ABU DHABI, 6th September, 2016 (WAM) -- The Ministry of Finance, MoF, has reviewed the final draft of the Federal Bankruptcy Law. The bankruptcy law sets up a new regulatory body, the Committee of Financial Restructuring.

The UAE Cabinet will decide on the number of members and entities that will represent the committee and will administer the committees law and its procedures. The committee is in charge of overseeing the procedures of financial restructuring outside the scope of the court, appointing experts in the field of financial restructuring, establishing an electronic record of individuals issued against them a bankruptcy ruling.

Obaid bin Humaid Al Tayer, Minister of State for Financial Affairs, highlighted that the ministry sought to implement a law that is based on modern legislative and economic principles, while taking into consideration the global developments and changes taking place in the economic and business sectors. These efforts have led to implementing the bankruptcy law, and distinguishing it from other laws on a regional level as well as in developed countries. The law was set to match various bankruptcy cases, determine all legal tools to restructure the debtors business in accordance with specific terms and conditions as well as a legislative framework.

Al Tayer said, "Mature economies have proven the need to implement a bankruptcy law in each country that wishes to strengthen its economic status. The bankruptcy law is one of the most important pillars for the local economy, as it provides protection for all parties, in addition to its pivotal role in attracting capital, in a safe and attractive investment environment, providing protection legislation and legal acts." The law works on identifying different ways to avoid bankruptcy cases and liquidation of the debtors funds, a comprehensive financial restructuring outside the scope of the court, composition procedures and the possibility to get new loans under terms set by the law. The law will also prevent individuals from bypassing the law as there is a number of punishments including a five year prison sentence as well as fines of up to a million Dirhams.

The law includes raising credit levels and financial guarantees within its legislative priority to strengthen confidence among investors and boost the economy by enabling the financially distressed businesses to restructure, and pay their debts and obligations without disrupting the production process in accordance with a transparent legal framework. This makes it the only law which includes those specifications in the Arab region.

The law applies to: companies that were established under commercial company laws as well as those which were not established under commercial company laws, companies which are semi or fully owned by the federal or the local government where their establishment legislatives are under this law, companies and institutions established in free zones and which do not have provisions to regulate composition procedures or restructuring bankruptcy according to Federal law No.08 of 2004 concerning financial free zones, any trader and licensed civil company.

Copyright Emirates News Agency (WAM) 2016.