By: Amr Adel and Ramy Sameeh
Dubai-Mubasher: The UAE’s new bankruptcy law will contribute to reducing the risks of doing business, protecting investors’ assets and helping companies in financial distress, according to officials and investors.
The new law, earlier approved by the Cabinet, will encourage businessmen who seek a secure environment to direct their investments to the UAE by strengthening their trust in the legislative and legal infrastructure.
Under the new law which is likely to take effect early 2017, businessmen will face a prison sentence of up to five years and a fine of up to 1 million dirhams ($272,000) if they fail to pay debts, thus avoiding filing for bankruptcy, according to Obaid Humaid al-Tayer, Minister of State for Financial Affairs.
“Having a federal bankruptcy law would ensure companies can survive and have the needed flexibility to manage their finances - all of which are factors that help attract more investments into the UAE,” according to Rashed Al Baloushi, CEO of the Abu Dhabi Securities Exchange (ADX).
The current insolvency law is comprehensive, but it applies more to individual businessmen and small companies, and doesn’t fit for a major economy like the UAE, according to Mazen Boustany, a partner with Baker & McKenzie Habib Al Mulla said.
The new law will apply to both state-owned and private companies, in addition to firms based in special free zones.
Tranlstaed by: Julian Nabil
