This article provides an overview of cases of personal civil liability of banks’ shareholders for the banks’ debts towards their creditors and liability for damages caused to banks by personal wrongful acts of their shareholders. This article describes an approach that Ukrainian courts have taken to the matter and the relevant legal principles together with mechanisms that make the liability of substantial shareholders a possibility.

Introduction

В течение последних двух лет Украина пережила существенные политические и экономические потрясения, что очень повлияло на финансовую и банковскую системы нашего государства. Как следствие на сегодняшний день процедура ликвидации применена к 65 банкам. Каждый должник должен понимать, что введение временной администрации или процедуры ликвидации банка не является спасением от взыскания с него задолженности, ведь банки, в отношении которых применяются данные процедуры, любым способом будут стараться вернуть денежные средства, за счет которых осуществлялось кредитование.

The new Bankruptcy Law (Federal Law Number 9 of 2016) is seen as a strategically improved law in comparison with previous insolvency laws. Having said that the Bankruptcy Law so far covers the following:

i. Permits organizations in money related issues and provides the chance to rearrange their issues so as to stay suitable;

ii. Companies failing to stay financially viable, offers them a chance to seek liquidation;

The UAE has pioneered a new insolvency regime for individuals or natural persons with the issuance of the stand-alone Insolvency Law No. 19 of 2019 (Insolvency Law), which has come to effect as of 30 November 2019.

The Insolvency Law is intended to provide sufficient protections to natural or civil persons who are facing financial distress and are unable to settle their debts, unlike the UAE Bankruptcy Law which regulates commercial companies and individuals considered as traders under the Commercial Transactions Code.

In yet another example of the Dubai International Financial Centre (DIFC) making its company and insolvency law even more versatile, the DIFC has introduced a mechanism which will operate in a similar manner to a scheme of arrangement under English law. The law came into effect on 12 November 2018.

Key terms

Introduction

When a limited liability company goes into liquidation, its creditors are faced with considerable uncertainty, not least over their rights to securities on loans made to the defaulter. In such cases, a number of questions arise, including the following:

UAE Legislators on 9 December 2018 issued a Decision of Council of Ministers Number 57 of 2018 (the Decision) regarding the recent amendments in Federal Law Number 11 of 1992 concerning the UAE Civil Procedure Code (the Civil Law). The decision issued by the Cabinet is major regarding the advertising and notification procedures. The present article by Legal Consultants of Dubai shed lights on the notification procedures in Execution cases. Following are the notable amendments made under the Decision regarding execution orders:

Recent amendments to the UAE Civil Procedure Code (CPC) are aimed at modernising and enhancing the litigation process in the UAE Courts. This includes simplifying and expediting the process for a creditor to obtain an enforceable judgment on admitted debt claims as a "Payment Order". Clyde & Co reports here on this welcome development and a very recent success with such a claim under the new regime.

On May 30, 2019, Dubai’s ruler, Sheikh Mohammed bin Rashid al-Maktoum, signed DIFC Insolvency Law, Law No. 1 of 2019 (the “New Insolvency Law”) into law, thereby repealing and replacing DIFC Law No. 3 of 2009. The New Insolvency Law, and supporting regulations (the “Regulations”), became effective on June 13, 2019, and govern companies operating in the Dubai International Financial Centre (the “DIFC”).

The UAE Government recently passed legislation that substantially simplifies the procedure for obtaining a payment order.

Payment orders may offer an efficient method to obtain ex parte judgement against a debtor. They are frequently used when claiming amounts arising from bounced checks or other commercial instruments.