14 May 2012
The new Financial Restructuring and Bankruptcy Law is expected to be finalized by the end of this year, a senior government official told Zawya.
"We hope that it will be ready by the end of the year," Dr. Hadef Bin Jouan Al Dhaheri, the UAE Minister of Justice, told Zawya on the sidelines of the global policy conference. A senior official at the Dubai Economic Council added that the next step would be to address the issues of individual bankruptcy.
"We will tackle the issues of individual bankruptcy at a later stage where it will be supported with executive by-laws," said Hani Al Hamli, Secretary General at the Council. "The new law, when it comes into effect, will feature more general articles. But the enforcement of the detailed procedures will be addressed through the by-laws perspective."
The main aims of the conference, which runs for two days, is to raise awareness about legal policy topics related to the Financial Restructuring and Bankruptcy Law, to highlight best practices and their applicability in the UAE and in Dubai, to strengthen institutional capabilities of the entities concerned and to encourage the business community to learn how to benefit from the law.
"It is in the final stages but has to also get the approval of other government entities. We do have an existing law dealing with bankruptcy but this will be a separate law. We are still in discussions with the Ministry of Finance about the current draft since they are the key drivers behind it," Al Dhaheri said.
The UAE has improved its standing in the World Bank's Ease of Doing Business rankings to 33 in 2012, up from 35 in 2011. However, it remains at an unchanged rank of 151 in terms of resolving insolvency. The new law "seeks to address the need of the hour", Al Hamli said.
"A clear law is necessary to protect companies and investors in the UAE. It will help to greatly improve the investment climate," he said. The DEC has played a key role in reviewing the recent draft of the law and had formed specialized committees comprising representatives from both the public and private sectors in order to make observations and recommendations for improving the development of the draft law.
Al Hamli clarified that the new law will be separate to the existing companies law. "But it will be interlinked to the companies law because it will tackle the practice of the company and its governance," he told Zawya.
The hybrid law will be tailored for local circumstances, he added. "It will be a hybrid law, which will tackle what suits us from a pro-UAE legislative viewpoint. Hence we have opened up a debate on the law with all its 36 dimensions - this means that we will gain insights from law schools, financial institutions, the judiciary and all other stakeholders. We have also invited the schools of law and bankruptcy, which is a new experience for us to learn from the latest lessons."
The provisions of the new draft law apply more widely than the current rules and procedures governing bankruptcy in Book 5 of Federal Law No. 18 of 1993. According to a statement on legal firm Hadef & Partners website in January, the new law empowers the UAE Council of Ministers to set up a Commission to administer the 'financial reorganization' procedure as well as maintain a centralized register for disqualified persons and directors and a centralized register of bankruptcy restrictions and orders.
Hadef & Partners and Clifford Chance have been instructed by the UAE Ministry of Finance on behalf of a number of UAE government stakeholders, to assist in formulating key policy proposals and to draft a new proposed federal bankruptcy law for the UAE, based on a comparative study of insolvency laws in a number of other legal jurisdictions, including England and Wales, France and Germany.
The GCC countries still lack an effective law for financial restructuring and bankruptcy which strongly affected - along with other factors - the attractiveness of investment prospects in these countries and therefore missed opportunities of growth, Al Hamli said. "The importance of this law is tremendous as it reassures foreign and local investors protection in case of defaults and difficulties in fulfilling their obligations towards creditors. Such a project will make the UAE the first GCC country to handle the financial restructuring and bankruptcy law in an objective and scientific manner, as well as to combine the regulatory and legislative framework and with experiences and practice."
The law draft also covers various advanced concepts in the field of financial restructuring and bankruptcy, such as cross-boarders solutions which is described as a crucial issue for Dubai as it has an open economy, supports foreign investments, and welcomes qualified and skilled-labor from all around the world. The new law, however, will not apply to government entities or entities incorporated and licensed to operate in a financial free zone such as the DIFC.
© Zawya 2012
The new Financial Restructuring and Bankruptcy Law is expected to be finalized by the end of this year, a senior government official told Zawya.
"We hope that it will be ready by the end of the year," Dr. Hadef Bin Jouan Al Dhaheri, the UAE Minister of Justice, told Zawya on the sidelines of the global policy conference. A senior official at the Dubai Economic Council added that the next step would be to address the issues of individual bankruptcy.
"We will tackle the issues of individual bankruptcy at a later stage where it will be supported with executive by-laws," said Hani Al Hamli, Secretary General at the Council. "The new law, when it comes into effect, will feature more general articles. But the enforcement of the detailed procedures will be addressed through the by-laws perspective."
The main aims of the conference, which runs for two days, is to raise awareness about legal policy topics related to the Financial Restructuring and Bankruptcy Law, to highlight best practices and their applicability in the UAE and in Dubai, to strengthen institutional capabilities of the entities concerned and to encourage the business community to learn how to benefit from the law.
"It is in the final stages but has to also get the approval of other government entities. We do have an existing law dealing with bankruptcy but this will be a separate law. We are still in discussions with the Ministry of Finance about the current draft since they are the key drivers behind it," Al Dhaheri said.
The UAE has improved its standing in the World Bank's Ease of Doing Business rankings to 33 in 2012, up from 35 in 2011. However, it remains at an unchanged rank of 151 in terms of resolving insolvency. The new law "seeks to address the need of the hour", Al Hamli said.
"A clear law is necessary to protect companies and investors in the UAE. It will help to greatly improve the investment climate," he said. The DEC has played a key role in reviewing the recent draft of the law and had formed specialized committees comprising representatives from both the public and private sectors in order to make observations and recommendations for improving the development of the draft law.
Al Hamli clarified that the new law will be separate to the existing companies law. "But it will be interlinked to the companies law because it will tackle the practice of the company and its governance," he told Zawya.
The hybrid law will be tailored for local circumstances, he added. "It will be a hybrid law, which will tackle what suits us from a pro-UAE legislative viewpoint. Hence we have opened up a debate on the law with all its 36 dimensions - this means that we will gain insights from law schools, financial institutions, the judiciary and all other stakeholders. We have also invited the schools of law and bankruptcy, which is a new experience for us to learn from the latest lessons."
The provisions of the new draft law apply more widely than the current rules and procedures governing bankruptcy in Book 5 of Federal Law No. 18 of 1993. According to a statement on legal firm Hadef & Partners website in January, the new law empowers the UAE Council of Ministers to set up a Commission to administer the 'financial reorganization' procedure as well as maintain a centralized register for disqualified persons and directors and a centralized register of bankruptcy restrictions and orders.
Hadef & Partners and Clifford Chance have been instructed by the UAE Ministry of Finance on behalf of a number of UAE government stakeholders, to assist in formulating key policy proposals and to draft a new proposed federal bankruptcy law for the UAE, based on a comparative study of insolvency laws in a number of other legal jurisdictions, including England and Wales, France and Germany.
The GCC countries still lack an effective law for financial restructuring and bankruptcy which strongly affected - along with other factors - the attractiveness of investment prospects in these countries and therefore missed opportunities of growth, Al Hamli said. "The importance of this law is tremendous as it reassures foreign and local investors protection in case of defaults and difficulties in fulfilling their obligations towards creditors. Such a project will make the UAE the first GCC country to handle the financial restructuring and bankruptcy law in an objective and scientific manner, as well as to combine the regulatory and legislative framework and with experiences and practice."
The law draft also covers various advanced concepts in the field of financial restructuring and bankruptcy, such as cross-boarders solutions which is described as a crucial issue for Dubai as it has an open economy, supports foreign investments, and welcomes qualified and skilled-labor from all around the world. The new law, however, will not apply to government entities or entities incorporated and licensed to operate in a financial free zone such as the DIFC.
© Zawya 2012
