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January 21, 2022|
The new federal decree-law no. 35 of 2021 amending the provisions of federal decree-law no. 9 of 2016 regarding bankruptcy and its amendments has been introduced in the United Arab Emirates (hereinafter referred to as the 'new Decree') to be in effect from 1st November 2021. The new decree brings in a fundamental and crucial change in the position of law that now accords individual liability on the shareholders of the company (subject to further conditions), in the instance the company funds are insufficient to cover even twenty per cent of the company's liabilities.
Liability of the company Management:
Pursuant to article 144 of the new decree on bankruptcy:
The new decree thus imposes individual liability on the shareholders in the event they commit any of the following acts (Ref: Article 147):
The new amendments to the bankruptcy law follow the recent landmark judgment issue in the UAE in the Marka Holdings PJSC case. The said company was declared bankrupt by Dubai Court's judgment, and liquidation of assets was ordered. In addition, the board members of the company were ordered to pay Aed 448 Million to their creditors and also held the company's directors personally liable for the debt.
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