“The law contributes in strengthening the financial, economic and legislative system in the UAE,” said finance minister Sheikh Hamdan bin Rashid al-Maktoum in a statement received Monday by AFP.
The move puts in place a “separate and modern law to avoid bankruptcy cases, including financial restructuring, composition procedures, restructuring debts and liquidation funds,” he said.
“Companies and individuals are now able to restructure their debt while avoiding bankruptcy liquidation,” he added.
The law will end the practice of sending people to jail for bounced cheques until a restructuring plan for business owners has been agreed with creditors, reported The National daily citing an unnamed government official.
It said a number of small business owners have fled the country over the past two years in fear of being jailed for defaulting on debt and other financial obligations.
“The bankruptcy law helps in attracting foreign investments due to the increase (of) trust in the economic environment and the flexible legislative infrastructure that protect investors’ assets and facilitate business,” said the minister.
The emirate of Dubai, one of seven sheikhdoms that form the UAE, has evolved over in recent years into a regional hub for business and services, attracting foreign companies to set up regional headquarters.