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Freezing of License – An Alternative to Closing/Liquidating of Business due to Financial Crisis for 3 Years

The impact of Coronavirus (COVID-19) is being felt by all businesses around the world. Arab states’ second largest economy, the UAE, is also suffering from the impact of COVID-19. “Trade, tourism and transportation” the foundations of the UAE economy have had a serious impact on businesses in the UAE.

This has forcefully resulted thousands of Companies to cease/liquidate their business. But nothing is permanent in the world, not even this pandemic and positively all will be back to normal within sometime. Closing the Company in the UAE is a multi-step procedure that involves liquidation of the company and assets, paying creditors, etc. and on the other hand setting up a new business from the starting can be time consuming and hectic. So, is there any other alternative which suits the requirement of the Business Owner?

If you own a Company and it is undergoing any restructuring of financial liabilities or wants to avoid liquidation or prevent losses, then freezing your Business License for a specified period would be a better option. By doing this you can retain your trade name and Business License keeping it inactive for as long as 3 (three) years with no further renewal fees during that period and you do not have to go through the whole process of starting your business again.

The Company cannot carry on with any of its operations, once the license is frozen as it would be illegal till the renewal. But the owner or shareholders of a frozen license can start new business in Dubai, by applying for a new license under his name. A license will automatically be cancelled if it is not renewed for 5 continuous years.

Department of Economic Development (DED) allows a Company to freeze its license only when no more employees are dependent on the Company, all VISAs have been cancelled as well as all governmental charges have been paid off and there is no pending litigation or legal action against the Company at the time of applying for freezing of license.


The procedure for freezing a license is as follows:

·        Issuing a letter on Company letterhead requesting to temporarily freeze the license.

·        The letter should contain details or the reasons and justifications behind the decision.

·        Canceling all employment VISAs.

·        Obtaining a confirmation letter from Ministry of Human Resources and Emiratization mentioning that there are no sponsored people on your license. The letter must also confirm that labor restrictions are not imposed on the license.

No creditors will lose their claim against the Company with frozen license. If a creditor initiates a court case against the Company with frozen license, DED will intimate the owner of the Company and activate the license immediately.

Any partner of a Company with an expired license will be blocked from renewing or registering any other new or existing licenses they might have under their name.

Once you plan to restart after the completion of the freeze period, the manager or shareholders must apply for renewal with a valid lease contract registered in Ejari at the Department of Economic Department.

If the Company’s owner doesn’t renew his license, a fine is imposed. All emirates and free zones have different fines, as such AED 2500 in Department of Economic Development (DED), and such fines can be applied on monthly or yearly basis. A frozen license can stop the accumulation of fines during the freezing period of the license and liquidation can also be avoided.

Nobody would like to close the Company if he can suspend the business temporarily and be prevented from paying the license non-renewal fines and can keep the license by freezing it for some time and resume it once you are back on track, WHY NOT OPT FOR IT!


In case you require any further information or clarification, feel free to contact us at below given details:



+971 50 409 2494

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