Legal Developments in the UAE Jody Waugh Partner

New UAE Bankruptcy Law Came into force 29 December 2016 Largely amends existing regime (as opposed to adopting Western regime) Applies to all traders operating in UAE with certain exceptions Three options within the law: Financial Reorganisation Committee Preventative Composition Bankruptcy, which leads to (i) Restructuring; or (ii) Liquidation Greater focus on restructuring Does provide for suspension of legal proceedings, including criminal action on bounced cheques

How does it impact trade finance? Should not have material impact on the way trade finance is structured It will however be relevant to: Any set off or netting provisions Who security cheques are taken from Acceleration provisions Secured positions Approach to enforcement and remedies available

New Mortgage over Movables Law Comes into force 90 days after publication (mid-March), but waiting on Cabinet Resolution for detail on the security register Creates public security register to file security interests Allows for public searches Movable assets include (without limitation): accounts payable and bank accounts documents of title, including bills of lading goods, equipment, machinery and other movable assets tangible and intangible elements of a business fungible assets Provides for existing or future assets Removes possessory requirement Creates direct execution enforcement rights

How will it impact trade finance? Create visibility for financiers, and certainty with regard to priority of security interests Will allow financiers to take much wider range and scope of security, including assets not previously possible May offer something close to a debenture/floating charge Inclusion of account payable and documents of title will create more flexibility in structuring Position on fungible assets will materially improve commodity finance Consideration between ownership versus security (including Islamic structures) Securitisation and receivables purchase The end of trust receipts? Quicker and easier enforcement option

What else is in the pipeline? UAE Netting Law Finance Company Law Union Law (amendment) Leasing Law VAT More regulation from Central Bank and SCA.

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