UAE To Improve Bankruptcy Law

by Lorys Charlambous, Tax-News.com, Cyprus

05 December 2011

The United Arab Emirates Ministry for Finance is expected to approve legislation that will introduce new rules with regard to bankruptcy and financial restructuring.

The legislation will broaden the scope of existing rules to cover individuals - as well as investors and businesses, as is currently the case - and will include individual and civil debt cases, and debt instances concerning professionals, such as doctors and lawyers, among other occupations.

The legislation also updates a number of areas to modify existing rules. The legislation stipulates what a debtor's obligations are regarding commercial and non-commercial debt, and provides additional protections to uphold the rights of both debtor and creditor.

In the case of corporates, the legislation provides new provisions on the restructuring of companies and organizations, and aims to enable viable companies to gain increased access to bank funding, on certain conditions.

Welcoming the advanced stage of negotiations towards the final legislation, which has now been forwarded for the approval of the Ministry of Justice, Younis Haji Al Khouri, the Undersecretary at the Ministry of Finance, said: “These efforts have led to this initiative to develop a new law in this area; one that is built on modern and advanced economic principles, and is distinguished from previous laws in its efficiency and effectiveness.”

“The Ministry expects that the new, untraditional features incorporated in this new law will aid in promoting growth in the UAE's economy as it will allow for business that are facing financial hardships to work on restructuring frameworks and on repaying their debt without decreasing their productivity.”

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