As part of the continuous efforts of the Federal Tax Authority (FTA) to assist corporate taxpayers to understand and manoeuvre through the complexities of the corporate tax regime of UAE, FTA has released the latest Business Restructuring Relief Guide for Corporate Tax Purposes (Guide). However please be mindful that, unlike Tax laws, FTA Guidelines are not legally binding.
United Arab Emirates enacted Federal Decree Law No. 51 of 2023 on Financial Restructuring and Bankruptcy (the “New Bankruptcy Law”). The New Bankruptcy Law replaced Federal Decree Law No. 9 of 2016 on Bankruptcy and has come into force from May 1, 2024.
The New Bankruptcy Law aims at preserving the stability of the national economy, protect rights of creditors and helping debtors to maintain their business to the extent possible, while improving the restructuring and bankruptcy proceedings in the UAE.
The United Arab Emirates legislators have enacted Federal Decree Law No. 51 of 2023 on Financial Restructuring and Bankruptcy (the “New Bankruptcy Law”).
It is worth noting that the New Bankruptcy Law established special courts to adjudicate bankruptcy applications which will be referred to as the bankruptcy courts (“Bankruptcy Courts”).
Key Takeaways
Key Takeaways
Morgan Heavener, Darren Mullins and Paul Wright, Accuracy
This is an extract from the 2023 edition of GIR's Europe, Middle East and Africa Investigations Review. The whole publication is available here.
On 12th May 2023, the High Court of England and Wales issued another significant judgment which is expected to advance the progress of reciprocal enforcement of judgments between the courts of the United Arab Emirates (UAE) and England and Wales.
The Dubai Court of First Instance concludes that preventive composition, restructuring, bankruptcy, and liquidation are only possible if the debtor company has existing assets.
In a recent judgment issued on 26 April 2023 the Dubai Court of First Instance rejected the liquidation application of an indebted company on the basis that the company does not have any assets that could be liquidated.
Over the past year or so, we have seen a number of examples of Dubai Courts taking an extremely cautious approach to handling debtor-led bankruptcy cases, particularly in relation to determining whether there is a legitimate distressed financial position and enquiring as to the conduct of managers leading to the bankruptcy of companies.
COMMERCIAL | JANUARY 2023 BANKRUPTCY IN THE UAE PART 2: DIRECTORS’ DUTIES 1. Introduction One of the most common ways of conducting business within the UAE is through an onshore limited liability company. Commercial companies incorporated onshore in the UAE have a separate legal personality.1 The company can enter into legally binding agreements in its own name and take on valid and binding obligations.