The UAE’s new Bankruptcy Law has come into effect from May 1, 2024, and by this, even senior management figures at a company can be held responsible. Earlier, the onus and the liabilities associated with a company going bankrupt were primarily on the company’s directors.

Under the new law, there will be a ‘two-year limitation period’ from the date of the bankruptcy declaration to initiate liability proceedings against individuals in the company, whether members of the board or senior management. These officials may be exempt from liability if they can prove they took all standard measures or had documented objections to the actions in question.

Changes to the bankruptcy rules constitute one of the big bang reforms for the business sector that the UAE instituted in recent years, which also includes 100 per cent ownership of companies for foreign investors. There have also been changes to intellectual property rights and arbitration for fast-track settlement of disputes.

The new UAE Bankruptcy Law also specifies that the amount awarded against company directors, or the de facto manager should ‘correspond to their level of fault’.

Source: GULFNEWS