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Five years to close business in UAE
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10.7.2009 |
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DUBAI - Inadequate insolvency laws drag out the time it takes to close a business in the UAE to an average of five years, local daily the National reported on Wednesday, citing a senior World Bank advisor.
The newspaper also said it costs company owners an average of 30 percent of the value of their estate to shut down a business, citing the World Bank’s Doing Business 2010 report.
Dahlia Khalifa, senior strategy adviser for the report, called on the government to review its insolvency laws, the newspaper reported.
“In the UAE, because there is not a very strong insolvency regime, there are actually very few companies that go through the insolvency process,” Khalifa was quoted as saying.
“What needs to be addressed is the creation of an insolvency regime so companies can go through a very clear process to resolve issues if there are any criminal obligations or results that come from filing for bankruptcy.”
The UAE’s insolvency laws have come under the spotlight in the last 12 months with the onset of the global financial crisis, with the difficulty in closing a business blamed for why several high profile businessmen have fled the UAE after their companies went bankrupt.
Under UAE law, directors and senior officers of a company operating in the Gulf state that cannot pay its debts, but wants to seek court protection from its creditors must do so within 20 days of failing to meet a deadline for payment, according to law firm Trowers & Hamlins.
Alternatively, if they intend to file for bankruptcy they must do so within 30 days of failing to meet a deadline for payment, the law firm says.
If they fail to meet these deadlines the directors can be found personally liable for unpaid debts if the company ultimately fails, it says.
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Source:business.maktoob.com |
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