Insolvency Legislation in Dubai
Updated on Thursday 15th December 2016
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The insolvency law in UAE is dealing with insolvency and bankruptcy. Besides that, there are certain provisions which can offer different creditor-friendly plans, with interesting substitutes instead of liquidation procedures. Our accountants in Dubai can provide you with information and details about the Insolvency Law for enterprises in the city and its implications.
What you need to know about the insolvency legislation in Dubai
First of all, a debtor needs to file for bankruptcy within 30 days, starting with the date he stopped paying the creditors. If a joint stock company is losing more than 50% of its capital, it is time to consider the dissolution of the firm. The next step is to organize a board of directors meeting, in order to convene about the article related to the dissolution of the company and to initiate the proceedings, as stipulated by the Companies Law Article. The same goes for a limited liability company in Dubai, and if the dissolution of the enterprise has been approved by the majority, the next stage is the liquidation process, which is made by an approved liquidator, who will investigate the firm’s situation, the financial statements, and the debts.
The liquidator also has the responsibility to pay all the debts, considering if there are sufficient assets to discharge for all the creditors involved. If the distribution of the company’s assets has ensued, the liquidator has to give a final account to the general association and to register the insolvency process at the Trade Register in Dubai. On the other hand, we remind that you can solicit our accounting services in Dubai, no matter if you have a small or a large company in the city. You may ask for audit services too.
Entities which deal with the insolvency legislation in Dubai
According to the Commercial Code in UAE, the insolvency law is available for any entity registered and for any individual who deals with commercial activities that generate profits. The companies registered in the Dubai’s free zones are exempt from the provisions of the Insolvency Law, just like the entities owned by the Government.
The main aspects of the Insolvency Law in UAE
The Committee of Financial Restructuring in UAE is the important authority which deals with the financial procedures regarding the restructuring of the companies and can appoint experts who can examine the financial situation of the firm when insolvency has been requested. Regarding the law, we remind the important aspects you should consider when dealing with insolvency and you wish to avoid bankruptcy:
• the first solution is to think about a financial reorganization, with the help of the Central Bank in the UAE;
• a financial restructuring is necessary if certain debts are involved;
• increasing new funds may be a solution to avoid bankruptcy of your company.
Our accounting firms in Dubai can offer you additional details about the insolvency legislation in Dubai, and about how to avert such issue for your company in the city, so please feel free to contact us.