UAE President Sheikh Khalifa bin Zayed al-Nahyan on Monday issued a long-pending decree on bankruptcy laws in the country.
Dubai Media Office posted on its official Twitter page that the UAE President had "issued a decree on federal law number 9 on 2016 on bankruptcy". The bill is expected to come into force in late December or early January.
The new legislation is expected to help smaller companies in particular as the UAE economy slows because of low oil prices.
Last month, Essam Al Tamimi, one of the country’s top lawyer, said the new law, understood to be based on ‘Chapter 11’ bankruptcy legislation in the US, will focus on company restructuring – 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.
This has proved problematic for smaller companies in particular as some executives of troubled firms have fled the country, leaving behind bad debts.For all the latest business 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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