Tuesday, September 6, 2016

UAE bankruptcy law effective from 2017

In a media round table, the UAE’s Ministry of Finance (MoF) today shared details of the federal bankruptcy law which was recently approved by the UAE Cabinet on September 4.

The federal bankruptcy law falls under the directives of His Highness Sheikh Khalifa bin Zayed Al Nahyan, UAE President, and His Highness Sheikh Mohammad bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai.

The new law works on identifying different ways to avoid bankruptcy cases and liquidation of the debtors’ funds, a comprehensive financial restructuring outside the scope of the court, composition procedures and the possibility to get new loans under terms set by the law.

Regulations will also prevent individuals from bypassing the law as there are a number of punishments, including a five-year prison sentence, as well as fines up to Dh1 million, the Ministry said in a media statement today.

The final draft of the law, which is considered an important addition to the UAE legislative system, was reviewed by Obaid Humaid Al Tayer, Minister of State for Financial Affairs.

The bankruptcy law sets up a new regulatory body the “Committee of Financial Restructuring”.

The UAE Cabinet will decide on the number of members and entities that will represent the committee, and will administer the committee’s law and its procedures.

The committee is in charge of: overseeing the procedures of financial restructuring outside the scope of the court, appointing experts in the field of financial restructuring, establishing an electronic record of individuals issued against them a bankruptcy ruling, by either imposing restrictions as ordered by the court or the loss of eligibility under the provisions of the law.

The committee is also responsible for organising and sponsoring initiatives that raise awareness among the public on the specification and objectives of the law, submitting periodical reports on the achievements, suggesting amendments to any provision of the law and determining any fees incurred, as well as any other tasks or mandates stated by the law or the UAE Cabinet.

Al Tayer highlighted that the Ministry sought to implement a law that is based on modern legislative and economic principles, while taking into consideration the global developments and changes taking place in the economic and business sectors.

These efforts have led to implementing the bankruptcy law, and distinguishing it from other laws on a regional level as well as in developed countries.

The law was set to match various bankruptcy cases, determine all legal tools to restructure the debtor’s business in accordance with specific terms and conditions as well as a legislative framework.

“Mature economies have proven the need to implement a bankruptcy law in each country that wishes to strengthen its economic status. The bankruptcy law is considered as one of the most important pillars for the local economy, as it provides protection for all parties, in addition to its pivotal role in attracting capital, in a safe and attractive investment environment and providing a protection legislation and legal acts,” Al Tayer added.

The law includes raising credit levels and financial guarantee within its legislative priority to strengthen the confidence among investors and boost the economy by enabling the financially distressed businesses to restructure, and pay their debts and obligations without disrupting the production process in accordance with transparent legal framework.

This makes it the only law which includes those specifications in the Arab region.

Which businesses are covered by the law

The law is implemented on:

-Companies that were established under commercial company laws, as well as the companies that were not established under the commercial company law

-Semi- or fully-owned companies by the federal or the local government where their establishment legislatives are under this law

-Companies and institutions established in free zones and which do not have provisions to regulate composition procedures or restructuring bankruptcy according to the Federal law No. 8 of 2004 concerning financial free zones
Any trader and licensed civil company
Al Tayer added: “We are delighted to adopt the final draft of the bankruptcy law, to encourage entrepreneurs who seek a secure investment environment to direct their investments in the country, while strengthening their trust in the legislative and legal infrastructure in the UAE that implements clear and transparent laws preserving their rights and achieving balance between the creditor and the debtor as well as prioritise creditors with guarantees over the ones without guarantees.

“The bankruptcy law will contribute in supporting the strategic plans adopted by UAE to develop its economic, financial and legislative structure.

"The law will also raise the UAE’s competitiveness levels in international reports, which will support the sustainable economic growth and enhance the national economy, which in return support the sustainable economic growth and promote the national economy on a global level.”

Monday, September 5, 2016

UAE Cabinet approves final draft of federal bankruptcy law

The final draft of the federal bankruptcy law has been approved by the UAE Cabinet, Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, said on Sunday.

The legislation aims to "promote our economy’s attractiveness for investments and to facilitate business", according to a tweet from Sheikh Mohammed.

Last week the economy minister said that the law was needed to help owners of small- and medium-sized enterprises weather a slowing economy and rising levels of bad debt.

Sultan Al Mansouri said that he expected the law to be finalised within a matter of months but that it would need to be approved by the Federal National Council before it becomes law.

The law will put a moratorium on sending people to jail for bounced cheques until a restructuring plan for business owners has been agreed with creditors, a senior government official told Over the past two years a number of small business owners in the UAE have fled the country leaving unpaid loans in their wake in fear of being jailed for defaulting on debt and other financial obligations.

For years, observers have urged the government to put in place a raft of legislation to make it easier for SMEs, the lifeblood of the economy, to thrive.

Earlier this year, consultancy firm KPMG recommended in a report on small businesses that the most urgent of those changes is the implementation of a comprehensive bankruptcy law to make it easier for SMEs to cope with insolvency in ways other than fleeing the country.

Abdul Aziz Al Ghurair, the chief executive of Mashreq and head of the UAE Banks Federation, said in November that some small business owners had skipped town, leaving about Dh5 billion of unsettled loans.

In May, however, Mr Al Ghurair said the potential fallout from rising levels of SME bad debt had been contained as banks work with business owners to restructure debt.

Monday, August 15, 2016

Mandatory benefits to employees in Jebel Ali Free Zone

Employees working in firms operating under the jurisdiction of the Jebel Ali Free Zone Authority (Jafza) are entitled to mandatory termination benefits as per the laws of the free zone. If the dismissal is deemed to be arbitrary, the employee shall be entitled to compensation in addition to severance payments due that are governed by the employment contracts in Jafza.

Compensation you are entitled to: According to Rule 11.8.7 of Jafza employment law, the amount of compensation that will be payable to a terminated employee shall be decided by the deemed authority here and will not exceed three times the total of the basic monthly wage and allowances as specified in the employment agreement.

Gratuity payment at termination: An employee whose service exceeds one year shall be entitled to a gratuity payment on termination of service at the rate of 21 calendar days pay of the last month’s basic salary (or more if the employment agreement so specifies) for each year of service for the first 5 years.

For each additional year, the amount increases to 30 calendar days of the last month’s basic salary, provided that the maximum payment does not exceed two years’ basic salary.

After the first year, payment will be pro-rata for the period served. The regulation clarifies that gratuity shall be calculated at the basic pay rate as defined in the employment agreement.

Airfare to home country: When an employee’s services are terminated, airfare to the international airport nearest to the employee's home should be offered. This is applicable at the expiry of the employment agreement or when the employment agreement is terminated by the client prior to its expiry.

If an employee’s annual contract is automatically renewed in accordance with the employment agreement, the employee is entitled to airfare either in the event of submitting a resignation or on dismissal, whenever this occurs.

However, if the employee has already availed the ticket for the completed contract period, s/he will not be entitled to an additional airfare for the same period.

A free service certificate :If the terminated employee wishes for some kind of record, he can request a service certificate, which is to be provided free of charge. The certificate will have details of the employee such as period of service, work performed while employed, final rate of pay and bonus, if any, and a character reference. These things can come in handy while applying for a new job elsewhere.

Tuesday, August 2, 2016

UAE Finance Ministry expects approval of federal debt law this year

Younis Al Khouri, the undersecretary at the Ministry of Finance, speaks during a news conference announcing the release of the statistical report on the Gulf Common Market at the Ministry of Finance in Abu Dhabi on August 2, 2016. Christopher Pike / The National
The UAE finance ministry expects this year the approval of a federal debt law that will allow the government to sell bonds on a federal level, a ministry official said.

The ministry has been working on the federal debt law for years. Currently, individual emirates, mainly Abu Dhabi and Dubai, have tapped the international bond markets.

"We have one clause outstanding, which is the debt ceiling and the servicing of the debt," said Younis Al Khouri, the undersecretary at the Ministry of Finance. "Once we agree with the central bank then we will go to the council of ministers for approval and after that is the FNC (Federal National Council) approval.

The UAE could raise between Dh80 billion and Dh100bn via a bond sale, Mr Al Khouri said in February.

Debt issuance in the UAE is expected to accelerate as the country seeks to finance a fiscal deficit, which reached 2.1 per cent of GDP last year, according to IMF estimates.

In April, Abu Dhabi raised US$5bn from the international debt markets, its first bond sale since 2009.

The IMF has called on the UAE to tap the bond markets and the assets of its sovereign wealth funds rather than draw down its local bank deposits to balance its budget.

The IMF is forecasting that the UAE’s cumulative fiscal deficit will reach $18.4bn between this year and 2021 as low oil prices reduce government income.

As a result of expected higher debt issuance, the country’s gross public debt to GDP ratio is forecast to rise to 17 per cent next year from 16.6 per cent at the end of last year, the fund said. The debt-to-GDP ratio averaged 18.5 per cent between 2005 and 2013.

Friday, July 22, 2016

U.A.E amended Federal Law to control Cyber Crimes

Sheikh Khalifa issued Federal Law No. 12/2016 amending Federal Law No. 5/2012 on combating information technology crimes.

Article 1 provides for replacing the text of Article 9 of Federal Law No. 9/2012 as follows:

Whoever uses a fraudulent computer network protocol address (IP address) by using a false address or a third-party address by any other means for the purpose of committing a crime or preventing its discovery, shall be punished by temporary imprisonment and a fine of no less than Dh500,000 and not exceeding Dh2,000,000, or either of these two penalties.

Article 2 of the law states that the law shall be published in the Official ‘Gazette’ and shall come into effect the day following publication.

Ministry of Foreign Affairs

Federal Law No. 10/2016 amends some of the provisions of Federal Law No. 45/1992 on regulating the work of the Ministry of Foreign Affairs.

The first article of the law, published in the latest issue of the Official ‘Gazette’, changes the text of Clause 10 of Article 2 of Federal Law No. 45/1992 and replaces it with the following text:

Issuance and renewal of diplomatic and special passports for nationals of the state as well as service passports. Specifying the eligible groups (of people) and rules for issuing these passports as an exception from the provisions of Federal Law No. 17/1972 on naturalisation and passports and amendments. A diplomatic or special passport is given to groups of people, who are not specified in the previous clause, excluding their families, and by virtue of a decision made by the President or the Vice-President of the State, based on a proposal from the Foreign Minister.

Article 2 states that each and any provision that contradicts the provisions of this law shall be abolished.

Article 3 provides for the publication of this law in the Official Gazette and that it will come into effect the day after publication.

National Media Council 

Sheikh Khalifa also issued Federal Law No. 11/ 2016 regulating the competencies of the National Media Council. 

According to the law, the National Media Council is the federal government body established to oversee and undertake the media affairs of the United Arab Emirates. It has corporate character, an independent budget and the legal capacity required to undertake all activities to ensure achievement of its goals. It is a government body affiliated with the Cabinet and shall have its seat in Abu Dhabi City. The Council may set up branches and offices inside and outside the UAE.

Article 4 of the law states the objectives of the NMC and accordingly it shall develop the UAE's media policy, draft media legislation and ensure its execution and co-ordinate the media policy between the emirates, in line with the UAE's domestic and foreign policy to ensure support for the Federation of the UAE and project national unity.

Article 5 states the NMC's scope of jurisdiction which includes the following:

Developing and executing the required policies and plans to develop the media sector; proposing bills and regulations relating to the work of the Council in coordination with the relevant authorities in the country; proposing regulations, standards and foundations required for licensing and accrediting media outlets and their staff and activities, including e-publishing; issuing rules and regulations that ensure the achievement of the Council's goals in line with the controls it specifies; coordinating with the authorities of media free zones on developing an organisational framework to regulate the Council's relationship with these zones; representing the UAE at media meetings, events and activities in and outside the UAE; undertaking any other relevant responsibilities specified by the Cabinet's regulations and resolutions.

Article 6 states that a Board of Directors, formed by virtue of a decision issued by the Cabinet, shall run the Council.

Article 7 states that the Board of Directors is the supreme authority of the Council and shall accordingly exercise all its powers and the required authority. It may develop the Council's general policy, propose amendments to the required plans and follow up the plans for their execution, propose draft regulations pertaining to the work and competencies of the Council as well as to the achievement of its objectives and submitting the same to the Cabinet for approval as well as the preparing of a draft organisational structure for the Council, specifying the responsibilities and competencies and departments of the Council, and submit the same to the Cabinet for approval, propose a draft annual budget for the Council and a draft annual closing account in addition to any other competencies delegated to the Board by the laws, regulations and resolutions issued by the Cabinet. The Board may also delegate some of its competencies to its Chairman.

According to the law, the Chairman of the National Media Council is responsible for overseeing the management of the Council for all aspects in line with the provisions of the Council's effective regulations. The Council shall have a director general, to be appointed by virtue of a federal law based on a proposal from the Chairman, who will be the legal representative of the Council. The Board of Directors shall issue a decision specifying the Chairman's competencies and jurisdiction.

Article 10, a clause about the standards and regulations issued by the Council, states that media organisations in the state must comply with the regulations and rules issued by the Council, as well as commit themselves to provide information and data required by the Council to achieve its objectives.

Article 11 states that the fiscal year of the Council shall start on the 1st of January and ends on the 31st of December every year.

According to the law, regulations and decisions which are effective in the National Media Council shall remain enforced at the time of issuance of the law without conflict with its provisions.

The law shall be published in the Official ‘Gazette’ and will come into effect the day following publication.