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• Appointing and specifying one or more liquidators (or the partners may choose to act as liquidators, in which case this must be specified in the resolution).
• Specifying the authorities of the liquidator.
• The resolution should be notarised before a Notary Public and then published in the official Saudi newspaper, Um al-Qura.
Step 3: Liquidator
Once the partners choose a liquidator, a power of attorney should be issued authorising it to conduct a comprehensive audit of assets and liabilities of the company and to marshal and distribute its assets to satisfy debts and to allocate surpluses, if any.
If there is more than one liquidator, they will be considered jointly liable for any wrongdoing. However, the liquidator typically has broad authority and the firm will be committed to the liquidator's transactions done within the bounds of its authority. While a full analysis will be required by the liquidator, some of the more obvious potential liabilities are as follows:
• Existing contracting obligations: This refers to ongoing agreements and any outstanding offers. It will be necessary to conclude, settle or transfer any existing agreements and to ensure all outstanding offers (even if not formally accepted) are resolved.
• Building leases and office equipment.
• Employment issues: Saudi labour law is typically employee-friendly with regard to the termination of existing employment contracts, so this is often a significant liability because it may be necessary to pay employees until the end of their contracts and/or to pay applicable end-of-service benefits. Resolution of employment issues also involves the transfer of sponsorship and/or cancellation of work visas for expatriate employees, which can be time-consuming.
Step 4: Dealing with government entities
The company must do the following:
• Issue a power of attorney allowing the liquidator to act on its behalf.
• Write a letter using the company letterhead, which must then be authenticated by the Chamber of Commerce declaring that the company owes no debts to the Department of Zakat and Income Tax.
• After settlement of all employment contract issues, including transfer of sponsorships and/or cancellation of all visas, obtain a printout/letter from the Ministry of Foreign Affairs stating that all employee visas have been cancelled.
• Using the printout/letter obtained from the Ministry of Foreign Affairs stating that all employee visas have been cancelled, cancel the firm's Labour Office file.
• The company should submit a file to the Saudi Arabian General Investment Authority (Sagia), the entity that provides licences to foreign investors, with all of the firm's original governmental licences, requesting termination of its operations and deletion of its licences. (This provision applies only to Sagia-licensed entities and businesses with some foreign ownership. Wholly Saudi-owned companies are not subject to this requirement.)
• Cancel its General Organisation of Social Insurance file.
• Cancel its municipality licence.
• Cancel its Chamber of Commerce membership.
• Cancel its commercial registration.
Step 5: Inventory of assets and liabilities
Within three months of being appointed, the liquidator, in cooperation with the company's auditor, will conduct an inventory of all assets and liabilities, and the management of the firm will submit all business documents requested by the liquidator.
Step 6: End of fiscal year
At the end of the fiscal year, the liquidator and auditor will prepare the company's financial statements, along with a report on the liquidation process.
