The long-awaited bankrupcy law approved by the Cabinet of Ministers of the United Arab Emirates will allow the entrepreneurs and heads of the companies who are in a difficult situation to avoid imprisonment, but with some conditions.
The bankrupcy law approved by cabinet council of the UAE, as expected, will come into force at the beginning of 2017 after its acceptance, Obeyd Humeyd Al Tayer, the minister of financial affairs reported journalists.
"This law will bring additional benefit to business community and will play a big role both for foreign, and for local investors. It is an important step for the UAE" — he told.
Now in the country there are no modern rules of bankruptcy that complicates the procedure of debt restructuring for the companies and threatens with imprisonment in case of inability to fulfill financial liabilities. The debts left by entrepreneurs who left the country in fear for the freedom for last year are estimated by specialists at $1,4 billion. That is why waited for the law in the UAE with such impatience.
The new law assumes creation of regulating board, Committee on financial restructuring which will supervise cases on restructuring and to appoint experts for their handling. It will provide an opportunity for the companies to obtain the new credits in accordance with the terms, established by the law.
Nevertheless, imprisonment for a period of up to five years and a penalty at the rate to 1 million dirhams ($272 thousand) can still threaten entrepreneurs if their company is not in a condition to pay debts and consciously avoids application for insolvency proceeding, Al Tayer told.
The new law won't extend to criminal proceedings which were already initiated in the relation of outstanding debts earlier. It will be applied both to state, and to the private companies with exceptions for the organizations which are based in special free zones.
Al Tayer told that in the UAE now the act of bankruptcy of physical persons is also drafted. According to him, work on the project will take about 12 months.
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