Plans to bring in a long-awaited insolvency law in the UAE will strengthen business confidence and boost inward investment, according to a firm which helps foreign companies set up in the region.
The Links Group, a provider of commercial facilitation and advisory services, welcomed the approval by the UAE Cabinet of the draft law which aims to regulate accumulated debts, ease restructuring of companies and support troubled businesses.
John Martin St Valery, founding partner of The Links Group, said: "Approval by the Federal National Council of the proposed insolvency law would strengthen business confidence in the region and attract more inward investment into the UAE.
"In our dealings with foreign companies the harsh penalties applied to defaulting businesses registered in the UAE has often been identified as a barrier to market entry."
He added: "With the draft insolvency law having been approved by the Cabinet, we are optimistic the FNC will also rule in its favour.
"Decriminalising bankruptcy and simplifying the process to help struggling businesses would make the UAE an even more attractive investment destination. It would also help to foster more entrepreneurship and innovation as the risk burden associated with potential failure would be significantly lessened."
The Links Group is a preferred partner of the Government of Dubai through a strategic alliance with the Foreign Investment Office of the Dubai Economic Department. It works closely with foreign trade bodies and companies to help attract investment into the UAE.
Earlier this month, Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Vice President and Ruler of Dubai, said the proposed draft law presents flexible strategies to bailout businesses faced with financial troubles that might lead to bankruptcy.
The law is also expected to include measures that will decriminalise the issuing of bounced cheques.
Deloitte Corporate Finance Limited, in a report issued in January this year, urged authorities in Dubai to relax the criminal implications of bankruptcy and bounced cheques as part of a strategy to enable the emirate, as a financial and trading hub, to reach the next level in terms of sustainability and competitiveness.
The draft law will now go to the Federal National Council for approval, and if passed there, it will be referred on to the rulers of the seven emirates, before it gets final approval from UAE President, Sheikh Khalifa bin Zayed bin Sultan Al Nahyan.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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