The UAE cabinet has approved the country’s long-awaited draft law on bankruptcy. In a series of tweets, Sheikh Mohammad bin Rashid Al Maktoum, Vice-President of the UAE and Prime Minister and Ruler of Dubai, said: “Today, we approved the final draft of the Federal law on Bankruptcy. The law aims to promote the investment attractiveness of the UAE economy and facilitate business.”
The new law paves the way for ailing companies to restructure – something that is not currently available in the UAE. Industry bodies including the UAE Banks Federation have been lobbying for such a law for several years. They claim the absence of formal bankruptcy legislation in the country hinders the growth of small-to-medium-sized businesses in particular – a sector the government is keen to develop.
Under existing legislation, unpaid debt or a bounced cheque can wind businesses in jail. Just last week, economy minister Sultan Saeed al-Mansouri was reported to have said the legislation may be finalised by the end of this year, to help companies weather challenging economic conditions.
We also passed the final version of the new Federal Law on bankruptcy, which aims to promote both investment and ease of doing business.
— HH Sheikh Mohammed (@HHShkMohd) September 4, 2016