, go for company liquidation and exit legally.

Regardless of the path you choose, ensure that you follow the correct procedure to freeze a trade license in Dubai or close your company correctly. That way, your business will remain compliant with UAE laws, avoiding future issues.

📲 Need help freezing your license or liquidating your company in Dubai? Let our experts handle the entire process for you—fast, legal, and stress-free! Whether you’re looking to pause your business or close it permanently, we’ll guide you every step of the way. Message us now on WhatsApp for a free consultation and personalized assistance.

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We’re ready to help you make the right move for your business!

Disclaimer: Dahhan Business Services is not affiliated with any particular government or legal entity. Dahhan Business Services does not give professional legal advice nor any other professional advice subject to a public office in the government. This article merely sets out a simple and basic idea regarding the freezing of a license. Dahhan Business Services in no way holds nor imposes any official governmental or legal authority and the article herein is only to be taken as a guide. All further governmental or legal issues should be addressed to the corresponding authorities.