Provisions of the law expected to boost funding for SMEs.
Dubai: The UAE cabinet on Sunday approved the much-awaited draft law on bankruptcy.
The new law paves the way for companies in financial distress to restructure.
A number of industry bodies such as the UAE Banks Federation (UBF) have been lobbying the government to expedite the new insolvency law for some time.
The adoption of the law is widely expected to improve businesses’ access to bank funding while improving the asset quality of the UAE banking sector.
Under the existing legislation, companies and businesses that faced financial distress and unpaid debt could result in jail terms forcing may business owners and executives to run away from the country leaving behind large unpaid debts.
The ability to launch criminal charges against individuals who issue bad cheques has long been cited as one of the principal obstacles to doing business in the UAE.
Rashed Al Baloushi, chief executive officer of Abu Dhabi Securities Exchange (ADX), said the cabinet’s approval of the bankruptcy law is timely and will help increase the UAE’s economy’s competitiveness as well as boost the investment climate.
He said the approval of the law will also help enhance the regulatory framework for the economy.
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