A number of small business owners in the UAE have fled the country leaving unpaid loans over the past two years. Silvia Razgova / The National
A number of small business owners in the UAE have fled the country leaving unpaid loans over the past two years. Silvia Razgova / The National

UAE bankruptcy law will not offer protection for defaults on personal debt



The UAE’s new bankruptcy law will not offer protection from jail for individuals unable to repay their debts, according to a top government official.

The final draft of the law, approved by the federal cabinet on Sunday, will offer protection for employees, shareholders and directors of companies undergoing court-led insolvencies, but private insolvent individuals will not be able to use it to avoid criminal prosecution, according to a person familiar with the draft legislation.

The legislation will apply to all onshore and free-zone companies throughout the UAE, with the exception of companies in the DIFC and ADGM jurisdictions, each of which already have their own separate insolvency regulations in place.

More details about the new law are expected to be revealed on Tuesday by the Ministry of Finance.

After receiving cabinet approval, draft federal laws are typically referred to the Federal National Council (FNC) for feedback and comment, and are then passed to the President for his signature, with the law coming into effect following its publication in the country’s official legal gazette.

The FNC is currently on recess and is due to reconvene in mid-October.

The approval of the draft of the new federal law, reported to contain about 130 articles, has been widely welcomed by the business and legal community as a significant milestone for the UAE’s economic development.

It is a sign of the economy maturing, according to the Noor Bank chief executive Hussain Al Qemzi.

“The law is expected to provide a greater flexibility in dealing with financially distressed companies. It will also provide a degree of certainty and security for business owners and investors, who can rely to some extent on protection for their businesses during a restructuring, to enable them to effectively negotiate with their creditors,” he said.

The lack of insolvency regulations during Dubai’s credit crisis in 2009-10 led to a number of businessmen being arrested for unpaid debts, with many fleeing the country to avoid arrest.

A number of small business owners in the UAE have fled the country leaving unpaid loans over the past two years.

Mazen Boustany, a partner with Baker & McKenzie Habib Al Mulla said: “The UAE in the past has had to create special tribunals to deal with the insolvencies of large companies like Dubai World, Amlak and Tamweel, due to the deficiencies of the current law.

“Hopefully with the passage of the new law this won’t have to happen any more.”

The UAE ranked 31st in the World Bank’s influential Doing Business 2016 index, published in October, but ranks only 91st out of 189 countries for Resolving Insolvency, putting it below countries including Mongolia, Nepal and Costa Rica.

“The law as it is in place right now is very creditor-friendly, but doesn’t offer effective means of helping debtors work through their financial difficulties,” said James Farn, head of banking and finance at Hadef & Partners in Abu Dhabi.

“It’s a question of having an insolvency law that’s fit for purpose for a modern economy like the UAE, one that meets the expectations of creditors but also offers appropriate recovery assistance for debtors.”

jeverington@thenational.ae

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Developer: Treyarch, Raven Software
Publisher:  Activision
Console: PlayStation 4 & 5, Windows, Xbox One & Series X/S
Rating: 3.5/5

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How to play the stock market recovery in 2021?

If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.

Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.

Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.

Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).

Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal. 

Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.

By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.

As demand for energy fell, the oil and gas industry had a tough year, too.

Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.

He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.” 

This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”

Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.

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Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding

Company profile

Name: Fruitful Day

Founders: Marie-Christine Luijckx, Lyla Dalal AlRawi, Lindsey Fournie

Based: Dubai, UAE

Founded: 2015

Number of employees: 30

Sector: F&B

Funding so far: Dh3 million

Future funding plans: None at present

Future markets: Saudi Arabia, potentially Kuwait and other GCC countries

Thank You for Banking with Us

Director: Laila Abbas

Starring: Yasmine Al Massri, Clara Khoury, Kamel El Basha, Ashraf Barhoum

Rating: 4/5

Jigra
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Starring: Alia Bhatt, Vedang Raina, Manoj Pahwa, Harsh Singh
Rated: 3.5/5
A new relationship with the old country

Treaty of Friendship between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates

The United kingdom of Great Britain and Northern Ireland and the United Arab Emirates; Considering that the United Arab Emirates has assumed full responsibility as a sovereign and independent State; Determined that the long-standing and traditional relations of close friendship and cooperation between their peoples shall continue; Desiring to give expression to this intention in the form of a Treaty Friendship; Have agreed as follows:

ARTICLE 1 The relations between the United Kingdom of Great Britain and Northern Ireland and the United Arab Emirates shall be governed by a spirit of close friendship. In recognition of this, the Contracting Parties, conscious of their common interest in the peace and stability of the region, shall: (a) consult together on matters of mutual concern in time of need; (b) settle all their disputes by peaceful means in conformity with the provisions of the Charter of the United Nations.

ARTICLE 2 The Contracting Parties shall encourage education, scientific and cultural cooperation between the two States in accordance with arrangements to be agreed. Such arrangements shall cover among other things: (a) the promotion of mutual understanding of their respective cultures, civilisations and languages, the promotion of contacts among professional bodies, universities and cultural institutions; (c) the encouragement of technical, scientific and cultural exchanges.

ARTICLE 3 The Contracting Parties shall maintain the close relationship already existing between them in the field of trade and commerce. Representatives of the Contracting Parties shall meet from time to time to consider means by which such relations can be further developed and strengthened, including the possibility of concluding treaties or agreements on matters of mutual concern.

ARTICLE 4 This Treaty shall enter into force on today’s date and shall remain in force for a period of ten years. Unless twelve months before the expiry of the said period of ten years either Contracting Party shall have given notice to the other of its intention to terminate the Treaty, this Treaty shall remain in force thereafter until the expiry of twelve months from the date on which notice of such intention is given.

IN WITNESS WHEREOF the undersigned have signed this Treaty.

DONE in duplicate at Dubai the second day of December 1971AD, corresponding to the fifteenth day of Shawwal 1391H, in the English and Arabic languages, both texts being equally authoritative.

Signed

Geoffrey Arthur  Sheikh Zayed

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Arsenal 0 Chelsea 3
Chelsea: Willian (40'), Batshuayi (42', 49')

Brighton 1
Gross (50' pen)

Tottenham 1
Kane (48)

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Founded over 50 years ago, the National Archives collects valuable historical material relating to the UAE, and is the oldest and richest archive relating to the Arabian Gulf.

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Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4

Company Profile

Company name: NutriCal

Started: 2019

Founder: Soniya Ashar

Based: Dubai

Industry: Food Technology

Initial investment: Self-funded undisclosed amount

Future plan: Looking to raise fresh capital and expand in Saudi Arabia

Total Clients: Over 50

MATCH INFO

Manchester United v Everton
Where:
Old Trafford, Manchester
When: Sunday, kick-off 7pm (UAE)
How to watch: Live on BeIN Sports 11HD

UEFA CHAMPIONS LEAGUE FIXTURES

All kick-off times 10.45pm UAE ( 4 GMT) unless stated

Tuesday
Sevilla v Maribor
Spartak Moscow v Liverpool
Manchester City v Shakhtar Donetsk
Napoli v Feyenoord
Besiktas v RB Leipzig
Monaco v Porto
Apoel Nicosia v Tottenham Hotspur
Borussia Dortmund v Real Madrid

Wednesday
Basel v Benfica
CSKA Moscow Manchester United
Paris Saint-Germain v Bayern Munich
Anderlecht v Celtic
Qarabag v Roma (8pm)
Atletico Madrid v Chelsea
Juventus v Olympiakos
Sporting Lisbon v Barcelona