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Federal Law No. 19 On Combating Commercial Fraud

Location: United Arab Emirates

Commercial

Issued On: 2016-12-12
Type: Federal Law

Federal Law No. 19

 

ON COMBATING COMMERCIAL FRAUD

 

Federal Law no 4/1979 dated 19/03/1979.

We, Khalifa bin Zayed Al Nahyan President of the United Arab Emirates,

Pursuant to the perusal of the Constitution; and

Federal Law no. (1) of 1972 on the Competencies of the Ministries and Powers of the Ministers, and its amendments;

Federal Law no. (5) of 1975 on the Commercial Register;

Federal Law no. (4) of 1979 on the suppression of fraud and deception in commercial transactions;

Federal Law no. (5) of 1979 on agricultural quarantine, and its amendments;

Federal Law no. 6 of 1979 on the veterinary quarantine, and its amendments;

Federal Law no. (10) of 1980 on the Central Bank, the Monetary System and the Organisation of the Banking Profession, and its amendments;

Federal Law no. (18) of 1981 on the regulation of commercial agencies, and its amendments;

Federal Law no. (4) of 1983 on the Profession of Pharmacy and Pharmaceutical Institutions;

Federal Law no. (2) of 2015 on the commercial companies;

Federal Law no. (5) of 1985 on the promulgation of the Civil Transactions Law of the United Arab Emirates and its amendments;

Federal Law no. (3) of 1987 promulgating the Penal Code, and its amendments;

Federal Law no. (35) of 1992 promulgating the Criminal Procedure Law, and its amendments;

Federal Law no. (36) of 1992 on Restitution;

Federal Law no. (37) of 1992 on trademarks and its amendments;

Federal Law no. (38) of 1992 on the establishment of arboretums and the regulation of the production, import and circulation of seedlings;

Federal Law no. (39) of 1992 concerning the production, import and trading of fertilisers and soil conditioners;

Federal Law no. (41) of 1992 on pesticides;

Federal Law no. (11) of 2015 controlling trading high-value stones and precious metals and stamping them;

Federal Law no. (18) of 1993 on the promulgation of the Commercial Transactions Law;

Federal Law no. (14) of 1995 regarding fighting narcotics and psychotropic substances, and its amendments;

Federal Law no. (20) of 1995 on the Drugs and Pharmaceuticals derived from Natural Resources;

Federal Law no. (4) of 2000 on UAE Securities & Commodities Authority and Market, and its amendments;

Federal Law no. (28) of 2001 on the establishment of Emirates Authority for Standardisation and Metrology, and its amendments;

Federal Law no. (7) of 2002 on copyrights and neighbouring rights, and its amendments;

Federal Law no. (17) of 2002 on the regulation and protection of industrial property rights for patents and industrial designs and models, and its amendments;

Federal Law no. (8) of 2015 on the Federal Customs Authority;

Federal Decree-Law no. (3) of 2003 on the Regulation of Telecommunication Sector, and its amendments;

Federal Law no. (1) of 2006 on electronic transactions and commerce;

Federal Law no. (24) of 2006 on consumer protection, and its amendments;

Federal Law no. (6) of 2007 on the Establishment of the Insurance Authority and Regulation of its Operations, and its amendments;

Federal Law no. (13) of 2007 on the commodities subject to the import and export control, and its amending laws;

Federal Decree-Law no. (5) of 2012 on Combating IT Crimes;

And based on the proposal of the Minister of Economy, the approval of the Cabinet and the Federal National Council and the ratification of the Federal Supreme Council,

Issued the following Law:

Article 1 - Definitions

In the implementation of the provisions of this Law, the following words and expressions shall have the meanings stated beside them unless the context requires otherwise:

State: United Arab Emirates.

Ministry: Ministry of Economy.

Minister: Minister of Economy.

Competent authority: Competent federal or local authority.

Supreme Committee: Supreme Committee for combating Commercial Fraud

Sub-committee: Committee for combating commercial fraud in the concerned Emirate.

Commercial Fraud: Deceiving a customer in any way by altering or changing the nature, amount, type, price, essential characteristics, origin, source or validity of the commodities or any other matter related thereto or submitting incorrect or misleading commercial data on the promoted products. This shall include deception, counterfeiting and fraud in the service in a way not compliant with the laws in force at the State or for including false or misleading statements.

Deception: Using fraudulent anecdotal or actual means by a contracting party to make the other party enter into a contract, or a contracting party deliberately hiding a fact or defect in the item if it was proved that the other party would not have entered into a contract if he had known of the same.

Commodity: All natural materials or animal, agricultural, industrial or transformational products, including the primary materials and components of the product.

Merchant: Any physical or legal person, working in his name and for his account in the commercial works set forth in the Commercial Transactions Law, who starts a commercial activity or takes any of the forms set forth in the Commercial Companies Law, even if such activity is civil, or declares to the public, in any way, of an activity founded for commerce, or exercises trade under a pseudonym or a hidden name behind another person or covering for another person.

Establishment: Any institution, company or any other entity taking any of the legal forms through which the commercial activity may be exercised at the State.

Fake Commodities: The commodities that do not conform with the rules, conditions, requirements, specifications and standards determined by the laws, regulations, rules and decisions in force at the State or the commodities that were subject to a change of any type, form, source or nature without obtaining the required approvals, or those advertised or promoted in a way that is contrary to the truth thereof.

Corrupt Commodities: The commodities that are no longer usable due to storage or transport factors or that were subject to other natural factors, contradicting the conditions specified in the laws, regulations and approved technical specifications, including damaged commodities.

Counterfeit Commodities: The commodities bearing, without authorisation, a trademark that is conformant or similar to the legally registered trademark.

Article 2

1- The provisions of this Law shall apply to whomever committed a commercial fraud, without excluding the free zones from the application of these provisions.

2- Any of the following acts shall be considered a commercial fraud:

a- The import, export, re-export, manufacturing, sale, display or acquisition for the purpose of sale, storage, lease, marketing or trading, the fake, corrupt or counterfeit commodities.

b- Advertising fake or unreal prizes or reductions.

c- Exploiting commercials, submitting the same or promising to submit the same in misleading and incorrect promotions or promoting fake, corrupt or counterfeit commodities.

d- Offering, submitting, promoting or advertising fake commercial services.

Article 3

Without prejudice to the criminal liability, the competent authority shall issue a decision compelling the importer to return the fake or corrupt commodities to their source within a specified period. If he fails to return the same to their source within this period, the competent authority may order their destruction, allow the use thereof for any other purpose or return them by itself to their source. The counterfeit commodities shall also be destructed, according to the conditions and rules determined by the Implementing Regulation of this Law.

In all events, the importer shall settle any costs or expenses incurred by the competent authority because of the disposition of the violating commodities.

Article 4

The merchant shall:

1- Submit to the competent authority the mandatory commercial books or the like clarifying the commercial information of the commodities owned or acquired by him, the value thereof and all the supporting documents and invoices whenever required to do so.

2- Place on the commodities the explanatory information, i.e. the ID labels, or any information written, printed, drawn or engraved on the product and stating the components, methods of use, maintenance or storage of the commodities according to the laws in force at the State.

3- Submit to the competent authority all that would determine the data and information of the provided service.

Article 5

1- A Supreme Committee shall be formed by a decision from the Minister under the name “Supreme Committee for Combating Commercial Fraud”, reporting to the Ministry, presided by the Undersecretary and having as members, representatives of the competent authorities. It shall:

a- Suggest the strategies and policies to combat commercial fraud.

b- Study the commercial fraud reports referred to it by the competent authority and take necessary decisions in their regard.

c- Study the obstacles faced by law enforcement and suggest a mechanism to address the same.

d- Issue the working regulation of the sub-committees.

e- Any other related tasks assigned by a decision from the Minister.

2- The Supreme Committee may refer to consultants and experts deemed appropriate without having the right to vote on its decisions.

Article 6

A sub-committee shall be formed in each Emirate to combat commercial fraud and shall:

a- Consider the request of reconciliation in the violations of the establishments offered to it, except the violations set forth in Article (14) of this Law.

b- Warn the violating establishments, and the Implementing Regulation of this Law shall determine the types of warnings.

c- Close the violating establishments for a period not exceeding two weeks in coordination with the competent authority.

d- Follow the processes of destruction, recycling or return to the source, according to the case, of the fake, corrupt or counterfeit commodities.

e- Provide the Ministry with periodic reports on its works as determined by the Implementing Regulation of this Law.

Article 7

The concerned persons may appeal the decisions of closure issued by the sub-committees before the Supreme Committee, within a period not exceeding five working days from the date of their notification thereof. The Supreme Committee shall issue its decision on the appeal within three working days from the date of filing the same.

Article 8

1- The sub-committees may carry out reconciliation in the violations upon the request of the violator and shall determine the fine that shall be paid by the violator provided that it is not less than twice the minimum fine set forth in this Law.

2- If the violator rejects the reconciliation, the papers shall be transferred to the Public Prosecution. If the rejection is made by the sub-committee, the violator may appeal such rejection before the Supreme Committee.

3- The Implementing Regulation of this Law shall determine the necessary procedures for the reconciliation.

Article 9

With the exception of the perishable commodities by lapse of time, the competent authority may detain the seized commodities at the violating establishment, at its own expense, for a period not exceeding thirty days from the date of detecting the violation and these commodities shall not be disposed of until issuance of a decision in their regard by the sub-committee.

Article 10

The violating establishment may request the competent Court to release the seized commodities and they shall not be released except by a ruling from this Court.

Article 11

The reconciliation revenues set forth in Article (8) of this Law shall be transferred to the account of the competent authority that carried out the seizure.

Article 12

Whoever commits the crime of commercial fraud shall be sentenced to imprisonment for a period not exceeding two years, and to a fine not less than fifty thousand Dirhams and not exceeding two hundred and fifty thousand Dirhams, or to either penalty.

Article 13

Whoever attempts to commit the crime of commercial fraud shall be sentenced to imprisonment for a period not exceeding one year, and to a fine not less than ten thousand Dirhams and not exceeding one hundred thousand Dirhams, or to either penalty.

Article 14

Whoevercommits the crime of commercial fraud or attempts the same if the commodities are food for humans or animals, prescription drugs, agricultural crops or organic food products, shall be sentenced to imprisonment for a period not exceeding two years, and to a fine not less than two hundred and fifty thousand Dirhams and not exceeding one million Dirhams, or to either penalty.

Article 15

1- Without prejudice to Article (3) of this Law, shall be sentenced to imprisonment for a period not exceeding six months and a fine equivalent to double the value of the commodities disposed of, whoever disposes of the seized commodities in any way whatsoever without a permit or licence from the sub-committee.

2- If the commodities disposed of are food for humans or animals, prescription drugs, agricultural crops or organic food products, the penalty shall be imprisonment for a period not exceeding two years and a fine not less than two hundred and fifty thousand Dirhams and not exceeding one million Dirhams or either penalties.

Article 16

The knowledge of the purchaser that the commodity is fake, corrupt or counterfeit shall not excempt the merchant from the penalty prescribed in this Law.

Article 17

The Court shall, in the event of conviction of one of the crimes set forth in Article (14), and Clause (2) of Article (15) of this Law, rule, in addition to the prescribed penalty, the confiscation or destruction of the food, prescription drugs, crops, products or tools used therein and shall order the publication of the ruling at the expense of the losing party in two local daily newspapers, one of them issued in Arabic.

Article 18

1- The Court may, upon conviction of any of the crimes set forth in Article (14) and Clause (2) of Article (15) of this Law, rule, in addition to the prescribed penalty, the closure of the violating establishment for a period not exceeding six months.

2- Without prejudice to the provisions of Clause (1) hereof, if the violating establishment is a department store, the violating department or the part related to the type of the violating commodity shall be closed and a label shall be placed on the closed section or department stating the reason of closure.

Article 19

Without prejudice to any more severe penalty provided by another Law, whoever violates any other provision of this Law, its Implementing Regulation and the decisions issued pursuant thereto shall be punishable by a fine not exceeding fifty thousand Dirhams.

Article 20

1- In addition to the imposition of the prescribed penalty, the Court shall, in case of recidivism in violation to the provisions of Article (14) and Clause (2) of Article (15) of this Law, cancel the licence.

2- Taking into account the provisions of the previous Clause, the Court may, in case of recidivism in violation to the provisions of this Law, double the prescribed penalty or add the closure of the store or cancellation of the licence to the prescribed penalty.

Article 21

The employees specified by a decision from the Minister of Justice, under agreement with the Minister or the competent authority, shall have the capacity of judicial officers as per proving the violations to the provisions of this Law, its Implementing Regulation and the decisions issued pursuant thereto.

Article 22

The competent authority shall, each in its field of competence, apply the provisions of fraud in the service, according to the rules determined by the Council of Ministers.

Article 23

The Council of Ministers shall issue the Implementing Regulation and the necessary decisions for the implementation of the provisions of this Law, within one hundred and eighty days from the date of enforcement thereof.

Article 24

Any provision that is contrary or inconsistent with the provisions of this Law shall be cancelled, in addition to the Federal Law no. (4) of 1979 on the suppression of fraud and deception in commercial transactions. The regulations and decisions issued pursuant thereto shall continue to be valid without prejudice to the provisions of this Law, until issuance of the regulations and decisions replacing the same.

Article 25

This Law shall be published in the Official Gazette and shall enter into effect on the day following the date of publication thereof.

Issued by Us at the Presidential

Palace in Abu Dhabi:

On: 12th of December 2016

Corresponding to: 13 Rabi' Al-Awwal 1438 H

Khalifa Bin Zayed Al Nahyan

President of the United Arab Emirates State

 

 

Federal Decree Law No. (20) of 2023 Amending Certain Provisions of Federal Decree Law No. (33) of 2021 Regarding The Regulation of Employment Relationships

Location: United Arab Emirates

Labour And Immigration

Issued On: 2023-09-13
Type: Federal Law

Federal Decree Law No. (20) of 2023 Amending Certain Provisions of Federal Decree Law No. (33) of 2021 Regarding The Regulation of Employment Relationships

                                                         Article (1)                                                                   

The following text shall replace Article (54) of Federal Decree Law No. (33) of 2021 Regarding the Regulation of Employment Relationships:

  1. In accordance with this Decree Law, employers, employees, and their beneficiaries are entitled to dispute any rights arising from the employment relationship. Following receipt of the request, the Ministry will review it and take the necessary steps to facilitate an amicable resolution.                                          
  2. The Ministry will render a final judgment on any dispute submitted to it in accordance with the provisions set forth in paragraphs (1) and (2) of this document if the value of the claim is not more than fifty thousand (50,000) UAE dirhams (AED) or if neither party complies with an amicable settlement decision relating to the subject matter, regardless of the value of the claim.                                                                                                                                           

  3. The Ministry has the authority to resolve the dispute in accordance with the provisions of paragraph (3) of this article, and the decision shall be annotated with execution in accordance with customary practice. If the decision is not satisfactory to either party, either party may file a lawsuit before the relevant

Court of Appeals for a review of the decision within fifteen (15) working days following notification of the decision. Upon filing, the court will schedule a hearing to consider the case within three (3) working days, and the case will be adjudicated within fifteen (15) working days. The decision of the Court of Appeals shall constitute a final verdict, and an appeal will suspend the implementation of the decision. If an appeal is filed, the execution of the decision described above will be suspended.

  1. The dispute shall be referred to the competent court if attempts to reach an amicable settlement within the time limit prescribed in the implementing regulation of this Decree-Law and in cases other than those described in paragraph (2) of this article do not succeed. This should be accompanied by a memorandum which summarises the dispute, the parties' arguments, in addition to the Ministry's recommendations.                                                                          
  2. As part of the dispute resolution process, the Ministry may order the employer to provide the worker's wages for a maximum of two (2) months, if the dispute results in the worker's wages being withheld.                                                                                                                                                                               

  3. If the Minister finds that the existing individual dispute has the potential to lead to a collective labour dispute that is detrimental to the public interest, other administrative procedures or measures may be imposed on the establishment.                                                                                                                                 
  4. After receiving a request, the competent court must, within three (3) business days, convene a hearing, notify the parties involved, and proceed promptly with the adjudication of the case.                                                                                                                                                                                                                  

  5. An application that does not follow the procedures described in this article will be rejected by the competent court.                                                                          
  6. After one (1) year from the maturity date of the right subject to a lawsuit, the lawsuit cannot be heard with regards to any of the rights protected by this Decree-Law.

Article (2)

This Decree-Law shall be published in the Official Gazette and shall take effect on 01/01/2024.

 

Federal Law No. 15 On Consumer Protection

Location: United Arab Emirates

Retail & Consumer

Issued On: 2020-10-11
Type: Federal Law

Federal Law No. 15

Issued on 10/11/2020

Corresponding to 24 Rabi` al-Awwal 1442 H.

On Consumer Protection

 

Federal Law No. 24 dated 13/08/2006.

We, Khalifa bin Zayed Al Nahyan, President of the United Arab Emirates, Pursuant to the perusal of the Constitution;

Federal Law No. (1) of 1972 on Competencies of the Ministries and Powers of the Ministers and its amendments;

Federal Law No. (18) of 1981 on the Regulation of Commercial Agencies and its amendments;

Federal Law No. (5) of 1985 promulgating the Civil Transactions Law and its amendments;

Federal Law No. (3) of 1987 promulgating the Penal Code and its amendments;

Federal Law No. (20) of 1991 promulgating the Civil Aviation Law;

Federal Law No. (11) of 1992 promulgating the Civil Procedure Law and its amendments;

Federal Law No. (35) of 1992 promulgating the Criminal Procedure Law and its amendments;

Federal Law No. (37) of 1992 on Trademarks and its amendments;

Federal Law No. (39) of 1992 on the Production, Import and Trading of Fertilizers and Agricultural Additives;

Federal Law No. (18) of 1993 promulgating the Commercial Transactions Law;

Federal Law No. (28) of 2001 on the Establishment of the Emirates Standardisation and Metrology Authority and its amendments;

Federal Decree-Law No. (3) of 2003 on the Regulation of Telecommunication Sector and its amendments;

Federal Law No. (1) of 2006 on Electronic Transactions and Commerce;

Federal Law No. (24) of 2006 on Consumer Protection and its amendments;

Federal Law No. (6) of 2007 on the Establishment of the Insurance Authority and Regulation of its Operations and its amendments;

Federal Law No. (13) of 2007 on Goods Subject to Import and Export Control and its amendments;

Federal Law No. (2) of 2008 concerning the Associations and Civil Institutions of Public Interest;

Federal Law No. (4) of 2012 on the Regulation of Competition;

Federal Decree-Law No. (5) of 2012 on Combating IT Crimes and its amendments;

Federal Law No. (2) of 2015 on Commercial Companies and its amendments;

Federal Law No. (8) of 2015 on the Federal Customs Authority;

Federal Law No. (10) of 2015 on Food Safety;

Federal Law No. (14) of 2016 on Violations and Administrative Penalties in the Federal Government;

Federal Law No. (19) of 2016 on Combating Commercial Fraud;

Federal Law No. (10) of 2018 on Product Safety;

Federal Law No. (8) of 2019 on Medical Products, the Pharmacy Profession and Pharmaceutical Establishments; and Based on the documents submitted by the Minister of Economy, the approval of the Council of Ministers and the Federal National Council, and the ratification of the Federal Supreme Council,

Hereby issue the following Law:

Chapter 1

General Provisions

Article 1- Definitions

For the purposes of the present Law, the following terms and expressions shall have the meanings assigned against each of them, unless the context requires otherwise:

State: The United Arab Emirates.

Ministry: The Ministry of Economy.

Minister: The Minister of Economy.

Competent Authority: The competent local authority in the concerned emirate entrusted with implementing the provisions of this Law.

Relevant Authorities: Federal or local government agencies concerned with the supervision and control over the business of the Supplier in the sectors under their supervision or control.

Committee: The Supreme Committee for Consumer Protection.

Department: The administrative unit concerned with Consumer protection affairs in the Ministry.

Standard Specifications: The mandatory standard specifications accredited by the Emirates Authority for Standardization and Metrology in the State.

Consumer: Every physical or juristic person who obtains a Good or Service - with or without charge - to satisfy his personal needs or the needs of others, or for which transactions or contracts are concluded therewith.

Supplier: Every juristic person who provides the Service, or manufactures, distributes, trades, sells, supplies, exports, imports a Good, or interferes in its production, trading or storage with the aim of providing it to the Consumer or entering into a transaction or a contract therewith in its regard.

Advertiser: Every juristic person who, by itself or through others, advertises the Good, Service or information by various means of advertising or announcement, whether the Advertiser is the Supplier himself or a person authorised to do so.

Good: Every natural, industrial, agricultural, animal, transformative, intellectual, or technical product, including the raw materials of the substances and components of the product.

Explanatory Information: Identification cards or any information written, printed, drawn, or engraved, indicating the components of the Good, its maintenance, storage, or validity date.

Price: The Price of sale or rent or use of the Good or Service, as the case may be.

Service: Anything provided to the Consumer, whether with or without consideration.

Defect: A lack of quality, quantity, or efficiency, or a difference in the external shape, size, or components of a Good or Service resulting from an error in its design, manufacture, production, or provision to the Consumer, which may lead to harm or deprive him, in whole or in part, of benefiting therefrom, provided that the Defect has not resulted from the action of the Consumer.

Malfunction: Everything that affects the Good after its production or the Service after its provision, which may lead to harm the Consumer or deprive him in whole or in part of benefiting therefrom, provided that the Malfunction has not resulted from the action of the Consumer.

Commercial Fraud: Deceiving the dealer in any way whatsoever, whether by altering or changing the nature of the Goods, their quantity, gender, Price, essential characteristic, origin, source, validity date, or any other matter related thereto, or providing incorrect or misleading commercial data about the promoted products. This includes fraud, counterfeiting, and deceiving the Service by not being in compliance with the legislation in force in the State, or because it contains false or misleading information.

Discounts: Offering Goods for sale at reduced Prices or providing Services at lower Prices during a specified period in any way whatsoever.

Promotion: Marketing of Goods or Services by drawing prizes, distributing gifts, or advertising Goods or Services through special offers or any other means.

Warranty: A written or implicit acknowledgement made by the Supplier or his representative that the Good or Service, subject-matter of the Warranty, is free from Defects or Malfunctions and conforms to Standard Specifications and that he undertakes to repair any Defect or Malfunction affecting the Good, replace the defective Good or re-perform the Service, within a specified period of time.

After-Sales Services: Taking care of the Good or Service to maintain its quality and this includes spare parts, maintenance, and technical support.

Recall: Withdrawal of the defective or hazardous Good through the Supplier or the concerned authority or the Relevant Authority in the State, the country of origin, or any other country.

Misleading Advertisement: Advertising a Good or Service based on deceptive information or omitting essential or basic information related to the Good or Service, which affects the Consumer and leads him to enter into a contract that he would not have entered into without that information. Announcing fake or unreal prizes or Discounts shall be considered misleading advertising.

Invoice: Any document sufficient on its own to prove the transaction or contract with the Consumer regarding the Good or Service, provided that it includes the data required by this Law or its Implementing Regulation.

Article 2- Objectives of the Law

This Law aims to protect all Consumer rights, and in particular the following:

1- The quality of the Good and the Service and obtaining them at the declared Price.

2- Preserving the health and safety of the Consumer when obtaining the Good or receiving the Service, without harming him when using the Good or receiving the Service.

3- Encouraging healthy consumption patterns.

Article 3- Applicability of the Law

The provisions of this Law shall apply to all Goods and Services within the State, including free zones, and operations related thereto and carried out by the Supplier, the Advertiser, or the commercial agent, as well as those carried out by means of electronic commerce if the Supplier is registered inside the State, without prejudice to international treaties and agreements to which the State is a party.

Article 4- Consumer Rights

All obligations established under this Law are considered rights of the Consumer, including:

1- Providing an appropriate and safe environment when purchasing a Good or receiving a Service.

2- Obtaining correct information about the Goods that he purchases, uses, or consumes, or the Service he receives.

3- Educating him and raising his awareness in respect of his rights and obligations.

4- Exercising his rights to choose the most appropriate product and Service available in the market according to his wishes.

5- Protecting the privacy and security of his data and not using it for promotional and marketing purposes.

6- Respecting his religious values, customs and traditions when providing him with any Good or receiving any Service.

7- Just and prompt settlement of his disputes.

8- Obtaining fair compensation for damages incurred by him or his money as a result of purchasing or using the Good or receiving the Service.

9- All other rights stipulated by the legislation in force in the State.

Any other rights may be added by a decision of the Council of Ministers.

Article 5- The Supreme Committee for Consumer Protection

1- A higher committee to be called “the Supreme Committee for Consumer Protection” is formed by a Cabinet decision based on the Minister's proposal. Said Committee shall be affiliated with the Ministry and chaired by the Minister with the membership of representatives from the competent authorities and Consumer protection societies, in addition to two experienced and competent persons chosen by the Minister. The decision shall determine the Committee's work system.

2- The Committee shall assume the following competencies:

a- Setting general policies for Consumer protection.

b- Studying the Consumer protection reports referred to it by the Department and the Competent Authority and taking the necessary decisions in their regard.

c- Studying the obstacles facing the application of the law and proposing a mechanism to address them.

d- Studying the suggestions and recommendations that are submitted thereto and relating to protecting the right of Consumers and expressing opinion thereon.

e- Developing plans and programs to educate Consumers and raise their awareness in respect of their economic rights and obligations.

f- Studying the proposals of the Minister thereto and issuing recommendations in their regard.

g- Any other functions assigned thereto by the Council of Ministers.

Article 6- Coordination with the Relevant Authorities

1- The Department shall coordinate with the Relevant Authorities to ensure the protection of Consumer rights.

2- The Department shall submit periodic reports to the Committee regarding coordination between it and the Relevant Authorities.

3- The Implementing Regulation of this Law shall determine the controls for implementing the provisions of this article.

Chapter 2

Obligations of the Supplier, Advertiser, and Commercial Agent

Article 7- Explanatory Information

1- The Supplier shall, upon offering the Good for sale, place the Explanatory Information on its cover or package, or in a place where it is displayed in a clear and legible manner, and he shall indicate the manner according to which it shall be installed and used, in accordance with the Standard Specifications legislation in force in the State.

2- If the use of the Good is hazardous, the Supplier shall clearly state the same according to what is specified by the Implementing Regulation of this Law.

Article 8- Price of Good and Service

1- When offering the Good for sale, the Supplier shall clearly place the Price thereon.

2- When declaring the Prices of Goods and Services rendered by the Supplier, advertisement thereof shall not be misleading.

3- The Supplier shall provide the Consumer with a dated Invoice that includes his trade name, address, type of Good, its Price and quantity, or the type of Service, its Price and details, and any other data specified by the Implementing Regulation of this Law.

4- The Invoice shall be in Arabic, and the Supplier may add any other language he specifies.

Article 9- Facing emergency circumstances

In the event of a crisis, emergency circumstances, or unusual conditions in the internal or external markets, the Minister may take all necessary measures to protect and preserve the interest of Consumers from any harm, and he may issue a decision specifying the selling Prices of any Good or Goods, and all Suppliers in the State shall be bound by this decision.

Article 10- Obligation of the Supplier to implement the Warranty

1- The Supplier shall implement all Warranties, provide the required spare parts and maintenance, replace the Good, or refund its monetary value, and commit to After-Sales Service as regards the sold Goods, within the specified time limit.

2- The Supplier shall guarantee the Service he provides and that it is free from Defects and Malfunctions within a period of time commensurate with the nature of that Service, otherwise he shall return the amount paid by the Consumer or a part thereof, or he shall re-perform the Service properly.

3- The Implementing Regulation of this Law shall determine the controls for implementing the provisions of this article.

Article 11- Obligations of the Supplier of the Good and Service upon discovering the Defect

In the event that the Supplier discovers a Defect or danger in the Good or Service that would harm the Consumer when using it or benefiting therefrom, the Supplier shall immediately inform the Ministry or the Competent Authority of potential damages and of the manner to prevent the same. Also, he shall immediately recall the same and announce that such products are hazardous, as determined by the Implementing Regulation of this Law.

Article 12- Malfunction of the Good or Service

In the event that a Malfunction is found in the Good or Service, the Supplier shall repair or replace the same, return the Good and refund its Price, or re-perform the Service without charge, in accordance with what is specified by the Implementing Regulation of this Law.

Article 13- Obligations to be fulfilled when the Malfunction recurs

If the same Malfunction in the Good is repeated three (3) times during the first year from the date on which the Consumer receives it in a way that substantially affects the quality of the functional performance of the Good, the Supplier shall replace it at no cost with a new one of the same type and specifications, or recover it and refund its value to the Consumer, and that according to what is specified by the Implementing Regulation of this Law.

Article 14- Provisions of After-Sales Service Warranty and Prices

The Minister may issue decisions on the basis of which the terms and conditions of the Warranty and the Prices of After-Sales Service are determined, as per the type and nature of each Good or Service.

Article 15- Obligations of the Good Supplier

The Supplier shall stipulate in the contracts concluded by him that he commits to repair, undertake maintenance or After-Sales Service or to return, replace or refund the Good within a specific time-limit from the appearance of the Defect or Malfunction, in accordance with what is specified by the Implementing Regulation of this Law.

Article 16- Commercial agencies

Subject to the provisions of Federal Law No. (18) of 1981 aforementioned, the commercial agent or distributor shall comply with the following:

1- Implementing all Warranties provided by the producer or the principal as regards the Good or Service subject of the agency.

2- Providing a similar Good for the Consumer to use without charge if the implementation of the Warranties stipulated in clause (1) of this article exceeds a period of (7) seven days, until those Warranties are implemented.

3- The agent shall be bound by all the obligations of the Supplier stipulated in this Law in the event the Service or Good is provided through him.

Article 17- Incorrect description of the Good or Service

The Advertiser, the Supplier and the commercial agent are prohibited from describing the Good or Service in a manner that contains incorrect data and from making any Misleading Advertisement in connection therewith.

Article 18- Licence for Promotion

The Supplier is prohibited from promoting Goods or Services, or from making general Price Discounts or advertising the same in any way whatsoever, except after obtaining a prior licence from the Competent Authority.

Article 19- Monopoly

Subject to the provisions of the legislation in force in the State, the Supplier is prohibited from concealing the Good, refraining from selling it, or from not providing the Service to the Consumer, with the intention of controlling or monopolizing the Price or forcing the Consumer to purchase certain quantities of the Good or adding certain conditions to benefit from the Service or to buy another Good or Service along therewith, or charging a Price higher than the Price that was advertised, in accordance with what is specified by the Implementing Regulation of this Law.

Article 20- Conformity of the Good with the approved Standard Specifications and public health and safety rules

The Supplier is obligated to ensure that the Good or Service conforms to the Standard Specifications, conditions and controls related to health and safety and the legislation in force in the relevant country.

Article 21- Prohibition of inclusion of a condition harmful to the Consumer

The Supplier is prohibited from including any condition when contracting with the Consumer that would harm the latter. Any condition provided for in the contract or Invoice or otherwise that would exempt the Supplier from any of the obligations stipulated in this Law shall be deemed null and void.

The Implementing Regulation of this Law shall determine the controls of the conditions that would prejudice the Consumer.

Chapter 3

Protection of Consumer Rights

Article 22- The Ministry's role in protecting Consumer rights

The Ministry shall supervise the implementation of the general policy for Consumer protection in cooperation with the Competent Authorities, and in particular the following:

1- Educating the Consumer and raising his awareness as to whatever contributes to protecting him from the risks of some Goods and Services, including e-commerce Services.

2- Publishing decisions and recommendations that contribute to increasing Consumer awareness.

3- Monitoring Price movement and working to limit its increase.

4- Working to achieve the principle of competition and combatting misleading advertisements and monopoly.

5- Receiving Consumer complaints and the Consumer Protection Association and taking the necessary measures in their regard or referring them to the competent authorities.

6 - The Implementing Regulation of this Law shall lay down a system for receiving complaints, the necessary procedures in their regard, and aspects of coordination between the Ministry and the Competent Authority. A table of administrative penalties and fines that the Ministry may impose on the Supplier shall be attached to the Implementing Regulation of this Law.

Article 23- Seeking assistance of experts and labs

Subject to Federal Law No. (28) of 2001 and its amendments here above-mentioned, the Ministry or the Competent Authority may, whenever the public interest requires so or in the event of a dispute between the Supplier and the Consumer, request the inspection of the Good or Service at laboratories, provided that the Supplier bears the expense of the examination if the Goods are found to be invalid.

The Implementing Regulation of this Law shall determine the controls for implementing the provisions of this article.

Article 24- The Consumer's right to claim compensation

1- The Consumer shall have the right to claim compensation for personal or material damages sustained by him as a result of using the Good or Service, in accordance with the legislation in force in the State, and any agreement to the contrary shall be null and void.

2- Damages resulting from the product’s misuse or use contrary to the method of use are excluded from the provisions of clause (1) of this article.

Article 25- E-commerce

1- Suppliers registered in the State and who work in the field of electronic commerce shall provide Consumers and the Competent Authorities in the State with their names, legal status, addresses and licensing bodies, as well as adequate information in Arabic about the product or Service provided, its specifications, and the terms of contract, payment, and Warranty, in accordance with what is specified by the Implementing Regulation of this Law.

2- The Ministry or the Competent Authority is not considered responsible for electronic commerce operations that take place through Suppliers unlicensed inside the State.

Article 26- Use of the Arabic language in statements, advertisements, and contracts

The data, advertisements, and contracts related to the Consumer shall be made in Arabic, and other languages ​​may be used in addition to Arabic.

Article 27- Prohibition, administrative seizure, or withdrawal of Goods

Subject to the legislation in force, the Minister or whomever he delegates and the Competent Authority, in case of necessity or urgency upon receipt of information or reports from competent authorities on a Good that is harmful or hazardous to the Consumer, may issue a decision prohibiting its import or ordering its administrative seizure or withdrawal from the market in the event of its entry.

Chapter 4

Penalties

Article 28

The application of the penalties stipulated in this Law shall not prejudice any more severe penalty stipulated in any other law.

Article 29

A penalty of imprisonment for a period not exceeding two years and a fine not less than (10,000) ten thousand dirhams and not exceeding (2,000,000) two million dirhams, or either of these two penalties, shall be imposed on anyone who violates any of the provisions of Articles (7,10,11,12,15,16, 17,21) and the provisions of clauses (1, 2 and 3) of Article (8) of this Law.

Article 30

A penalty of imprisonment for a period not exceeding six months and a fine not less than (3,000) three thousand dirhams and not exceeding (200,000) two hundred thousand dirhams, or either of these two penalties, shall be inflicted on whoever violates any of the provisions of Articles (18,19,20,26) and the provision of clause (4) of Article (8), of this Law.

The penalty shall be doubled in the event of recidivism.

Article 31

The competent court, upon conviction for any of the crimes stipulated in this Law, may rule the following:

1- Confiscation or destruction the Good, materials and tools used, at the expense of the convicted person.

2- Closure of the shop or place where the crime occurred for a period not exceeding three months.

3- Publication of the conviction ruling at the expense of the convicted person in two daily local newspapers, one of them in the Arabic language.

Article 32

A penalty of imprisonment for a period not exceeding two months and a fine equivalent to twice the market value of the Goods and tools, or either of these two penalties, shall be inflicted on whoever dispose illegally and in any way whatsoever of the Goods and tools upon which the Competent Authority has expressed any reservation.

Chapter 5

Final Provisions

Article 33- Adjustment of situation

The Supplier, the commercial agent, and the Advertiser shall adjust their situation in accordance with the provisions of this Law within one year from the date of its entry into force, and this period may be extended to other similar periods by a Cabinet decision upon the Minister’s proposal.

Article 34 - Judicial seizure

The employees designated by a decision issued by the Minister of Justice in agreement with the Minister or head of the Competent Authority, shall have the capacity of judicial officers in proving any violation of the provisions of this Law and its Implementing Regulation and the decisions issued in implementation thereof, and that within the scope of their competence.

Article 35- Grievance

Any interested party may file a grievance in writing with the Minister as regards decisions and measures taken against him under the provisions of this Law, and that within (15) fifteen working days from the date of being notified of the grieved-against decision or measure, provided that all supporting documents are attached thereto. Said grievance shall be decided within (30) thirty days from the date of its submission, and the decision issued therein shall be final. Failure to respond to the grievance within the aforementioned period shall be considered a rejection thereof.

Article 36- Implementing Regulation

Based on the Minister’s proposal, the Council of Ministers shall issue the Implementing Regulation of this Law within six months from the date of its publication.

Article 37- Abrogation

1- Federal Law No. (24) of 2006 mentioned here above shall be abrogated, as well as any provision that contradicts or conflicts with the provisions of this Law.

2- The regulations and decisions issued in implementation of Federal Law No. (24) of 2006 shall remain applicable, as long as they do not conflict with the provisions of this Law, until the issuance of the regulations and decisions that replace them.

Article 38- Publication and entry into force of the Law

This Law shall be published in the Official Gazette and shall come into force as of the day following the date of its publication.

Issued by us at the Presidential

Palace in Abu Dhabi:

On: 10 / November / 2020

Corresponding to 24 Rabi’ al-Awwal 1442 H.

Khalifa bin Zayed Al Nahyan

President of the United Arab Emirates

 

 

Law No. (15) of 2017 Concerning Administration of Estates and Implementation of Wills of Non-Muslims in the Emirate of Dubai

Location: United Arab Emirates

Family, Wills, Succession Planning

Issued On: 2017-10-18
Type: Federal Law

Law No. (15) of 2017 Concerning

Administration of Estates and Implementation of Wills of Non-Muslims in the Emirate of Dubai1

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Chapter One

Title of the Law, Definitions, Scope of Application, and

Preliminary Provisions

Title of the Law

Article (1)

This Law will be cited as “Law No. (15) of 2017 Concerning Administration of Estates and Implementation of Wills of Non-Muslims in the Emirate of Dubai”.

Definitions

Article (2)

The following words and expressions, wherever mentioned in this Law, will have the meaning indicated opposite each of them unless the context implies otherwise:

 

UAE:

The United Arab Emirates.

Emirate:

The Emirate of Dubai.

Ruler:

His Highness the Ruler of Dubai.

Government:

The Government of Dubai.

DIFC:

The Dubai International Financial Centre.

Competent Court:

The Dubai Courts or the DIFC Courts, as the case may be.

President:

The President of the Dubai Courts or the Chief Justice of the DIFC Courts, as the case may be.

Will:

The expression of how a testator wishes his property or any part thereof to be disposed of after his death.

Estate:

All property and real and moral rights of a deceased.

Executor:

A natural or legal person appointed by a testator pursuant to a Will or other separate document, or appointed by the Competent Court, to implement the Will.

Administrator:

A natural or legal person who administers an Estate under the supervision of the Competent Court.

Register:

The register of Wills and Estates of non-Muslims created

within the Dubai Courts, or the register of Wills created within the DIFC Courts.

Scope of Application

Article (3)

This Law will apply to all Wills and Estates of non-Muslims in the Emirate, including in the Dubai International Financial Centre.

Applicable Law

Article (4)

  1. Except as expressly provided for by this Law, the applicable law prescribed by the choice of law provisions of the legislation in force will apply to Estates and Wills of non-Muslims.

 

  1. Notwithstanding the provisions of paragraph (a) of this Article, the legislation in force in the Emirate will apply in any of the following cases:

 

  1. where the Estate or Will relates to Real Property located in the Emirate;

 

  1. determining whether the willed property is real or moveable;

 

  1. where the provisions of the applicable foreign law contradict public order or morals; and

 

  1. where the testator chooses the application of the UAE legislation to his Will.

 

  1. Where a testator has multiple nationalities, the applicable law will be decided based on the nationality specified by him upon registration of his Will. Where he does not specify a nationality, the Will will be governed by the legislation of the country in which he resides or his business is based.

Rights Related to Wills and Estates

Article (5)

A Will takes precedence over intestate succession. However, a Will will not be implemented and an Estate will not be distributed unless the following liabilities are settled as per the order of priority stated below:

  1. the funeral expenses of the deceased;
  2. the Estate administration and Will implementation expenses;
  3. the remuneration of Executors and Administrators; and
  4. the debts owed by the Estate, as per the debt priority ranking stipulated in the legislation in force.

 

Chapter Two

Wills

Register of Wills

Article (6)

  1. A register known as the “Register of Wills of non-Muslims” will be created at the Dubai Courts and at the DIFC Courts for the purpose of registering the Wills of non-Muslims.

 

  1. The form of the Register, the information to be entered therein, and the procedures and rules for registration thereon will be determined pursuant to a resolution of the President.

Execution of Wills

Article (7)

The execution of a Will will be effected in writing, or by using meaningful verbal expressions or intelligible signs if the testator is unable to write. A Will may be made in favour of a named or unnamed person; a living person or an unborn child whose existence is ascertained; or an identified or unidentified group, and may be made for charitable purposes. The wording of a Will may be non-restrictive or restrictive. A Will may stipulate that it will take effect on a future date, and may be conditional or contingent upon the satisfaction of any requirements. In addition, a Will may apply to the whole Estate or to any part thereof.

Requirements for Registering Wills on the Register

Article (8)

Registering a Will on the Register will be subject to the following conditions:

  1. The testator must be non-Muslim.
  2. The Will must satisfy the Will validity conditions stipulated herein.
  3. The Will must nominate an Executor and must state how the willed property will be disposed of.
  4. The testator must have signed the Will or affixed his seal or fingerprint to it, in the presence of two (2) witnesses.
  5. The text of the Will must not have been altered by deleting or erasing any part thereof, or by adding or inserting new text.
  6. All the fees prescribed by the legislation in force in the Emirate must have been paid.

Conditions for Validity of Wills

Article (9)

  1. A Will will be valid subject to the following conditions:

 

  1. The willed property must be capable of being owned and used by the beneficiary of the Will.

 

  1. The testator must be of full capacity and must not be less than twenty-one (21) years of age.

 

  1. The testator must not be under interdiction for prodigality or imbecility unless the Will is made for charitable purposes and his guardian obtains the relevant approval from the Competent Court.

 

  1. The testator must not be prohibited from disposing of his property, and must not be declared bankrupt or insolvent.

 

  1. The willed property must be owned by the testator.

 

  1. The Will must be enforceable.

 

  1. The enjoyment of the willed property and the purpose for which it is bequeathed must be lawful.

 

  1. The willed property must be existent and of a known or measurable amount at the time of death of the testator. Future assets may be bequeathed by a Will if their existence is ascertainable.

 

  1. The Will must not contradict public order or morals.

 

  1. Any interested party may request the interpretation of, or contest, a Will before the Competent Court.

 

  1. Where a Will includes a condition which contradicts public order or morals, this condition will be null and void and the Will will remain valid.

Lapse of Wills

Article (10)

A Will will lapse in any of the following cases:

  1. where the Will is revoked by the testator. This revocation must be registered on the Register;

 

  1. where a new Will that contradicts the original Will is registered;

 

  1. where the willed property is disposed of in a manner that involves transfer of ownership;

 

  1. in the event of death of the beneficiary of the Will during the lifetime of the testator, unless an alternative beneficiary is stated in the Will;

 

  1. in the event of destruction of the willed property; where it is proven pursuant to a definitive court judgment that the title to the property belongs to another person; or where such property is proven to be non-transferable;

 

  1. where the testator becomes bankrupt during his lifetime, or where the entire willed property is used to satisfy the debts of the Estate;

 

  1. in the event of renunciation of the Will by its beneficiary or his guardian; and

 

  1. where the testator is killed by the beneficiary of the Will; whether that beneficiary has been a principal or accomplice in the murder of the testator, or has caused his death. In any such case, the beneficiary must have been convicted pursuant to a definitive court judgment.

Multiple Wills

Article (11)

  1. In case of multiple Wills, the Will which is registered on the Register will prevail. Where all Wills are registered, the Will registered first will prevail.

 

  1. Where none of the multiple Wills is registered on the Register, they will be deemed a single Will. In the event of conflict between or amongst them, the Will determined pursuant to a judgment of the Competent Court will be implemented.

Acceptance and Renunciation of Wills

Article (12)

  1. Upon the death of a testator, the beneficiary of the Will may accept or renounce it in whole or in part within sixty (60) days from the date on which he is notified of the Will. This will be subject to the following rules:
    1. Where the beneficiary is a minor, an unborn child, or a person placed under interdiction, the acceptance or renunciation of the Will will be effected by the guardian, subject to the approval of the Competent Court.

 

  1. Where the beneficiary is a public or private entity, the acceptance or renunciation of the Will will be effected by the legal representative of that entity.

 

  1. Where the beneficiary dies before he accepts or renounces the Will, the right to accept or renounce it will pass to his heirs. In case he leaves no heirs, the Will will lapse.

 

  1. Where the beneficiary is an unnamed person, no acceptance or renunciation will be required.

Encumbered Wills

Article (13)

Where the willed property is encumbered by any rights or obligations, it will be transferred to the beneficiary of the Will together with these rights and obligations. If the beneficiary refuses to fulfil these rights and obligations, his rights under the Will will be forfeited.

Requirements for Executors

Article (14)

  1. An Executor must:

 

  1. be of full capacity;

 

  1. not be convicted of any felony or other crime affecting honour and trustworthiness, unless he has been rehabilitated;

 

  1. not have been declared bankrupt or insolvent, unless he has been rehabilitated;

 

  1. declare his acceptance to implement the Will; and

 

  1. not have any interest in the willed property.

 

  1. In the absence of an Executor, the Competent Court will appoint an Executor as per the following order:

 

  1. the alternative Executor named in the Will;
  2. any Executor chosen by the beneficiary or his guardian; or
  3. any other Executor determined by the Competent Court.

Duties and Powers of Executors

Article (15)

Under the supervision of the Competent Court, an Executor will have the duties and powers to:

  1. conduct an inventory of the willed property; receive and take possession of that property; collect any rights arising from the same; and take any necessary action to preserve it, including entrusting it to a trustworthy person, initiating legal proceedings, dealing with government and non-government entities in respect of the implementation of the Will; and representing the beneficiary of the Will in claims related to the Will;

 

  1. pay the beneficiary of the Will his necessary expenses from the willed property once the amount of these expenses is determined by the Competent Court;

 

  1. where the Will is encumbered by any rights, invite creditors and the holders of these rights to submit their claims within ninety (90) days from the date on which the invitation is published in two (2) local daily newspapers, one of which is in English;

 

  1. perform any obligations arising from the Will and make the necessary settlements in this respect, subject to obtaining the written approval of the Competent Court;

 

  1. subject to obtaining the approval of the Competent Court, take the necessary action to manage and invest the willed property, including by way of lease or mortgage of this property, whether by himself or through contracting any investment agents;

 

  1. appoint lawyers and seek assistance from experts and specialists to exercise his duties and powers; and pay their fees and remuneration from the willed property, subject to obtaining the written approval of the Competent Court of the amount of these fees and remuneration;

 

  1. subject to obtaining the written approval of the Competent Court, sell any part of the willed property where the cost of maintaining this part exceeds its value, or where it is prone to damage or destruction; and

 

  1. subject to obtaining the written approval of the Competent Court, deliver the willed property or any part thereof to the beneficiary.

Obligations of Executors

Article (16)

An Executor must:

  1. manage the willed property in good faith and with the due diligence a prudent person would exercise;

 

  1. present himself as Executor when exercising any of his duties and powers under this Law or under the Will;

 

  1. regularly keep separate records and books in respect of the implementation of the Will;

 

  1. not use, or allow any other person to use, the willed property directly or indirectly for his own benefit or gain, unless he is so authorised by the testator or the Competent Court;

 

  1. not disclose to others any information or data related to the accounts of the Will, unless otherwise stipulated by the legislation in force; and

 

  1. meet any other obligations stated in the Will implementation order or required due to the nature of disposition.

Removing Executors

Article (17)

  1. The Competent Court may, at any time, for valid reasons and based on the application of an Executor, a beneficiary, or heirs, issue a judgment removing the Executor upon hearing the statements of the applicant and of the Executor and reviewing the relevant submissions. In this case, the Competent Court will appoint a replacement Executor.

 

  1. Where an Executor is removed, he must, within sixty (60) days from the date on which he is notified of the removal decision, submit to the Competent Court a detailed report on the work he has performed and the financial accounts related to the Will.

Implementation of Wills

Article (18)

A Will will be implemented pursuant to:

  1. a written order issued by the Competent Court, where the Will is registered on the Register; or
  2. a judgment issued by the Competent Court based on a written application by the beneficiary of the Will or his guardian in accordance with the procedures for instituting legal proceedings, where the Will is not registered on the Register.

Accounts of Wills

Article (19)

An Executor must, within the time frame prescribed by the Competent Court for this purpose, submit to the Competent Court a report on his work. This report must contain a detailed statement of the accounts and expenditure related to the Will.

Transfer of Ownership of Willed Property

Article (20)

The ownership of willed property will be transferred to the beneficiary of the Will pursuant to an order or a judgment issued by the Competent Court, subject to the following:

  1. The beneficiary must be of full capacity and must not be under interdiction for prodigality or imbecility, except where the beneficiary is a minor, or a person placed under interdiction, who has a guardian, custodian, or trustee.

 

  1. The Executor must submit to the Competent Court the final accounts of the willed property.

Chapter Three

Estates

Disposal of Estates

Article (21)

  1. The Estate of a deceased non-Muslim will devolve to his heirs in accordance with the procedures stipulated herein and the rules and procedures adopted by the Competent Court.
  2. Except for funeral expenses and other necessary expenses of the deceased’s family members who depended on him for livelihood during his lifetime, no disposition in respect of an Estate may be undertaken before an Estate administration judgment or order is issued by the Competent Court to appoint an Administrator.

Administration of Estates

Article (22)

  1. An Estate will be administered by one or more persons (the “Administrator(s)”). An Administrator will, in addition to the duties assigned to him pursuant to the Estate administration judgment issued by the Competent Court, exercise the duties and powers stipulated in this Law.

 

  1. The Administrator will be the legal representative of the Estate, and may sue and be sued in that capacity.

 

  1. The Competent Court may appoint the Administrator from amongst persons agreed upon by the heirs, or may appoint any other person. It may also appoint more than one Administrator, in which case they will be assigned to act jointly or severally, and each of them will perform specific duties.

 

  1. The Competent Court may, based on a written application by the heirs or their legal representative(s), issue a judgment to remove an Administrator and replace him with another Administrator for any reason whatsoever. Where the Estate is administered by multiple Administrators, and the Competent Court holds that the remaining Administrators can continue to administer the Estate, it may remove the Administrator without appointing a replacement.

 

  1. Where an Administrator is replaced, he must submit to the Competent Court, within sixty (60) days from the date on which the judgment replacing him is issued, a report which contains a detailed account of the work he has performed and the financial statements of the Estate.

Duties and Powers of Administrators

Article (23)

An Administrator will have the duties and powers to:

  1. conduct an inventory of the Estate of the deceased;

 

  1. where the Estate is encumbered by any rights, invite creditors and holders of these rights to submit their claims within ninety (90) days from the date on which the invitation is published in two (2) local daily newspapers, one of which is in English;

 

  1. receive and take possession of the Estate; collect any rights arising from the same; and take any necessary action to preserve it, including entrusting it to a trustworthy person, initiating legal proceedings, and dealing with government and non- government entities in respect of any matter related to the Estate;

 

  1. appoint lawyers and seek assistance from experts and specialists to exercise his duties and powers; and pay their fees and remuneration from the Estate, subject

to obtaining the approval of the Competent Court of the amount of these fees and remuneration;

 

  1. pay any heir in need his necessary expenses once these expenses are determined by the Competent Court, and deduct the same from his share in the Estate upon distribution of the same;

 

  1. perform any obligations arising from the Estate and make the necessary settlements in this respect, subject to obtaining the written approval of the Competent Court;

 

  1. subject to obtaining the written approval of the Competent Court, take the necessary action to manage and invest the property of the Estate, including by way of lease or mortgage of this property, whether by himself or through contracting any investment agents;

 

  1. subject to obtaining the written approval of the Competent Court, sell any part of the Estate where the cost of maintaining this part exceeds its value, or where it is prone to damage or destruction; and

 

  1. distribute the Estate to beneficiaries in accordance with a judgment issued by the Competent Court in this respect.

Obligations of Administrators

Article (24)

An Administrator must:

  1. administer the Estate in good faith and with the due diligence a prudent person would exercise;

 

  1. present himself as Administrator when exercising any of his duties and powers under this Law;

 

  1. regularly keep separate records and books of each Estate;

 

  1. not use, or allow any other person to use, the property of the Estate directly or indirectly for his own benefit or gain, unless he is so authorised by the Competent Court;

 

  1. not disclose to others any information or data related to the accounts of the Estate, unless otherwise stipulated by the legislation in force; and

 

  1. meet any other obligations stated in the Estate administration order or required due to the nature of disposition.

Inventoryof Estates

Article (25)

  1. An Administrator will, within six (6) months from the date of issuance of an Estate administration judgment, submit to the Competent Court an inventory of the property and assets of the Estate, an estimated value of the same, and a statement of the rights or obligations thereof. The Competent Court may extend this time frame for the same period based on a written application of the Administrator.

 

  1. Any affected party may contest the inventory of the property of the Estate referred to in paragraph (a) of this Article before the Competent Court within ninety (90) days from the date of being notified of the same. The judgment issued by the Competent Court in this respect will be subject to appeal, and the judgment on that appeal will be final and non-appealable.

Accounts of Estates

Article (26)

The Administrator will, every three (3) months or when so requested by the Competent Court, submit to the Competent Court a report on the accounts and expenditure of the Estate.

Distribution of Estates

Article (27)

The Competent Court may, upon the request of the Administrator or any of the heirs, issue a judgment or an order to:

  1. distribute the Estate to heirs and beneficiaries of Wills, if any, after collecting the rights and performing the obligations of the Estate;

 

  1. distribute the Estate before fulfilling its obligations, subject to allocating a part thereof to settle these obligations, where the entire Estate is not required to be used to satisfy its debts;

 

  1. temporarily deliver to one or more heirs, against submission of relevant guarantees, their shares in the Estate or any part thereof, if the Estate is not required to be liquidated; or

 

  1. extend the period of Estate administration for the period it deems necessary in special and justifiable circumstances.

Absence of Heirs

Article (28)

Subject to the international conventions and treaties to which the UAE is a party, the Estate of an intestate who leaves no heirs will devolve to the Public Treasury of the Government of Dubai.

Chapter Four

Final Provisions

Jurisdiction and Judicial Enforcement

Article (29)

  1. Depending on the place of registration of a Will, the Dubai Courts or the DIFC Courts will have jurisdiction to determine disputes related to that Will.

 

  1. The judgments and decisions issued by the Competent Court in respect of the Wills and Estates governed by this Law will be enforced in accordance with the rules and procedures adopted by the Competent Court in this respect.

Remuneration of Executors and Administrators

Article (30)

  1. Where the remuneration of an Administrator or Executor is not determined in the Will or by agreement of the heirs, the Competent Court will determine it based on a written application submitted by the Administrator or the Executor, as the case may be.

 

  1. The remuneration of an Administrator or Executor will be a preferential debt and will rank second in priority to judicial fees.

Conflict of Interest

Article (31)

An Administrator, an Executor, or any of their subordinates may not sell or purchase the willed property or Estate property for his own account or for the account of others; and may not have a direct or indirect interest in any project or agreement related to the willed property or Estate property, unless he is so authorised by the testator or the Competent Court.

Fees

Article (32)

  1. In return for the services it provides in accordance with this Law, the Dubai Courts will charge the fees prescribed by a resolution of the Chairman of the Executive Council.

 

  1. In return for the services it provides in accordance with this Law, the DIFC Courts will charge the fees prescribed by a resolution of the Chairman of the Dubai International Financial Centre.

Transitional Provisions

Article (33)

All Wills of non-Muslims which are registered with the Dubai Courts or with the DIFC Courts prior to the effective date of this Law will be deemed valid as if made in accordance with the provisions of this Law.

Issuing Implementing

Resolutions Article (34)

The Chairman of the Executive Council will issue the resolutions required for the implementation of the provisions of this Law.

Repeals

Article (35)

Any provision in any other legislation will be repealed to the extent that it contradicts the provisions of this Law.

Publication and Commencement

Article (36)

This Law will be published in the Official Gazette and will come into force on the day on which it is published.

Mohammed bin Rashid Al Maktoum

Ruler of Dubai

Issued in Dubai on 18 October 2017

Corresponding to 28 Muharram 1439 A.H.

Law No. (15) of 2017 Concerning Administration of Estates and Implementation of Wills of Non-Muslims in the Emirate of Dubai

 

Federal Decree Law No. (15) of 2020 Amending Certain Provisions of the Federal Law No. (3) of 1987 Concerning the Penal Code

Location: United Arab Emirates

General

Issued On: 2022-09-27
Type: Federal Law

Article (1)

The provisions of the Islamic Shari’a shall apply to the retribution and blood money crimes. Other crimes and their respective punishments shall be provided for in accordance with the provisions of this Law and other applicable penal codes.

Article (26)

  1. Crimes shall be categorized into three types:

    1. Felonies,

    2. Misdemeanors, and

    3. Offences

  2. The type of a crime shall be determined in accordance with the type of penalty provided for it in the law. Where a crime is punished by a fine or blood money in conjunction with another penalty, its type shall be determined according to this other penalty.

Article (28)

A felony is the crime that is punished by any of the following punishments:

    1. Any of retribution punishments.

    2. Capital punishment.

    3. Life imprisonment.

    4. Temporary imprisonment.

Article (66)

  1. Principal punishments are:

    1. Retribution and blood money punishments.

    2. Capital punishment.

    3. Life imprisonment.

    4. Temporary imprisonment.

    5. Incarceration.

    6. Detention.

    7. Fine.

  2. Where the conditions to apply retribution or blood money punishment are not met, the Court shall impose to the punishments provided for in this Law or other penal codes as applicable.

Article (92)

The capital punishment shall override all other punishments with the exception of the proportionate fines and confiscation. Imprisonment punishment shall override, up to the extent of its term, incarceration punishment impose in any crime committed before issuing the said imprisonment punishment.

Article (121)

Where a foreigner is convicted for a felony and sentenced to any freedom restricting punishment, the court shall also order the deportation of the sentenced foreigner. In misdemeanors, the Court may order deportation in its sentence or to order deportation only in lieu of freedom restriction punishment.

As an exception to the above paragraph and to any other provision in any other law, the Court may not order the deportation of a foreigner if such a foreigner is a spouse of or a first degree relative to a UAE national, unless the sentence is issued in a crime against the security of the State.

Article (313) Bis

  1. There shall be no punishment for consuming, possession or trading in alcohol drinks in the situations and at places allowed as per applicable legislations.

  2. Subject to (1) of this Article, each Emirate shall regulate consuming, possession, dealing with and trading in alcohol drinks.

  3. Whoever provides or sells alcohol drinks to any person of less than 21 years age or purchases them with the objective of provision to such person shall be subject to the punishments of incarceration and a fine of no less than AED One Hundred Thousand and no more than AED Five Hundred Thousand, or any of the two punishments. Whoever does any of the said actions after verifying that the age of the person to whom alcohol drinks are provided or sold is no less than 21 years according to his passport or any other official identification shall not be guilty of any crime.

Article (323)

Whoever receives or obtains, directly or indirectly, any funds from any person or party within or outside the UAE to do or to promote any of the actions provided for in Articles (319) and (320)

of this Law shall be subject to the punishments of incarceration for no less than one year and a fine of no less than AED Five Thousand, or any of the two punishments.

Article (335)

Whoever attempts suicide shall be subject to the punishments of incarceration for no more than six months or a fine of no more than AED Five Thousand, or both of the two punishments.

The Court may order the detention of the convicted defendant in a healing facility in lieu of the punishment determined for the crime in accordance with the controls provided for in Article

(137) of this Law.

Whoever instigates or helps in any way other person to suicide, and the other person starts or commits suicide based on such instigation or help, shall be subject to the punishment of incarceration. Should the suiciding person is under 18 years of age or of a limited mental capacity, this shall constitute an aggravating circumstance.

The instigator shall be sentenced to the punishment prescribed for mediated murder or attempted murder, as applicable, in case the suiciding person or attempting suicide lacks mental capacity.

Article (354)

Without prejudice to the provisions of the Law on Juvenile Delinquents and Homeless, whoever uses coercion in having sexual intercourse with a female or sodomy with a male shall be sentenced to capital punishment. Coercion shall be considered as evident if the victim is below fourteen years of age at the time when the crime occurs, or if the victim is of no free will due to young age, lunacy, or insanity.

Article (356)

Without prejudice to the previous two Articles, whoever commits sexual molestation of any person through coercion, threat or deceit, shall be subject to the punishment of temporary imprisonment.

Voluntary sexual molestation shall be subject to the same punishment provided for in the previous paragraph, if the age of the victim, male or female, is less than fourteen years or if the victim is of no free will due to young age, lunacy, or insanity.

Where the culprit is an ascendant, custodian, in charge of the victim or a servant of the victim or of the previously mentioned persons, the punishment shall be life or temporary imprisonment.

Article (358)

Whoever publicly commits obscene act shall be subject to a fine of no less than AED One Thousand and no more than AED Fifty Thousand. In case of repetition, the punishment shall be incarceration for no more than three months and fine of no more than AED One Hundred Thousand or one of them. The same punishment shall apply to any person who says or does any act that violate public morals.

Whoever does any indecent action towards a female or a boy of less than fifteen years of age, even in private place, shall be subject to the punishment of incarceration for no less than one year.

Article (359)

Whoever molests a female in an indecent way by words or action in a public road or in a frequented place shall be subject to the punishments of incarceration for no more than one year and fine of no more than AED One Hundred Thousand or one of the two punishments.

The same punishment shall apply to any male who enters under disguise to any place allocated for women only or to which the entry of men is forbidden. Should the male commits any crime under such disguise, this shall constitute an aggravating circumstance.

Article (360)

Whoever is found in a public road or frequented place enticing obscenity among passersby, by sayings or actions, shall be subject to the punishments of incarceration for no more than six months and fine of no more than AED One Hundred Thousand or one of the two punishments.

Article (361)

Whoever publicly makes appeals or songs, yelling or speech that is immoral or publicly entice others to indecency in any way whatsoever shall be subject to the punishments of incarceration for no more than one month and a fine of no more than AED One Hundred Thousand or one of the two punishments.

Article (362)

Whoever manufactures, imports, exports, possesses, acquires or transports for the purpose of exploiting, distributing or displaying to others any writings, drawings, images, films, symbols or other items if they are violating public morals, shall be subject to the punishments of incarceration for no more than one month and a fine of no more than AED One Hundred Thousand or one of the two punishments.

The same punishment shall apply to any person who advertise any of the previously mentioned items.

Article (382)

Theft shall occur by illegal appropriation of movable property owned by a person other than the offender and it shall be subject to the following provisions.

Article Two

A new Article under the number (53) Bis shall be added to the Federal Law No. (3) of 1987 as follows:

Whoever commits any action in good faith that may damage another person while trying to provide help or relief to such person in cases that require urgent intervention to save life, prevent, or mitigate any damages to the body of such person shall not be guilty of any crime.

Article Three

Articles (334), (371) and (381) of the said Federal Law No. (3) of 1987 concerning Penal Code shall be null and void and the said Federal Law No. (18) of 1978 shall be null and void. Any other provisions contradicting the provisions of this Decree by Law shall be null and void.

Article Four

This Decree by Law shall be published in the Official Gazette and shall come into force on the next day after its publishing date.

 

Taxation of Corporations and Businesses Federal Decree-Law No. 47 of 2022

Location: United Arab Emirates

Finance

Issued On: 2022-10-03
Type: Federal Law

Chapter One – General Provisions

 

Article 1 – Definitions

In the application of the provisions of this Decree-Law, the following words and expressions shall have meanings assigned against each, unless the context otherwise requires:

State: United Arab Emirates.

Federal Government: The government of the United Arab Emirates.

Local Government: Any of the governments of the Member Emirates of the Federation.

Ministry: Ministry of Finance.

Minister: Minister of Finance.

Authority: Federal Tax Authority.

Corporate Tax: The tax imposed by this Decree-Law on juridical persons and Business income.

Business: Any activity conducted regularly, on an ongoing and independent basis by any Person and in any location, such as industrial, commercial, agricultural, vocational, Federal Decree-Law No. 47 of 2022 – Unofficial translation 3 professional, service or excavation activities or any other activity related to the use of tangible or intangible properties.

Qualifying Income: Any income derived by a Qualifying Free Zone Person that is subject to Corporate Tax at the rate specified in paragraph (a) of Clause 2 of Article 3 of this Decree Law.

Government Entity: The Federal Government, Local Governments, ministries, government departments, government agencies, authorities and public institutions of the Federal Government or Local Governments.

Government Controlled Entit : Any juridical person, directly or indirectly wholly owned and controlled by a Government Entity, as specified in a decision issued by the Cabinet at the suggestion of the Minister.

Person: Any natural person or juridical person.

Business Activity : Any transaction or activity, or series of transactions or series of activities conducted by a Person in the course of its Business.

Mandated Activity : Any activity conducted by a Government Controlled Entity in accordance with the legal instrument establishing or regulating the entity, that is specified in a decision issued by the Cabinet at the suggestion of the Minister.

State’s Territory : The State’s lands, territorial sea and airspace above it. Natural Resources : Water, oil, gas, coal, naturally formed minerals, and other non-renewable, non-living natural resources that may be extracted from the State’s Territory.

Extractive Business : The Business or Business Activity of exploring, extracting, removing, or otherwise producing and exploiting the Natural Resources of the State or any interest therein as determined by the Minister.

Non-Extractive Natural Resource Business : The Business or Business Activity of separating, treating, refining, processing, storing, transporting, marketing or distributing the Natural Resources of the State.

Qualifying Public Benefit Entity : Any entity that meets the conditions set out in Article 9 of this Decree-Law and that is listed in a decision issued by the Cabinet at the suggestion of the Minister.

Qualifying Investment Fund : Any entity whose principal activity is the issuing of investment interests to raise funds or pool investor funds or establish a joint investment fund with the aim of enabling the holder of such an investment interest to benefit from the profits or gains from the entity’s acquisition, holding, management or disposal of investments, in accordance with the applicable legislation and when it meets the conditions set out in Article 10 of this Decree-Law.

Exempt Person : A Person exempt from Corporate Tax under Article 4 of this Decree-Law.

Taxable Person : A Person subject to Corporate Tax in the State under this Decree-Law.

Licensing Authority : The competent authority concerned with licensing or authorising a Business or Business Activity in the State.

Licence : A document issued by a Licensing Authority under which a Business or Business Activity is conducted in the State.

Taxable Income : The income that is subject to Corporate Tax under this Decree-Law.

Financial Year : The period specified in Article 57 of this Decree-Law.

Tax Return : Information filed with the Authority for Corporate Tax purposes in the form and manner as prescribed by the Authority, including any schedule or attachment thereto, and any amendment thereof.

Tax Period : The period for which a Tax Return is required to be filed.

Related Party : Any Person associated with a Taxable Person as determined in Clause 1 of Article 35 of this Decree-Law.

Revenue : The gross amount of income derived during a Tax Period.

Recognised Stock Exchange : Any stock exchange established in the State that is licensed and regulated by the relevant competent Federal Decree-Law No. 47 of 2022 authority, or any stock exchange established outside the State of equal standing.

Resident Person : The Taxable Person specified in Clause 3 of Article 11 of this Decree-Law.

Non-Resident Person : The Taxable Person specified in Clause 4 of Article 11 of this Decree-Law.

Free Zone : A designated and defined geographic area within the State that is specified in a decision issued by the Cabinet at the suggestion of the Minister.

Free Zone Person : A juridical person incorporated, established or otherwise registered in a Free Zone, including a branch of a Non-Resident Person registered in a Free Zone.

Unincorporated Partnership : A relationship established by contract between two Persons or more, such as a partnership or trust or any other similar association of Persons, in accordance with the applicable legislation of the State.

Permanent Establishment : A place of Business or other form of presence in the State of a Non-Resident Person in accordance with Article 14 of this Decree-Law.

State Sourced Income : Income accruing in, or derived from, the State as specified in Article 13 of this Decree-Law.

Qualifying Free Zone Person : A Free Zone Person that meets the conditions of Article 18 of this Decree-Law and is subject to Corporate Tax under Clause 2 of Article 3 of this Decree-Law.

Investment Manager : A Person who provides brokerage or investment management services that is subject to the regulatory oversight of the competent authority in the State. C

orporate Tax Payable : Corporate Tax that has or will become due for payment to the Authority in respect of one or more Tax Periods.

Foreign Partnership: A relationship established by contract between two Persons or more, such as a partnership or trust or any other similar association of Persons, in accordance with laws of a foreign jurisdiction.

Foreign Tax Credit : Tax paid under the laws of a foreign jurisdiction on income or profits that may be deducted from the Corporate Tax due, in accordance with the conditions of Clause 2 of Article 47 of this Decree-Law.

Family Foundation : Any foundation, trust or similar entity that meets the conditions of Article 17 of this Decree-Law.

Interest : Any amount accrued or paid for the use of money or credit, including discounts, premiums and profit paid in respect of an Islamic financial instrument and other payments economically equivalent to interest, and any other amounts incurred in connection with the raising of finance, excluding payments of the principal amount.

Accounting Income : The accounting net profit or loss for the relevant Tax Period as per the financial statements prepared in accordance with the provisions of Article 20 of this Decree-Law. Exempt Income : Any income exempt from Corporate Tax under this Decree-Law.

Connected Person : Any Person affiliated with a Taxable Person as determined in Clause 2 of Article 36 of this Decree-Law.

Tax Loss : Any negative Taxable Income as calculated under this Decree-Law for a given Tax Period.

Qualifying Business Activity : Any activity that is specified in a decision issued by the Cabinet at the suggestion of the Minister. Foreign Permanent

Establishment : A place of Business or other form of presence outside the State of a Resident Person that is determined in accordance with the criteria prescribed in Article 14 of this Decree-Law.

Market Value : The price which could be agreed in an arm’s-length free market transaction between Persons who are not Related Parties or Connected Persons in similar circumstances.

Qualifying Group : Two or more Taxable Persons that meet the conditions of Clause 2 of Article 26 of this Decree-Law.

Net Interest Expenditure : The Interest expenditure amount that is in excess of the Interest income amount as determined in accordance with the provisions of this Decree-Law.

Bank : A Person licensed in the State as a bank or finance institution or an equivalent licensed activity that allows Federal Decree-Law No. 47 of 2022 – Unofficial translation 7 the taking of deposits and the granting of credits as defined in the applicable legislation of the State.

Insurance Provider : A Person licensed in the State as an insurance provider that accepts risks by entering into or carrying out contracts of insurance, in both the life and non-life sectors, including contracts of reinsurance and captive insurance, as defined in the applicable legislation of the State.

Control : The direction and influence over one Person by another Person in accordance with the conditions of Clause 2 of Article 35 of this Decree-Law.

Tax Group : Two or more Taxable Persons treated as a single Taxable Person according to the conditions of Article 40 of this Decree-Law.

Withholding Tax Credit : The Corporate Tax amount that can be deducted from the Corporate Tax due in accordance with the conditions of Clause 2 of Article 46 of this Decree-Law.

Withholding Tax : Corporate Tax to be withheld from State Sourced Income in accordance with Article 45 of this DecreeLaw.

Tax Registration : A procedure under which a Person registers for Corporate Tax purposes with the Authority.

Tax Registration Number : A unique number issued by the Authority to each Person who is registered for Corporate Tax purposes in the State.

Tax Deregistration : A procedure under which a Person is deregistered for Corporate Tax purposes with the Authority.

Tax Procedures Law : The federal law that governs tax procedures in the State.

Administrative Penalties : Amounts imposed and collected under this DecreeLaw or the Tax Procedures Law.

Chapter Two – Imposition of Corporate Tax and Applicable Rates

Article 2 – Imposition of Corporate Tax Corporate Tax shall be imposed on Taxable Income, at the rates determined under this Decree-Law, and payable to the Authority under this Decree-Law and the Tax Procedures Law.

Article 3 – Corporate Tax Rate

1. Corporate Tax shall be imposed on the Taxable Income at the following rates: a. 0% (zero percent) on the portion of the Taxable Income not exceeding the amount specified in a decision issued by the Cabinet at the suggestion of the Minister. b. 9% (nine percent) on Taxable Income that exceeds the amount specified in a decision issued by the Cabinet at the suggestion of the Minister.

2. Corporate Tax shall be imposed on a Qualifying Free Zone Person at the following rates: a. 0% (zero percent) on Qualifying Income. b. 9% (nine percent) on Taxable Income that is not Qualifying Income under Article 18 of this Decree-Law and any decision issued by the Cabinet at the suggestion of the Minister in respect thereof.

Chapter Three – Exempt Person A

Article 4 – Exempt Person

1. The following Persons shall be exempt from Corporate Tax: a. A Government Entity. b. A Government Controlled Entity. c. A Person engaged in an Extractive Business, that meets the conditions of Article 7 of this Decree-Law. d. A Person engaged in a Non-Extractive Natural Resource Business, that meets the conditions of Article 8 of this Decree-Law. e. A Qualifying Public Benefit Entity under Article 9 of this Decree-Law. f. A Qualifying Investment Fund under Article 10 of this Decree-Law. g. A public pension or social security fund, or a private pension or social security fund that is subject to regulatory oversight of the competent authority in the State and that meets any other conditions that may be prescribed by the Minister. h. A juridical person incorporated in the State that is wholly owned and controlled by an Exempt Person specified in paragraphs (a), (b), (f) and (g) of Clause 1 of this Article and conducts any of the following: 1) Undertakes part or whole of the activity of the Exempt Person. 2) Is engaged exclusively in holding assets or investing funds for the benefit of the Exempt Person. 3) Only carries out activities that are ancillary to those carried out by the Exempt Person. i. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.

2. A Person under paragraphs (a), (b), (c) and (d) of Clause 1 of this Article that is a Taxable Person insofar as it relates to any Business or Business Activity under Articles 5, 6, 7 or 8 of this Decree-Law, respectively, shall be treated as an Exempt Person for the purposes of Articles 26, 27, 38 and 40 of this Decree-Law.

3. Persons specified in paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, are required to apply to the Authority to be exempt from Corporate Tax in the form and manner and within the timeline prescribed by the Authority in this regard.

4. The exemption from Corporate Tax under paragraphs (f), (g), (h) and (i) of Clause 1 of this Article, as applicable, shall be effective from the beginning of the Tax Period specified in the application, or any other date determined by the Authority.

5. In the event that the Exempt Person failed to meet any of the conditions under the relevant provisions of this Decree-Law at any particular time during a Tax Period, such Person shall cease to be an Exempt Person for the purposes of this Decree-Law from the beginning of that Tax Period.

6. For the purposes of Clause 5 of this Article, the Minister may prescribe the conditions under which a Person may continue to be an Exempt Person, or cease to be an Exempt Person from a different date, in any of the following instances: a. Failure to meet the conditions is the result of the liquidation or termination of the Person. b. Failure to meet the conditions is of a temporary nature and will be promptly rectified, and appropriate procedures are in place to monitor the compliance with the relevant conditions of this Decree-Law. c. Any other instances as may be prescribed by the Minister.

Article 5 – Government Entity

1.A Government Entity shall be exempt from Corporate Tax and the provisions of this Decree-Law shall not apply to it.



2. Notwithstanding Clause 1 of this Article, a Government Entity shall be subject to the provisions of this Decree-Law if it conducts a Business or Business Activity under a Licence issued by a Licensing Authority.



3. Any Business or Business Activity conducted by a Government Entity under a Licence issued by a Licensing Authority shall be treated as an independent Business, and the Government Entity shall keep financial statements for this Business separately from the Government Entity’s other activities.

4. The Government Entity shall calculate the Taxable Income for its Business or Business Activity specified in Clause 2 of this Article independently for each Tax Period, in accordance with the provisions of this Decree-Law.



5. Transactions between the Business or Business Activity specified under Clause 2 of this Article and the other activities of the Government Entity shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree Law.

6. A Government Entity may apply to the Authority for all its Businesses and Business Activities to be treated as a single Taxable Person for the purposes of this DecreeLaw subject to meeting the conditions to be prescribed by the Minister.

Article 6 – Government Controlled Entity

1. A Government Controlled Entity shall be exempt from Corporate Tax and the Federal Decree-Law No. 47 of 2022 – Unofficial translation 11 provisions of this Decree-Law shall not apply to it.

2. Notwithstanding Clause 1 of this Article, a Government Controlled Entity shall be subject to the provisions of this Decree-Law if it conducts a Business or Business Activity that is not its Mandated Activities.

3. Any Business or Business Activity conducted by a Government Controlled Entity that is not its Mandated Activity shall be treated as an independent Business, and the Government Controlled Entity shall keep financial statements for this Business separately from its Mandated Activity.

4. The Government Controlled Entity shall calculate the Taxable Income for its Business or Business Activity that is not its Mandated Activity independently for each Tax Period, in accordance with the provisions of this Decree-Law.

5. Transactions between the Business or Business Activity specified in Clause 2 of this Article and the Mandated Activity of the Government Controlled Entity shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree-Law.

Article 7 – Extractive Business

1. A Person shall be exempt from Corporate tax and the provisions of this DecreeLaw shall not apply to its Extractive Business where all of the following conditions are met: a. The Person directly or indirectly holds or has an interest in a right, concession or Licence issued by a Local Government to undertake its Extractive Business. b. The Person is effectively subject to tax under the applicable legislation of an Emirate in accordance with the provisions of Clause 6 of this Article. c. The Person has made a notification to the Ministry in the form and manner agreed with the Local Government.

2. If a Person that meets the conditions of Clause 1 of this Article derives income from both an Extractive Business and any other Business that is within the scope of this Decree-Law, the following shall apply: a. The income derived from the Extractive Business shall be calculated and taxed according to the applicable legislation of the Emirate. b. The income derived from the other Business shall be subject to the provisions, unless that other Business meets the conditions to be exempt from Corporate Tax under Article 8 of this Decree-Law.

3. For the purposes of Clause 2 of this Article, a Person shall not be considered to derive income from any other Business where such other Business is ancillary or incidental to that Person’s Extractive Business and the Revenue of such other Business in a Tax Period does not exceed 5% (five percent) of the total Revenue of that Person in the same Tax Period.

4. For the purposes of calculating the Taxable Income of the Person’s other Business, the following shall apply: a. The other Business shall be treated as an independent Business, and financial statements shall be kept for this Business separately from the Extractive Business. b. Any common expenditure shared between the Extractive Business and the other Business of the Person shall be apportioned in proportion to their Revenue in the Tax Period, unless such expenditure is taken into account in different proportions for the purposes of calculating the tax payable by the Person under the applicable legislation of the relevant Emirate in respect of its Extractive Business, in which case the expenditure will be apportioned in the latter proportion. c. The Person shall calculate the Taxable Income for its other Business independently for each Tax Period in accordance with the provisions of this Decree-Law.

5. Transactions between the Extractive Business and the other Business of the same Person shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree-Law, unless such other Business is exempt from Corporate Tax under Article 8 of this Decree-Law.

6. A Person shall be considered effectively subject to tax under the applicable legislation of the Emirate for the purposes of this Article if the Local Government imposes a tax on income or profits, a royalty or revenue tax, or any other form of tax, charge or levy in respect of such Person’s Extractive Business. 7. The exemption under this Article shall not apply to contractors, subcontractors, suppliers or any other Person used or contemplated to be used in any part of the performance of the Extractive Business that does not in its own right meet the conditions to be exempt from Corporate Tax under this Article or Article 8.

Article 8 – Non-Extractive Natural Resource Business

1. A Person shall be exempt from Corporate tax and the provisions of this DecreeLaw shall not apply to its Non-Extractive Natural Resource Business where all of the following conditions are met: a. The Person directly or indirectly holds or has an interest in a right, concession or Licence issued by a Local Government to undertake its Non-Extractive Natural Resource Business in the State. b. The Person’s income from its Non-Extractive Natural Resource Business is derived solely from Persons that undertake a Business or Business Activity. c. The Person is effectively subject to tax under the applicable legislation of an Emirate in accordance with the provisions of Clause 6 of this Article. d. The Person has made a notification to the Ministry in the form and manner agreed with the Local Government.

2. If a Person that meets the conditions of Clause 1 of this Article derives income from both a Non-Extractive Natural Resource Business and any other Business that is within the scope of this Decree-Law, the following shall apply: a. The income derived from the Non-Extractive Natural Resource Business shall be calculated and taxed according to the applicable legislation of the Emirate. b. The income derived from the other Business shall be subject to this DecreeLaw, unless that other Business meets the conditions to be exempt from Corporate Tax under Article 7 of this Decree-Law.

3. For the purposes of Clause 2 of this Article, a Person shall not be considered to derive income from any other Business where such other Business is ancillary or incidental to that Person’s Non-Extractive Natural Resource Business and the Revenue of such other Business in a Tax Period does not exceed 5% (five percent) of the total Revenue of that Person in the same Tax Period.

4. For the purposes of calculating the Taxable Income of the Person’s other Business, the following shall apply: a. The other Business shall be treated as an independent Business, and financial statements shall be kept for this Business separately from the Non-Extractive Federal Decree-Law No. 47 of 2022 – Unofficial translation 14 Natural Resource Business. b. Any common expenditure shared between the Non-Extractive Natural Resource Business and other Business of the Person shall be apportioned in proportion to their Revenue in a Tax Period, unless such expenditure is taken into account in a different proportion for the purposes of calculating the tax payable by the Person under the applicable legislation of the relevant Emirate in respect of its Non-Extractive Natural Resource Business, in which case the expenditure will be apportioned in the latter proportion. c. The Person shall calculate the Taxable Income for the other Business independently for each Tax Period in accordance with the provisions of this Decree-Law.

5. Transactions between the Non-Extractive Natural Resource Business and any other Business of the same Person shall be considered Related Party transactions subject to the provisions of Article 34 of this Decree-Law, unless such other Business is exempt from Corporate Tax under Article 7 of this Decree-Law.

6. A Person shall be considered effectively subject to tax under the applicable legislation of the Emirate, for the purposes of this Article if the Local Government imposes a tax on income or profits, a royalty or revenue tax, or any other form of tax, charge or levy in respect of such Person’s Non-Extractive Natural Resource Business.

7. The exemption under this Article shall not apply to contractors, subcontractors, suppliers or any other Person used or contemplated to be used in any part of the performance of the Non-Extractive Natural Resource Business that does not in its own right meets the conditions to be exempt from Corporate Tax under this Article or Article 7 of this Decree-Law.

Article 9 – Qualifying Public Benefit Entity

1. A Qualifying Public Benefit Entity shall be exempt from Corporate Tax where all of the following conditions are met: a. It is established and operated for any of the following: 1) Exclusively for religious, charitable, scientific, artistic, cultural, athletic, educational, healthcare, environmental, humanitarian, animal protection or other similar purposes. Federal Decree-Law No. 47 of 2022 – Unofficial translation 15 2) As a professional entity, chamber of commerce, or a similar entity operated exclusively for the promotion of social welfare or public benefit. b. It does not conduct a Business or Business Activity, except for such activities that directly relate to or are aimed at fulfilling the purpose for which the entity was established. c. Its income or assets are used exclusively in the furtherance of the purpose for which it was established, or for the payment of any associated necessary and reasonable expenditure incurred. d. No part of its income or assets is payable to, or otherwise available, for the personal benefit of any shareholder, member, trustee, founder or settlor that is not itself a Qualifying Public Benefit Entity, Government Entity or Government Controlled Entity. e. Any other conditions as may be prescribed in a decision issued by the Cabinet at the suggestion of the Minister.

2. The exemption under Clause 1 of this Article shall be effective from the beginning of the Tax Period in which the Qualifying Public Benefit Entity is listed in the Cabinet decision issued at the suggestion of the Minister or any other date determined by the Minister.

3. For the purposes of monitoring the continued compliance by a Qualifying Public Benefit Entity with the conditions of Clause 1 of this Article, the Authority may request any relevant information or records from the Qualifying Public Benefit Entity within the timeline specified by the Authority.

Article 10 – Qualifying Investment Fund

1. An investment fund may apply to the Authority to be exempt from Corporate Tax as a Qualifying Investment Fund where all of the following conditions are met: a. The investment fund or the investment fund’s manager is subject to the regulatory oversight of a competent authority in the State, or a foreign competent authority recognised for the purposes of this Article. b. Interests in the investment fund are traded on a Recognised Stock Exchange, or are marketed and made available sufficiently widely to investors. c. The main or principal purpose of the investment fund is not to avoid Corporate Federal Decree-Law No. 47 of 2022 – Unofficial translation 16 Tax. d. Any other conditions as may be prescribed in a decision issued by Cabinet at the suggestion of the Minister.

2. For the purposes of monitoring the continued compliance by a Qualifying Investment Fund with the conditions of Clause 1 of this Article, the Authority may request any relevant information or records within the timeline prescribed by the Authority.

Chapter Four – Taxable Person and Corporate Tax Base

Article 11 – Taxable Person

1.Corporate Tax shall be imposed on a Taxable Person at the rates determined under this Decree-Law. 2. For the purposes of this Decree-Law, a Taxable Person shall be either a Resident Person or a Non-Resident Person. 3. A Resident Person is any of the following Persons: a. A juridical person that is incorporated or otherwise established or recognised under the applicable legislation of the State, including a Free Zone Person. b. A juridical person that is incorporated or otherwise established or recognised under the applicable legislation of a foreign jurisdiction that is effectively managed and controlled in the State. c. A natural person who conducts a Business or Business Activity in the State. d. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister. 4. A Non-Resident Person is a Person who is not considered a Resident Person under Clause 3 of this Article and that either: a. Has a Permanent Establishment in the State as under Article 14 of this Decree-Law. b. Derives State Sourced Income as under Article 13 of this Decree-Law. c. Has a nexus in the State as specified in a decision issued by the Cabinet at the suggestion of the Minister. 5. A branch in the State of a Person referred to in Clause 3 of this Article, shall be treated as one and the same Taxable Person. Federal Decree-Law No. 47 of 2022 – Unofficial translation 17 6. The Cabinet shall, upon a suggestion of the Minister and in coordination with the relevant competent authorities, issue a decision specifying the categories of Business or Business Activity conducted by a resident or non-resident natural person that are subject to Corporate Tax under this Decree-Law.

Article 12 – Corporate Tax Base

1. A Resident Person, which is a juridical person, is subject to Corporate Tax on its Taxable Income derived from the State or from outside the State, in accordance with the provisions of this Decree-Law.

2. The Taxable Income of a Resident Person, which is a natural person, is the income derived from the State or from outside the State insofar as it relates to the Business or Business Activity conducted by the natural person in the State as set out in Clause 6 of Article 11 of this Decree-Law.

3. A Non-Resident Person is subject to Corporate Tax on the following: a. The Taxable Income that is attributable to the Permanent Establishment of the Non-resident Person in the State. b. State Sourced Income that is not attributable to a Permanent Establishment of the Non-Resident Person in the State. c. The Taxable Income that is attributable to the nexus of the Non-Resident Person in the State as determined in a decision issued by the Cabinet pursuant to paragraph (c) of Clause 4 of Article 11 of this Decree-Law.

Article 13 – State Sourced Income

1. Income shall be considered State Sourced Income in any of the following instances: a. Where it is derived from a Resident Person. b. Where it is derived from a Non-Resident Person and the income received has been paid or accrued in connection with, and attributable to, a Permanent Establishment of that Non-Resident Person in the State. c. Where it is otherwise accrued in or derived from activities performed, assets located, capital invested, rights used, or services performed or benefitted from in the State.

2. Subject to any conditions and limitations that the Minister may determine, State Sourced Income shall include, without limitation: a. Income from the sale of goods in the State. b. Income from the provision of services that are rendered or utilized or benefitted from in the State. c. Income from a contract insofar as it has been wholly or partly performed or benefitted from in the State. d. Income from movable or immovable property in the State. e. Income from the disposal of shares or capital of a Resident Person. f. Income from the use or right to use in the State, or the grant of permission to use in the State, any intellectual or intangible property. g. Interest that meets any of the following conditions: 1) The loan is secured by movable or immovable property located in the State. 2) The borrower is a Resident Person. 3) The borrower is a Government Entity. h. Insurance or reinsurance premiums in any of the following instances: 1) The insured asset is located in the State. 2) The insured Person is a Resident Person. 3) The insured activity is conducted in the State.

Article 14 – Permanent Establishment

1. A Non-Resident Person has a Permanent Establishment in the State in any of the following instances: a. Where it has a fixed or permanent place in the State through which the Business of the Non-Resident Person, or any part thereof, is conducted. b. Where a Person has and habitually exercises an authority to conduct a Business or Business Activity in the State on behalf of the Non-Resident Person. c. Where it has any other form of nexus in the State as specified in a decision issued by the Cabinet at the suggestion of the Minister

2. For the purposes of paragraph (a) of Clause 1 of this Article, a fixed or permanent place in the State includes: a. A place of management where management and commercial decisions that are necessary for the conduct of the Business are, in substance, made. b. A branch. c. An office. d. A factory. e. A workshop. f. Land, buildings and other real property. g. An installation or structure for the exploration of renewable or non-renewable natural resources. h. A mine, an oil or gas well, a quarry or any other place of extraction of natural resources, including vessels and structures used for the extraction of such resources. i. A building site, a construction project, or place of assembly or installation, or supervisory activities in connection therewith, but only if such site, project or activities, whether separately or together with other sites, projects or activities, last more than (6) six months, including connected activities that are conducted at the site or project by one or more Related Parties of the NonResident Person.

3. Notwithstanding Clauses 1 and 2 of this Article, a fixed or permanent place in the State shall not be considered a Permanent Establishment of a Non-Resident Person if it is used solely for any of the following purposes: a. Storing, displaying or delivering of goods or merchandise belonging to that Person. b. Keeping a stock of goods or merchandise belonging to that Person for the sole purpose of processing by another Person. c. Purchasing goods or merchandise or collecting information for the NonResident Person. d. Conducting any other activity of a preparatory or auxiliary nature for the NonResident Person. e. Conducting any combination of activities mentioned in paragraphs (a), (b), (c), and (d) of Clause 3 of this Article, provided that the overall activity is of a preparatory or auxiliary nature.

4. Clause 3 of this Article shall not apply to a fixed or permanent place in the State that is used or maintained by a Non-Resident Person if the same Non-Resident Person or its Related Party carries on a Business or Business Activity at the same place or at another place in the State where all of the following conditions are met: a. Where the same place or the other place constitutes a Permanent Establishment of the Non-Resident Person or its Related Party. b. The overall activity resulting from the combination of the activities carried out by the Non-Resident Person and its Related Party at the same place or at the two places is not of a preparatory or auxiliary nature and together would form a cohesive Business operation, had the activities not been fragmented.

5. For the purposes of paragraph (b) of Clause 1 of this Article, a Person shall be considered as having and habitually exercising an authority to conduct a Business or Business Activity in the State on behalf of a Non-Resident Person if any of the following conditions are met: a. The Person habitually concludes contracts on behalf of the Non-Resident Person. b. The Person habitually negotiates contracts that are concluded by the Non-Resident Person without the need for material modification by the Non-Resident Person.

6. The provisions of Paragraph (b) of Clause 1 of this Article shall not apply where the Person conducts a Business or Business Activity in the State as an independent agent and acts for the Non-Resident Person in the ordinary course of that Business or Business Activity, unless the Person acts exclusively or almost exclusively on behalf of the Non-Resident Person, or where that Person cannot be considered legally or economically independent from the Non-Resident Person.

7. For the purposes of Clause 3 of this Article, the Minister may prescribe the conditions under which the mere presence of a natural person in the State does not create a Permanent Establishment for a Non-Resident Person in any of the following instances: a. Where such presence is a consequence of a temporary and exceptional situation. b. Where the natural person is employed by the Non-Resident Person, and all of the following conditions are met: 1) The activities being conducted in the State by the natural person are not part of the core income-generating activities of the Non-Resident Person or its Related Parties. 2) The Non-Resident Person does not derive State Sourced Income.

Article 15 – Investment Manager Exemption

  1. For the purposes of Clause 6 of Article 14 of this Decree-Law, an Investment Manager shall be considered an independent agent when acting on behalf of a Non-Resident Person, where all of the following conditions are met: a. The Investment Manager is engaged in the business of providing investment management or brokerage services. b. The Investment Manager is subject to the regulatory oversight of the competent authority in the State. c. The transactions are carried out in the ordinary course of the Investment Manager’s Business. d. The Investment Manager acts in relation to the transactions in an independent capacity. e. The Investment Manager transacts on an arm’s length basis with the NonResident Person and receives due compensation for the provision of services. f. The Investment Manager is not the Non-Resident Person’s representative in the State in relation to any other income or transaction that is subject to Corporate Tax for the same Tax Period. g. Any such other conditions as may be prescribed in a decision issued by the Cabinet at the suggestion of the Minister. 2. For the purposes of Clause 1 of this Article, “transactions” means any of the following: a. Transactions in commodities, real property, bonds, shares, derivatives or securities of any other description. b. Transactions of buying or selling any foreign currency or placement of funds at interest. c. Such other transactions permissible to be carried out by the Investment Manager on behalf of a Non-Resident Person under the applicable legislation of the State.



Article 16 – Partners in an Unincorporated Partnership



  1. Unless an application is made under Clause 8 of this Article, and subject to any conditions the Minister may prescribe an Unincorporated Partnership shall not be considered a Taxable Person in its own right, and Persons conducting a Business as an Unincorporated Partnership shall be treated as individual Taxable Persons for the purposes of this Decree-Law.

2. Where Clause 1 of this Article applies, a person who is a partner in an Unincorporated Partnership shall be treated as: a. Conducting the Business of the Unincorporated Partnership. b. Having a status, intention, and purpose of the Unincorporated Partnership. c. Holding assets that the Unincorporated Partnership holds. d. Being party to any arrangement to which the Unincorporated Partnership is a party.



3. For the purposes of Clause 1 of this Article, the assets, liabilities, income and expenditure of the Unincorporated Partnership shall be allocated to each partner in proportion to their distributive share in that Unincorporated Partnership, or in the manner prescribed by the Authority where the distributive share of a partner cannot be identified.



4. The Taxable Income of a partner in an Unincorporated Partnership shall take into account the following: a. Expenditure incurred directly by the partner in conducting the Business of the Unincorporated Partnership. b. Interest expenditure incurred by the partner in relation to contributions made to the capital account of the Unincorporated Partnership.



5. Interest paid by an Unincorporated Partnership to a partner on their capital account shall be treated as an allocation of income to the partner and is therefore not a deductible expenditure for calculating the Taxable Income of the partner in the Unincorporated Partnership.



6. For the purposes of calculating and settling the Corporate Tax Payable of a partner in an Unincorporated Partnership under Chapter Thirteen of this Decree-Law, any foreign tax incurred by the Unincorporated Partnership shall be allocated as a Foreign Tax Credit to each partner in proportion to their distributive share in the Unincorporated Partnership.



7. A Foreign Partnership shall be treated as an Unincorporated Partnership for the purposes of this Decree-Law where all of the following conditions are met: a. The Foreign Partnership is not subject to tax under the laws of the foreign jurisdiction. b. Each partner in the Foreign Partnership is individually subject to tax with regards to their distributive share of any income of the Foreign Partnership as and when the income is received by or accrued to the Foreign Partnership. c. Any other conditions as may be prescribed by the Minister.



8. The partners in an Unincorporated Partnership can make an application to the Authority for the Unincorporated Partnership to be treated as a Taxable Person.



9. Where an application under Clause 8 of this Article is approved: a. The provisions of Clauses 1 to 6 of this Article shall no longer apply to the partners in the Unincorporated Partnership in respect of the Business conducted by the Unincorporated Partnership. b. Each partner in the Unincorporated Partnership shall remain jointly and severally liable for the Corporate Tax Payable by the Unincorporated Partnership for those Tax Periods when they are partners in the Unincorporated Partnership. c. One partner in the Unincorporated Partnership shall be appointed as the partner responsible for any obligations and proceedings in relation to this Decree-Law on behalf of the Unincorporated Partnership.



10.Where the application under Clause 8 of this Article is approved, the Unincorporated Partnership shall be treated as a Taxable Person effective from the commencement of the Tax Period in which the application is made, or from the commencement of a future Tax Period, or any other date determined by the Authority.



Article 17 – Family Foundation



  1. A Family Foundation can make an application to the Authority to be treated as an Unincorporated Partnership for the purposes of this Decree-Law where all of the following conditions are met: a. The Family Foundation was established for the benefit of identified or identifiable natural persons, or for the benefit of a public benefit entity, or both. b. The principal activity of the Family Foundation is to receive, hold, invest, disburse, or otherwise manage assets or funds associated with savings or investment. c. The Family Foundation does not conduct any activity that would have constituted a Business or Business Activity under Clause 6 of Article 11 of this Decree-Law had the activity been undertaken, or its assets been held, directly by its founder, settlor, or any of its beneficiaries. d. The main or principal purpose of the Family Foundation is not the avoidance of Corporate Tax. e. Any other conditions as may be prescribed by the Minister.



  1. 2. Where the application under Clause 1 of this Article is approved, the Family Foundation shall be treated as an Unincorporated Partnership effective from the commencement of the Tax Period in which the application is made, or from the commencement of a future Tax Period, or any other date determined by the Authority. 3. For the purposes of monitoring the continued compliance by a Family Foundation with the conditions of Clause 1 of this Article, the Authority may request any relevant information or records from the Family Foundation within the timeline specified by the Authority.



Chapter Five – Free Zone Person

Article 18 – Qualifying Free Zone Person

1. A Qualifying Free Zone Person is a Free Zone Person that meets all of the following conditions: a. Maintains adequate substance in the State. b. Derives Qualifying Income as specified in a decision issued by the Cabinet at the suggestion of the Minister. c. Has not elected to be subject to Corporate Tax under Article 19 of this DecreeLaw. d. Complies with Articles 34 and 55 of this Decree-Law. e. Meets any other conditions as may be prescribed by the Minister.

2. A Qualifying Free Zone Person that fails to meet any of the conditions under Clause 1 of this Article at any particular time during a Tax Period shall cease to be a Qualifying Free Zone Person from the beginning of that Tax Period.

3. Notwithstanding Clause 2 of this Article, the Minister may prescribe the conditions or circumstances under which a Person may continue to be a Qualifying Free Zone Person, or cease to be a Qualifying Free Zone Person from a different date.

4. The application of paragraph (a) of Clause 2 of Article 3 of this Decree-Law to a Qualifying Free Zone Person shall apply for the remainder of the tax incentive period stipulated in the applicable legislation of the Free Zone in which the Qualifying Free Zone Person is registered, which period may be extended in accordance with any conditions as may be determined in a decision issued by the Cabinet at the suggestion of the Minister, but any one period shall not exceed (50) fifty years.

Article 19 – Election to be Subject to Corporate Tax

  1. A Qualifying Free Zone Person can make an election to be subject to Corporate Tax at the rates specified under Clause 1 of Article 3 of this Decree-Law. 2. The election under Clause 1 of this Article shall be effective from either of: a. The commencement of the Tax Period in which the election is made. b. The commencement of the Tax Period following the Tax Period in which the election was made.

Chapter Six – Calculating Taxable Income

Article 20 – General Rules for Determining Taxable Income

1. The Taxable Income of each Taxable Person shall be determined separately, on the basis of adequate, standalone financial statements prepared for financial reporting purposes in accordance with accounting standards accepted in the State.

2. The Taxable Income for a Tax Period shall be the Accounting Income for that period, and to the extent applicable, adjusted for the following: a. Any unrealised gain or loss under Clause 3 of this Article. b. Exempt Income as specified in Chapter Seven of this Decree-Law. c. Reliefs as specified in Chapter Eight of this Decree-Law. d. Deductions as specified in Chapter Nine of this Decree-Law. e. Transactions with Related Parties and Connected Persons as specified in Chapter Ten of this Decree-Law. f. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. g. Any incentives or special reliefs for a Qualifying Business Activity as specified in a decision issued by the Cabinet at the suggestion of the Minister. h. Any income or expenditure that has not otherwise been taken into account in determining the Taxable Income under the provisions of this Decree-Law as may be specified in a decision issued by the Cabinet at the suggestion of the Minister. i. Any other adjustments as may be specified by the Minister.

3. For the purposes of calculating the Taxable Income for the relevant Tax Period, and subject to any conditions that the Minister may prescribe, a Taxable Person that prepares financial statements on an accrual basis may elect to take into account gains and losses on a realisation basis in relation to: a. all assets and liabilities that are subject to fair value or impairment accounting under the applicable accounting standards; or b. all assets and liabilities held on capital account at the end of a Tax Period, whilst taking into account any unrealised gain or loss that arises in connection with assets and liabilities held on revenue account at the end of that period.

4. For the purposes of paragraph (b) of Clause 3 of this Article: a. “Assets held on capital account” refers to assets that the Person does not trade, assets that are eligible for depreciation, or assets treated under applicable accounting standards as property, plant and equipment, investment property, intangible assets, or other non-current assets. b. “Liabilities held on capital account” refers to liabilities, the incurring of which does not give rise to deductible expenditure under Chapter Nine of this DecreeLaw, or liabilities treated under applicable accounting standards as noncurrent liabilities. c. “Assets and liabilities held on revenue account” refers to assets and liabilities other than those held on a capital account. d. An “unrealised gain or loss” includes an unrealised foreign exchange gain or loss.

5. Notwithstanding Clauses 1 and 3 of this Article, the Minister may prescribe any of the following for the purposes of this Decree-Law: a. The circumstances and conditions under which a Person may prepare financial statements using the cash basis of accounting. b. Any adjustments to the accounting standards to be applied for the purposes of determining the Taxable Income for a Tax Period. c. A different basis for determining the Taxable Income of a Qualifying Business Activity.

6. Subject to any conditions prescribed under Clause 5 of this Article, a Taxable Person can make an application to the Authority to change its method of accounting from cash basis to accrual basis from the commencement of the Tax Period in which the application is made or from the commencement of a future Tax Period.

7. In the case of any conflict between the provisions of this Decree-Law and the applicable accounting standards, the provisions of this Decree-Law shall prevail to that extent.

Article 21 – Small Business Relief

1. A Taxable Person that is a Resident Person may elect to be treated as not having derived any Taxable Income for a Tax Period where: a. the Revenue of the Taxable Person for the relevant Tax Period and previous Tax Periods does not exceed a threshold to be set by the Minister; and b. the Taxable Person meets all other conditions prescribed by the Minister

2. Where Clause 1 of this Article applies to a Taxable Person, the following provisions of this Decree-Law shall not apply: a. Exempt Income as specified in Chapter Seven of this Decree-Law. b. Reliefs as specified in Chapter Eight of this Decree-Law. c. Deductions as specified in Chapter Nine of this Decree-Law. d. Tax Loss relief as specified in Chapter Eleven of this Decree-Law. e. Article 55 of this Decree-Law. 3. The Authority may take the necessary measures to verify the compliance with the conditions of Clause 1 of this Article, and may request any relevant information or records from the Taxable Person within the timeline prescribed by the Authority.

Chapter Seven – Exempt Income

Article 22 – Exempt Income The following income and related expenditure shall not be taken into account in determining the Taxable Income:

1. Dividends and other profit distributions received from a juridical person that is a Resident Person.

2. Dividends and other profit distributions received from a Participating Interest in a foreign juridical person as specified in Article 23 of this Decree-Law.

3. Any other income from a Participating Interest as specified in Article 23 of this Decree-Law.

4. Income of a Foreign Permanent Establishment that meets the condition of Article 24 of this Decree-Law. 5. Income derived by a Non-Resident Person from operating aircraft or ships in international transportation that meets the conditions of Article 25 of this DecreeLaw.

Article 23 – Participation Exemption

1. Income from a Participating Interest shall be exempt from Corporate Tax, subject to the conditions of this Article

2. A Participating Interest means, a 5% (five percent) or greater ownership interest in the shares or capital of a juridical person, referred to as a “Participation” for the purposes of this Chapter where all of the following conditions are met: a. The Taxable Person has held, or has the intention to hold, the Participating Interest for an uninterrupted period of at least (12) twelve months. b. The Participation is subject to Corporate Tax or any other tax imposed under the applicable legislation of the country or territory in which the juridical person is resident which is of a similar character to Corporate Tax at a rate not less than the rate specified in paragraph (b) of Clause 1 of Article 3 of this Decree-Law. c. The ownership interest in the Participation entitles the Taxable Person to receive not less than 5% (five percent) of the profits available for distribution by the Participation, and not less than 5% (five percent) of the liquidation proceeds on cessation of the Participation. d. Not more than 50% (fifty percent) of the direct and indirect assets of the Participation consist of ownership interests or entitlements that would not have qualified for an exemption from Corporate Tax under this Article if held directly by the Taxable Person, subject to any conditions that may be prescribed under paragraph (e) of this Clause. e. Any other conditions as may be prescribed by the Minister.

3. A Participation shall be treated as having met the condition under paragraph (b) of Clause 2 of this Article where all of the following conditions are met: a. The principal objective and activity of the Participation is the acquisition and holding of shares or equitable interests that meet the conditions of Clause 2 of this Article. b. The income of the Participation derived during the relevant Tax Period or Tax Periods substantially consists of income from Participating Interests.

4. A Participation in a Qualifying Free Zone Person or an Exempt Person shall be treated as having met the condition under paragraph (b) of Clause 2 of this Article, subject to any conditions that may be prescribed by the Minister.

5. Where the conditions of Clause 2 of this Article continue to be met, the following income shall not be taken into account in determining Taxable Income: a. Dividends and other profit distributions received from a foreign Participation Federal Decree-Law No. 47 of 2022 – Unofficial translation 30 that is not a Resident Person under paragraph (b) of Clause 3 of Article 11 of this Decree-Law. b. Gains or losses on the transfer, sale, or other disposition of a Participating Interest (or part thereof) derived after expiry of the time period specified in paragraph (a) of Clause 2 or Clause 9 of this Article. c. Foreign exchange gains or losses in relation to a Participating Interest. d. Impairment gains or losses in relation to a Participating Interest.

6. The exemption under this Article shall not apply to income derived by the Taxable Person from a Participating Interest insofar as: a. the Participation can claim a deduction for the dividend or other distributions made to the Taxable Person under the applicable tax legislation; b. the Taxable Person has recognised a deductible impairment loss in respect of the Participating Interest prior to the Participating Interest meeting the conditions of Clause 2 of this Article; c. the Taxable Person or its Related Party who is subject to Corporate Tax under this Decree-Law has recognised a deductible impairment loss in respect of a loan receivable from the Participation.

7. Where the impairment loss referred to in paragraph (c) of Clause 6 of this Article is reversed in a subsequent Tax Period, the associated income of the Taxable Person shall be exempt from Corporate Tax in that Tax Period up to the amount of income from the Participating Interest that was not exempted under paragraph (c) of Clause 6 of this Article.

8. The exemption under this Article does not apply to a loss realised on the liquidation of a Participation.

9. The exemption under this Article shall not apply for a period of (2) two years where a Participation was acquired in exchange for the transfer of an ownership interest that did not meet the conditions of Clause 2 of this Article or a transfer that was exempted under Article 26 or 27 of this Decree-Law.

10. Where a Taxable Person fails to hold a 5% (five percent) or greater ownership interest in the Participation for an uninterrupted period of at least (12) twelve months, any income previously not taken into account under this Article shall be included in the calculation of the Taxable Income in the Tax Period in which the ownership interest in the Participation falls below 5% (five percent).

11.The Minister may prescribe that an ownership interest in the shares or capital of a juridical person meets the minimum ownership requirement under Clause 2 of this Article where the acquisition cost of that ownership interest exceeds a threshold specified by the Minister.

Article 24 – Foreign Permanent Establishment Exemption

1. A Resident Person can make an election to not take into account the income, and associated expenditure, of its Foreign Permanent Establishments in determining its Taxable Income.

2. Where Clause 1 of this Article applies, a Resident Person shall not take into account the following in determining its Taxable Income or Corporate Tax Payable for a Tax Period: a. losses in any of its Foreign Permanent Establishments, calculated as if the relevant Foreign Permanent Establishments were a Resident Person under this Decree-Law; b. positive income and associated expenditure in any of its Foreign Permanent Establishments, calculated as if the relevant Foreign Permanent Establishments were a Resident Person under this Decree-Law; and c. any Foreign Tax Credit that would have been available under Article 47 of this DecreeLaw had the election under Clause 1 of this Article not been made.

3. For the purposes of this Article, “income and associated expenditure” of a Taxable Person’s Foreign Permanent Establishments for a Tax Period is the aggregate of the income and associated expenditure in each of the relevant foreign jurisdictions.

4. In determining the income and associated expenditure of a Foreign Permanent Establishment, a Resident Person and each of its Foreign Permanent Establishments shall be treated as separate and independent Persons.

5. For the purposes of Clause 4 of this Article, a transfer of assets or liabilities between a Resident Person and its Foreign Permanent Establishment shall be treated as having taken place at Market Value at the date of the transfer for the purposes of determining the Taxable Income of that Resident Person.

6. The exemption under Clause 1 of this Article shall apply to all Foreign Permanent Establishments of the Resident Person that meet the condition specified in Clause 7 of this Article.

7. The exemption under Clause 1 of this Article shall only apply to a Foreign Permanent Establishment that is subject to Corporate Tax or a tax of a similar character under the applicable legislation of the relevant foreign jurisdiction at a rate not less than the rate specified in paragraph (b) of Clause 1 of Article 3 of this Decree-Law.

Article 25 – Non-Resident Person Operating Aircraft or Ships in International Transportation Income derived by a Non-Resident Person from the operation of aircraft or ships in international transportation shall not be subject to Corporate Tax where all of the following conditions are met:

1. The Non-Resident Person is in the Business of any of the following: a. International transport of passengers, livestock, mail, parcels, merchandise or goods by air or by sea. b. Leasing or chartering aircrafts or ships used in international transportation. c. Leasing of equipment which are integral to the seaworthiness of ships or the airworthiness of aircrafts used in international transportation.

2. A Resident Person that performs any of the activities under Clause 1 of this Article would be exempt, or not be subject to tax that is of a similar character to Corporate Tax, under the applicable legislation of the country or territory in which the Non-Resident Person is resident.

Chapter Eight – Reliefs Article 26 – Transfers Within a Qualifying Group

1. No gain or loss needs to be taken into account in determining the Taxable Income in relation to the transfer of one or more assets or liabilities between two Taxable Persons that are members of the same Qualifying Group.

2. Two Taxable Persons shall be treated as members of the same Qualifying Group where all of the following conditions are met: a. The Taxable Persons are juridical persons that are Resident Persons, or NonResident Persons that have a Permanent Establishment in the State. b. Either Taxable Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in the other Taxable Person, or a third Person has Federal Decree-Law No. 47 of 2022 – Unofficial translation 33 a direct or indirect ownership interest of at least 75% (seventy-five percent) in each of the Taxable Persons. c. None of the Persons are an Exempt Person. d. None of the Persons are a Qualifying Free Zone Person. e. The Financial Year of each of the Taxable Persons ends on the same date. f. Both Taxable Persons prepare their financial statements using the same accounting standards.

3. For the purposes of this Decree-Law, where a Taxable Person applies Clause 1 of this Article: a. the asset or liability shall be treated as being transferred at its net book value at the time of transfer so that neither a gain nor a loss arises; and b. the value of any consideration paid or received against the transfer of the asset or liability shall equal the net book value of the transferred asset or liability. 4. The provision of Clause 1 of this Article shall not apply where, within (2) two years from the date of the transfer, any of the following occurs: a. There is a subsequent transfer of the asset or liability outside of the Qualifying Group. b. The Taxable Persons cease to be members of the same Qualifying Group.

5. Where Clause 4 of this Article applies, the transfer of the asset or liability shall be treated as having taken place at Market Value at the date of the transfer for the purposes of determining the Taxable Income of both Taxable Persons for the relevant Tax Period.

Article 27 – Business Restructuring Relief

1. No gain or loss needs to be taken into account in determining Taxable Income in any of the following circumstances: a. A Taxable Person transfers its entire Business or an independent part of its Business to another Person who is a Taxable Person or will become a Taxable Person as a result of the transfer in exchange for shares or other ownership interests of the Taxable Person that is the transferee. b. One or more Taxable Persons transfer their entire Business to another Person who is a Taxable Person or will become a Taxable Person as a result of the transfer in exchange for shares or other ownership interests of the Taxable Person that is the transferee, and the Taxable Person or Taxable Persons that are the transferor cease to exist as a result of the transfer.

2. Clause 1 of this Article applies where all of the following conditions are met: a. The transfer is undertaken in accordance with, and meets all the conditions imposed by, the applicable legislation of the State. b. The Taxable Persons are Resident Persons, or Non-Resident Persons that have a Permanent Establishment in the State. c. None of the Persons are an Exempt Person. d. None of the Persons are a Qualifying Free Zone Person. e. The Financial Year of each of the Taxable Persons ends on the same date. f. The Taxable Persons prepare their financial statements using the same accounting standards. g. The transfer under Clause 1 of this Article is undertaken for valid commercial or other non-fiscal reasons which reflect economic reality.

3. For the purposes of this Decree-Law, where a Taxable Person applies Clause 1 of this Article, all of the following must be observed: a. The assets and liabilities transferred shall be treated as being transferred at their net book value at the time of transfer so that neither a gain nor a loss arises. b. The value of the shares or ownership interests received under paragraph (a) of Clause 1 of this Article shall not exceed the net book value of the assets transferred and liabilities assumed, less the value of any other form of consideration received. c. The value of the shares or ownership interests received under paragraph (b) of Clause 1 of this Article shall not exceed the book value of the shares or ownership interests surrendered, less the value of any other form of consideration received. d. Any unutilized Tax Losses incurred by the Taxable Person that is the transferor prior to the Tax Period in which the transfer under Clause 1 of this Article completes may become carried forward Tax Losses of the Taxable Person is the transferee, subject to conditions to be prescribed by the Minister.

4. The provisions of this Article shall apply, as the context requires, where, in the case of a transfer under Clause 1 of this Article: a. shares or ownership interests are received by a Person other than the Taxable Person that is the transferor; b. shares or ownership interests are issued or granted by a Person other than the Taxable Person that is the transferee; or c. no shares or ownership interests are received by the Taxable Person who is a partner in an Unincorporated Partnership that is treated as a Taxable Person under Clause 9 of Article 16 of this Decree-Law.

5. Where a Taxable Person transfers an independent part of its Business, paragraph (d) of Clause 3 of this Article shall apply only to those unutilised Tax Losses that can be reasonably attributed to the independent part of the Business being transferred.

6. The provision of Clause 1 of this Article shall not apply where, within (2) two years from the date of the transfer, any of the following occurs: a. The shares or other ownership interests in the Taxable Person that is the transferor or the transferee are sold, transferred or otherwise disposed of, in whole or part, to a Person that is not a member of the Qualifying Group to which the relevant Taxable Persons belong. b. There is a subsequent transfer or disposal of the Business or the independent part of the Businesses transferred under Clause 1 of this Article.

7. Where Clause 6 of this Article applies, the transfer of the Business or the independent part of the Business shall be treated as having taken place at Market Value at the date of the transfer.

Chapter Nine – Deductions

Article 28 – Deductible Expenditure

1. Expenditure incurred wholly and exclusively for the purposes of the Taxable Person’s Business that is not capital in nature shall be deductible in the Tax Period in which it is incurred, subject to the provisions of this Decree-Law.

2. For the purposes of calculating the Taxable Income for a Tax Period, no deduction Federal Decree-Law No. 47 of 2022 – Unofficial translation 36 is allowed for the following: a. Expenditure not incurred for the purposes of the Taxable Person’s Business. b. Expenditure incurred in deriving Exempt Income. c. Losses not connected with or arising out of the Taxable Person’s Business. d. Such other expenditure as may be specified in a decision issued by the Cabinet at the suggestion of the Minister.

3. If expenditure is incurred for more than one purpose, a deduction shall be allowed for a. Any identifiable part or proportion of the expenditure incurred wholly and exclusively for the purposes of deriving Taxable Income. b. An appropriate proportion of any unidentifiable part or proportion of the expenditure incurred for the purposes of deriving Taxable Income that has been determined on a fair and reasonable basis, having regard to the relevant facts and circumstances of the Taxable Person’s Business.

Article 29 – Interest Expenditure Notwithstanding paragraph (b) of Clause 2 of Article 28 of this Decree-Law, Interest expenditure shall be deductible in the Tax Period in which it is incurred, subject to the other provisions of Article 28 and Articles 30 and 31 of this Decree-Law.

Article 30 – General Interest Deduction Limitation Rule

  1. A Taxable Person’s Net Interest Expenditure shall be deductible up to 30% (thirty percent) of the Taxable Person’s accounting earnings before the deduction of interest, tax, depreciation and amortisation (EBITDA) for the relevant Tax Period, excluding any Exempt Income under Article 22 of this Decree-Law.



  1. 2. A Taxable Person’s Net Interest Expenditure for a Tax Period is the amount by which the Interest expenditure incurred during the Tax Period, including the amount of any Net Interest Expenditure carried forward under Clause 4 of this Article, exceeds the taxable Interest income derived during that same period.



  1. 3. The limitation under Clause 1 of this Article shall not apply where the Net Interest Expenditure of the Taxable Person for the relevant Tax Period does not exceed a Federal Decree-Law No. 47 of 2022 – Unofficial translation 37 amount specified by the Minister.



  1. 4. The amount of Net Interest Expenditure disallowed under Clause 1 of this Article may be carried forward and deducted in the subsequent (10) ten Tax Periods in the order in which the amount was incurred, subject to Clauses 1 and 2 of this Article.



  1. 5. Interest expenditure disallowed under any other provision of this Decree-Law shall be excluded from the calculation of Net Interest Expenditure under Clause 2 of this Article.



6. Clauses 1 to 5 of this Article shall not apply to the following Persons: a. A Bank. b. An Insurance Provider. c. A natural person undertaking a Business or Business Activity in the State. d. Any other Person as may be determined by the Minister.



7. The Minister may issue a decision to specify the application of Clauses 1 and 2 of this Article to a Taxable Person that is related to one or more Persons through ownership or control and there is an obligation on them under applicable accounting standards for their financial statements to be consolidated.

Article 31 – Specific Interest Deduction Limitation Rule

1.No deduction shall be allowed for Interest expenditure incurred on a loan obtained, directly or indirectly, from a Related Party in respect of any of the following transactions: a. A dividend or profit distribution to a Related Party. b. A redemption, repurchase, reduction or return of share capital to a Related Party. c. A capital contribution to a Related Party. d. The acquisition of an ownership interest in a Person who is or becomes a Related Party following the acquisition.

2. Clause 1 of this Article shall not apply where the Taxable Person can demonstrate that the main purpose of obtaining the loan and carrying out the transaction referred to under Clause 1 of this Article is not to gain a Corporate Tax advantage

3. For the purposes of Clause 2 of this Article, no Corporate Tax advantage shall be deemed to arise where the Related Party is subject to Corporate Tax or a tax of a similar character under the applicable legislation of a foreign jurisdiction on the Interest at a rate not less than the rate specified in paragraph (b) of Clause 1 of Article 3 of this Decree-Law.

Article 32 – Entertainment Expenditure

1. Subject to Article 28 of this Decree-Law, a Taxable Person shall be allowed to deduct 50% (fifty percent) of any entertainment, amusement, or recreation expenditure incurred during a Tax Period.

2. Clause 1 of this Article applies to any expenditure incurred for the purposes of receiving and entertaining the Taxable Person’s customers, shareholders, suppliers or other business partners, including, but not limited to, expenditure in connection with any of the following: a. Meals. b. Accommodation. c. Transportation. d. Admission fees. e. Facilities and equipment used in connection with such entertainment, amusement or recreation. f. Such other expenditure as specified by the Minister.

Article 33 – Non-deductible Expenditure No deduction is allowed for:

1. Donations, grants or gifts made to an entity that is not a Qualifying Public Benefit Entity.

2. Fines and penalties, other than amounts awarded as compensation for damages or breach of contract.

3. Bribes or other illicit payments.

4. Dividends, profit distributions or benefits of a similar nature paid to an owner of the Taxable Person.

5. Amounts withdrawn from the Business by a natural person who is a Taxable Person under paragraph (c) of Clause 3 of Article 11 of this Decree-Law or a partner in an Unincorporated Partnership.

6. Corporate Tax imposed on a Taxable Person under this Decree-Law.

7. Input Value Added Tax incurred by a Taxable Person that is recoverable under Federal Decree-Law No. (8) of 2017 referred to in the preamble and what replaces it.

8. Tax on income imposed on the Taxable Person outside the State. 9. Such other expenditure as specified in a decision issued by the Cabinet at the suggestion of the Minister.

Chapter Ten – Transactions with Related Parties and Connected Persons

Article 34 – Arm’s Length Principle

1. In determining Taxable Income, transactions and arrangements between Related Parties must meet the arm’s length standard as specified in Clauses 2, 3, 4 and 5 of this Article and any conditions that may be prescribed in a decision issued by the Authority.

2. A transaction or arrangement between Related Parties meets the arm’s length standard if the results of the transaction or arrangement are consistent with the results that would have been realised if Persons who were not Related Parties had engaged in a similar transaction or arrangement under similar circumstances. 3

. The arm’s length result of a transaction or arrangement between Related Parties must be determined by applying one or a combination of the following transfer pricing methods: a. The comparable uncontrolled price method. b. The resale price method. c. The cost-plus method. d. The transactional net margin method. e. The transactional profit split method.

4. The Taxable Person may apply any transfer pricing method other than the methods listed in Clause 3 of this Article where the Taxable Person can demonstrate that none of the above methods can be reasonably applied to determine an arm’s length result and that any such other transfer pricing method used satisfies the condition of Clause 2 of this Article.

5. The choice and application of a transfer pricing method or combination of transfer pricing methods under Clause 3 or 4 of this Article must be made having regard to the most reliable transfer pricing method and taking into account following factors: a. The contractual terms of the transaction or arrangement. b. The characteristics of the transaction or arrangement. c. The economic circumstances in which the transaction or arrangement is conducted. d. The functions performed, assets employed, and risks assumed by the Related Parties entering into the transaction or arrangement. e. The business strategies employed by the Related Parties entering into the transaction or arrangement.

6. The Authority’s examination as to whether income and expenditures resulting from the Taxable Person’s relevant transactions or arrangements meet the arm’s length standard shall be based on the transfer pricing method used by the Taxable Person in accordance with Clause 3 or 4 of this Article, provided such transfer pricing method is appropriate having regard to the factors mentioned in Clause 5 of this Article.

7.Application of the selected transfer pricing method or combination of transfer pricing methods in accordance with Clause 3 or 4 of this Article may result in an arm’s length range of financial results or indicators acceptable for establishing the arm’s length result of a transaction or arrangement between Related Parties, subject to any conditions specified in a decision issued by the Authority.

8. Where the result of the transaction or arrangement between Related Parties does not fall within the arm’s length range, the Authority shall adjust the Taxable Income to achieve the arm’s length result that best reflects the facts and circumstances of the transaction or arrangement.

9. Where the Authority makes an adjustment to the Taxable Income pursuant to Clause 8 of this Article, the Authority shall rely on information that can or will be made available to the Taxable Person.

10.Where the Authority or a Taxable Person adjusts the Taxable Income for a transaction or arrangement to meet the arm’s length standard, the Authority shall make a corresponding adjustment to the Taxable Income of the Related Party that is party to the relevant transaction or arrangement.

11.Where a foreign competent authority makes an adjustment to a transaction or arrangement involving a Taxable Person to meet the arm’s length standard, such Taxable Person can make an application to the Authority to make a corresponding adjustment to its Taxable Income.

Article 35 – Related Parties and Control

1. For the purposes of this Decree-Law, “Related Parties” means any of the following: a. Two or more natural persons who are related within the fourth degree of kinship or affiliation, including by way of adoption or guardianship. b. A natural person and a juridical person where: 1) the natural person or one or more Related Parties of the natural person are shareholders in the juridical person, and the natural person, alone or together with its Related Parties, directly or indirectly owns a 50% (fifty percent) or greater ownership interest in the juridical person; or 2) the natural person, alone or together with its Related Parties, directly or indirectly Controls the juridical person. c. Two or more juridical persons where: 1) one juridical person, alone or together with its Related Parties, directly or indirectly owns a 50% (fifty percent) or greater ownership interest in the other juridical person; 2) one juridical person, alone or together with its Related Parties, directly or indirectly Controls the other juridical person; or 3) any Person, alone or together with its Related Parties, directly or indirectly owns a 50% (fifty percent) or greater ownership interest in or Controls such two or more juridical persons. d. A Person and its Permanent Establishment or Foreign Permanent Establishment. e. Two or more Persons that are partners in the same Unincorporated Partnership. f. A Person who is the trustee, founder, settlor or beneficiary of a trust or foundation, and its Related Parties. 2. For the purposes of this Decree-Law, “Control” means the ability of a Person, whether in their own right or by agreement or otherwise to influence another Person, including: a. The ability to exercise 50% (fifty percent) or more of the voting rights of another Person. b. The ability to determine the composition of 50% (fifty percent) or more of the Board of directors of another Person. c. The ability to receive 50% (fifty percent) or more of the profits of another Person. d. The ability to determine, or exercise significant influence over, the conduct of the Business and affairs of another Person.

Article 36 – Payments to Connected Persons

1. Without prejudice to the provisions of Article 28 of this Decree-Law, a payment or benefit provided by a Taxable Person to its Connected Person shall be deductible only if and to the extent the payment or benefit corresponds with the Market Value of the service, benefit or otherwise provided by the Connected Person and is incurred wholly and exclusively for the purposes of the Taxable Person’s Business.

2. For the purposes of this Decree-Law, a Person shall be considered a Connected Person of a Taxable Person if that Person is: a. An owner of the Taxable Person. b. A director or officer of the Taxable Person. c. A Related Party of any of the Persons referred to in paragraphs (a) and (b) of Clause 2 of this Article.

3. For the purposes of paragraph (a) of Clause 2 of this Article, an owner of the Taxable Person is any natural person who directly or indirectly owns an ownership interest in the Taxable Person or Controls such Taxable Person.

4. Where the Taxable Person is a partner in an Unincorporated Partnership, a Connected Person is any other partner in that same Unincorporated Partnership, and any Person that is a Related Party of that partner.

5. To determine that a payment or benefit provided by the Taxable Person corresponds with the Market Value of the service or otherwise provided by the Connected Person in exchange, the relevant provisions of Article 34 of this DecreeLaw shall apply as the context requires.

6. Clause 1 of this Article shall not apply to any of the following: a. A Taxable Person whose shares are traded on a Recognised Stock Exchange. b. A Taxable Person that is subject to the regulatory oversight of a competent authority in the State. c. Any other Person as may be determined in a decision issued by the Cabinet at the suggestion of the Minister.

Chapter Eleven – Tax Loss Provisions

Article 37 – Tax Loss Relief

1. A Tax Loss can be offset against the Taxable Income of subsequent Tax Periods to arrive at the Taxable Income for those subsequent Tax Periods.

2. The amount of Tax Loss used to reduce the Taxable Income for any subsequent Tax Period cannot exceed 75% (seventy-five percent) or any other percentage as specified in a decision issued by the Cabinet at the suggestion of the Minister of the Taxable Income for that Tax Period before any Tax Loss relief, except in circumstances that may be prescribed in a decision issued by the Cabinet at the suggestion of the Minister.

3. A Taxable Person cannot claim Tax Loss relief for: a. Losses incurred before the date of commencement of Corporate Tax. b. Losses incurred before a Person becomes a Taxable Person under this DecreeLaw. Federal Decree-Law No. 47 of 2022 – Unofficial translation 44 c. Losses incurred from an asset or activity the income of which is exempt, or otherwise not taken into account under this Decree-Law.

4. A Tax Loss carried forward to a subsequent Tax Period must be set off against the Taxable Income of that subsequent Tax Period, before any remainder can be carried forward to a further subsequent Tax Period, or any Tax Loss transferred under

Article 38 of this Decree-Law can be utilised.

Article 38 – Transfer of Tax Loss

1. A Tax Loss or a portion thereof may be offset against the Taxable Income of another Taxable Person where all of the following conditions are met: a. Both Taxable Persons are juridical persons. b. Both Taxable Persons are Resident Persons. c. Either Taxable Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in the other, or a third Person has a direct or indirect ownership interest of at least 75% (seventy-five percent) in each of the Taxable Persons. d. The common ownership under paragraph (c) of Clause 1 of this Article must exist from the start of the Tax Period in which the Tax Loss is incurred to the end of the Tax Period in which the other Taxable Person offsets the Tax Loss transferred against its Taxable Income. e. None of the Persons are an Exempt Person. f. None of the Persons are a Qualifying Free Zone Person. g. The Financial Year of each of the Taxable Persons ends on the same date. h. Both Taxable Persons prepare their financial statements using the same accounting standards.

2. Where a Taxable Person transfers its Tax Loss to another Taxable Person under Clause 1 of this Article: a. the Taxable Person which the Tax Loss is transferred to shall reduce its Taxable Income for the relevant Tax Period; b. the total Tax Loss offset shall not exceed the amount allowed under Clause 2 of Article 37 of this Decree-Law; and c. the Taxable Person shall reduce its available Tax Losses by the amount of the Tax Loss transferred to the other Taxable Person for the relevant Tax Period.

Article 39 – Limitation on Tax Losses Carried Forward 1. Tax Losses can only be carried forward and utilised in accordance with the provision of Clause 2 of Article 37 of this Decree-Law provided that:

a. From the beginning of the Tax Period in which the Tax Loss is incurred to the end of the Tax Period in which the Tax Loss or part thereof is offset against Taxable Income of that period, the same Person or Persons continuously owned at least a 50% (fifty percent) ownership interest in the Taxable Person.

b. The Taxable Person continued to conduct the same or a similar Business or Business Activity following a change in ownership of more than 50% (fifty percent).

2. For the purposes of paragraph (b) of Clause 1 of this Article, relevant factors for determining whether a Taxable Person has continued to conduct the same or a similar Business or Business Activity following a change in the direct or indirect ownership include: a. the Taxable Person uses some or all of the same assets as before the ownership change; b. the Taxable Person has not made significant changes to the core identity or operations of its Business since the ownership change; and c. where there have been any changes, these result from the development or exploitation of assets, services, processes, products or methods that existed before the ownership change.

3. Clause 1 of this Article shall not apply to a Taxable Person whose shares are listed on a Recognised Stock Exchange.

Chapter Twelve – Tax Group Provisions

Article 40 – Tax Group

1. A Resident Person, which for the purposes of this Decree-Law shall be referred to as a “Parent Company”, can make an application to the Authority to form a Tax Federal Decree-Law No. 47 of 2022 – Unofficial translation 46 Group with one or more other Resident Persons, each referred to as a “Subsidiary” for the purposes of this Chapter, where all of the following conditions are met: a. The Resident Persons are juridical persons. b. The Parent Company owns at least 95% (ninety-five percent) of the share capital of the Subsidiary, either directly or indirectly through one or more Subsidiaries. c. The Parent Company holds at least 95% (ninety-five percent) of the voting rights in the Subsidiary, either directly or indirectly through one or more Subsidiaries. d. The Parent Company is entitled to at least 95% (ninety-five percent) of the Subsidiary's profits and net assets, either directly or indirectly through one or more Subsidiaries. e. Neither the Parent Company nor the Subsidiary is an Exempt Person. f. Neither the Parent Company nor the Subsidiary is a Qualifying Free Zone Person. g. The Parent Company and the Subsidiary have the same Financial Year. h. Both the Parent Company and the Subsidiary prepare their financial statements using the same accounting standards.

2. Notwithstanding paragraph (e) of Clause 1 of this Article, one or more Subsidiaries in which a Government Entity directly or indirectly owns at least a 95% (ninetyfive percent) ownership interest as specified in paragraphs (b), (c) and (d) of Clause 1 of this Article can form a Tax Group, subject to the conditions to be prescribed by the Authority.

3. An application made under Clause 1 of this Article shall be made to the Authority by the Parent Company and each Subsidiary seeking to become members of the Tax Group.

4. A Tax Group formed under Clause 1 of this Article is treated as a single Taxable Person for the purposes of this Decree-Law, represented by the Parent Company.

5. The Parent Company shall comply with all obligations set out in Chapters Fourteen, Sixteen and Seventeen of this Decree-Law on behalf of the Tax Group. 6. The Parent Company and each Subsidiary shall be jointly and severally liable for Corporate Tax Payable by the Tax Group for those Tax Periods when they are Federal Decree-Law No. 47 of 2022 – Unofficial translation 47 members of the Tax Group.

7. The joint and several liability under Clause 6 of this Article for a Tax Period can be limited to one or more members of the Tax Group following approval by the Authority.

8. The Parent Company and each Subsidiary shall remain responsible for complying with the provisions under Article 45 of this Decree-Law.

9. A Subsidiary can join an existing Tax Group following submission of an application to the Authority by the Parent Company and the relevant Subsidiary.

10.A Subsidiary shall leave the Tax Group in the following circumstances: a. Following approval by the Authority of an application by the Parent Company and the relevant Subsidiary. b. Where the relevant Subsidiary no longer meets the conditions to be a member of the Tax Group as specified in Clause 1 of this Article.

11.A Tax Group shall cease to exist in any of the following circumstances: a. Following approval by the Authority of an application by the Parent Company. b. Where the Parent Company no longer meets the conditions to form a Tax Group as specified in Clause 1 of this Article, subject to the provisions of Clause 12 of this Article.

12.The Parent Company of a Tax Group can make an application to the Authority to be replaced by another Parent Company without a discontinuation of the Tax Group, in any of the following circumstances. a. The new Parent Company meets the conditions under Clause 1 of this Article relating to the former Parent Company. b. The former Parent Company ceases to exist and the new Parent Company or a Subsidiary is its universal legal successor.

13. Notwithstanding Clauses 11 and 12 of this Article, the Authority may, at its discretion, dissolve a Tax Group or change the Parent Company of a Tax Group based on information available to the Authority, and notify the Parent Company of such action taken.

Article 41 – Date of Formation and Cessation of a Tax Group

1. For the purposes of Article 40 of this Decree-Law, a Tax Group shall be formed, or a new Subsidiary shall join an existing Tax Group from the beginning of the Tax Period specified in the application submitted to the Authority, or from the beginning of any other Tax Period determined by the Authority.

2. For the purposes of paragraph (a) of Clause 10 of Article 40 and paragraph (a) of Clause 11 of Article 40 of this Decree-Law, the relevant member of a Tax Group shall be treated as leaving that Tax Group from the beginning of the Tax Period specified in the application submitted to the Authority, or from the beginning of any other Tax Period determined by the Authority.

3. For the purposes of paragraph (b) of Clause 10 of Article 40 and paragraph (b) of Clause 11 of Article 40 of this Decree-Law, the relevant member of a Tax Group shall be treated as leaving that Tax Group from the beginning of the Tax Period in which the conditions under Clause 1 of Article 40 of this Decree-Law are no longer met.

Article 42 – Taxable Income of a Tax Group

1. For the purposes of determining the Taxable Income of a Tax Group, the Parent Company shall consolidate the financial results, assets and liabilities of each Subsidiary for the relevant Tax Period, eliminating transactions between the Parent Company and each Subsidiary that is a member of the Tax Group.

2. The relevant provisions of this Decree-Law shall apply as the context requires to the Tax Group.

3. Unutilised Tax Losses of a Subsidiary that joins a Tax Group (referred to in this Article as “pre-Grouping Tax Losses”) shall become carried forward Tax Losses of the Tax Group, and can be used to offset the Taxable Income of the Tax Group insofar this income is attributable to the relevant Subsidiary.

4. Where a new Subsidiary joins an existing Tax Group, unutilised Tax Losses of the existing Tax Group cannot be used to offset the Taxable Income of the Tax Group insofar this income is attributable to the new Subsidiary.

5. The application of Clauses 3 and 4 of this Article is subject to the conditions of Articles 37 and 39 of this Decree-Law. Federal Decree-Law No. 47 of 2022 – Unofficial translation 49

6. Where a Subsidiary leaves a Tax Group, Tax Losses of the Tax Group shall remain with the Tax Group, with the exception of any unutilised pre-Grouping Tax Losses of the relevant Subsidiary.

7. On cessation of a Tax Group, unutilised Tax Losses of the Tax Group shall be allocated as follows: a. Where the Parent Company continues to be a Taxable Person, all Tax Losses shall remain with the Parent Company. b. Where the Parent Company ceases to be a Taxable Person, Tax Losses of the Tax Group shall not be available for offset against future Taxable Income of individual Subsidiaries, with the exception of any unutilised pre-Grouping Tax Losses of such Subsidiaries.

8. Paragraph (b) of Clause 7 of this Article shall not apply where there is a continuation of the Tax Group under Clause 12 of Article 40 of this Decree-Law.

9. Clause 1 of this Article shall not apply where an asset or liability has been transferred between members of the Tax Group and either the transferor or transferee leaves the Tax Group within (2) two years from the date of the transfer, unless the associated income would have been exempt from Corporate Tax or not taken into account under any other provisions of this Decree-Law.

10.Any income that was not taken into account with regards to a transfer described in Clause 9 of this Article shall be taken into account on the date the transferor or transferee leaves the Tax Group, and shall result in a corresponding adjustment of the cost base for Corporate Tax purposes of the relevant asset or liability. 11.The Tax Group must prepare consolidated financial statements in accordance with accounting standards applied in the State.

Chapter Thirteen – Calculation of Corporate Tax Payable

Article 43 – Currency For the purposes of this Decree-Law, all amounts must be quantified in the United Arab Emirates dirham. Any amount quantified in another currency must be converted at the applicable exchange rate set by the Central Bank of the United Arab Emirates, subject to any conditions that may be prescribed in a decision issued by the Authority.

Article 44 – Calculation and Settlement of Corporate Tax The Corporate Tax due under this Decree-Law is settled in the following order:

1. First, by using the Taxable Person’s available Withholding Tax Credit, as determined under Article 46 of this Decree-Law.

2. To the extent there is a residual amount after Clause 1 of this Article, by using the Taxable Person’s available Foreign Tax Credit as determined under Article 47 of this Decree-Law.

3. To the extent there is a residual amount after Clause 2 of this Article, by using any credits or other forms of relief as specified in a decision issued by the Cabinet at the suggestion of the Minister.

4. To the extent there is a residual amount after Clause 3 of this Article, this amount of Corporate Tax Payable must be settled in accordance with Article 48 of this Decree-Law.

Article 45 – Withholding Tax

1. The following income shall be subject to Withholding Tax at the rate of 0% (zero percent) or any other rate as specified in a decision issued by the Cabinet at the suggestion of the Minister: a. The categories of State Sourced Income derived by a Non-Resident Person as prescribed in the decision issued by the Cabinet pursuant to this Article, insofar such income is not attributable to a Permanent Establishment of the Non-resident Person in the State. b. Any other income as specified in a decision issued by the Cabinet at the suggestion of the Minister.

2. The Withholding Tax payable under Clause 1 of this Article shall be deducted from the gross amount of the payment and remitted to the Authority in the form and manner and within the timeline prescribed by the Authority. Article 46 – Withholding Tax Credit 1. If a Person becomes a Taxable Person in a Tax Period, the Person’s Corporate Tax due under Article 3 of this Decree-Law can be reduced by the amount of the maximum Withholding Tax Credit under this Decree-Law is the lower of: a. The amount of Withholding Tax deducted under Clause 2 of Article 45 of this Decree-Law. b. The Corporate Tax due under this Decree-Law.

3. Any excess Withholding Tax Credit for a Tax Period as a result of Clause 2 of this Article shall be refunded to the Taxable Person in accordance with Article 49 of this Decree-Law.

Article 47 – Foreign Tax Credit 1. Corporate Tax due under Article 3 of this Decree-Law can be reduced by the amount of Foreign Tax Credit for the relevant Tax Period. 2. The Foreign Tax Credit under this Decree-Law cannot exceed the amount of Corporate Tax due on the relevant income. 3. Any unutilised Foreign Tax Credit as a result of Clause 2 of this Article cannot be carried forward or carried back. 4. A Taxable Person shall maintain all necessary records for the purposes of claiming a Foreign Tax Credit.

Chapter Fourteen – Payment and Refund of Corporate Tax

Article 48 – Corporate Tax Payment

A Taxable Person must settle the Corporate Tax Payable under this Decree-Law within (9) nine months from the end of the relevant Tax Period, or by such other date as determined by the Authority.

Article 49 – Corporate Tax Refund

  1. A Taxable Person may make an application to the Authority for a Corporate Tax refund in accordance with the provisions of the Tax Procedures Law in the following circumstances: a. The Withholding Tax Credit available to a Taxable Person exceeds the Taxable Person’s Corporate Tax Payable. b. Where the Authority is otherwise satisfied that the Taxable Person has paid Corporate Tax in excess of the Taxable Person’s Corporate Tax Payable. 2. The Authority shall issue the Taxable Person a notice of the Authority’s decision on an application under Clause 1 of this Article in accordance with the Tax Procedures Law.

Chapter Fifteen – Anti-Abuse Rules

Article 50 – General Anti-Abuse Rule

1. This Article applies to a transaction or an arrangement if, having regard to all relevant circumstances, it can be reasonably concluded that: a. the entering into or carrying out of the transaction or arrangement, or any part of it, is not for a valid commercial or other non-fiscal reason which reflects economic reality; and b. the main purpose or one of the main purposes of the transaction or arrangement, or any part of it, is to obtain a Corporate Tax advantage that is not consistent with the intention or purpose of this Decree-Law.

2. For the purposes of this Article, a Corporate Tax advantage includes, but is not limited to the following: a. A refund or an increased refund of Corporate Tax. b. Avoidance or reduction of Corporate Tax Payable. c. Deferral of a payment of Corporate Tax or advancement of a refund of Corporate Tax. d. Avoidance of an obligation to deduct or account for Corporate Tax.

3. Where the provisions of this Article apply to a transaction or arrangement, the Authority may make a determination that one or more specified Corporate Tax advantages obtained as a result of the transaction or arrangement are to be counteracted or adjusted.

4. If a determination is made under Clause 3 of this Article, the Authority must issue an assessment giving effect to the determination, which may include: a. allowing or disallowing any exemption, deduction or relief in calculating the Federal Decree-Law No. 47 of 2022 – Unofficial translation 53 Taxable Income or the Corporate Tax Payable, or any part thereof; b. allocating any such exemption, deduction or relief, or any part thereof, to any other Persons; c. recharacterising for the purposes of this Decree-Law the nature of any payment or other amount, or any part thereof; or d. disregarding the effect that would otherwise result from the application of other provisions of this Decree-Law, and can make compensating adjustments to the Corporate Tax liability of any other Person affected by the determination made by the Authority.

5. For the purpose of determining whether this Article applies to a transaction or arrangement, the following must be considered: a. The manner in which the transaction or arrangement was entered into or carried out. b. The form and substance of the transaction or arrangement. c. The timing of the transaction or arrangement. d. The result of the transaction or arrangement in relation to the application of this Decree-Law. e. Any change in the financial position of the Taxable Person that has resulted, will result, or may reasonably be expected to result, from the transaction or arrangement. f. Any change in the financial position of another Person that has resulted, will result, or may reasonably be expected to result, from the transaction or arrangement. g. Whether the transaction or arrangement has created rights or obligations which would not normally be created between Persons dealing with each other at arm’s length in respect of the relevant transaction or arrangement. h. Any other relevant information and circumstances.

6. In any proceeding concerning the application of this Article, the Authority must demonstrate that the determination made under Clause 3 of this Article is just and reasonable.

Chapter Sixteen – Tax Registration and Deregistration

Article 51 – Tax Registration

1. Any Taxable Person shall register for Corporate Tax with the Authority in the form and manner and within the timeline prescribed by the Authority and obtain a Tax Registration Number, except in circumstances prescribed by the Minister.

2. For the purposes of an exemption from Corporate Tax under this Decree-Law or for purposes of Clause 6 of Article 53 of this Decree-Law, the Authority may require the relevant Person under paragraphs (e), (f), (g), (h) and (i) of Clause 1 of Article 4 of this Decree-Law, or the Unincorporated Partnership, as applicable, to register for Corporate Tax and obtain a Tax Registration Number

. 3. The Authority shall, at its discretion and based on information available to the Authority, have the ability to register a Person for Corporate Tax effective from the date the Person became a Taxable Person.

Article 52 – Tax Deregistration

1. A Person with a Tax Registration Number shall file a Tax Deregistration application with the Authority where there is a cessation of its Business or Business Activity, whether by dissolution, liquidation, or otherwise, in the form and manner and within the timeline prescribed by the Authority.

2. A Taxable Person shall not be deregistered unless it has paid all Corporate Tax and Administrative Penalties due and filed all Tax Returns due under this Decree-Law, including its Tax Return for the Tax Period up to and including the date of cessation.

3. If the Tax Deregistration application is approved, the Authority shall deregister the Person for Corporate Tax purposes with effect from the date of cessation or from such other date as may be determined by the Authority.

4. Where a Person does not comply with the Tax Deregistration requirements under this Article, the Authority may, at its discretion and based on information available to the Authority, deregister the Taxable Person effective from the later of either: a. the last day of the Tax Period in which it became apparent to the Authority that the conditions under Clause 2 of this Article have been met; or b. the date the Taxable Person ceases to exist.

Chapter Seventeen – Tax Returns and Clarifications

Article 53 – Tax Returns

1. Subject to Article 51 of this Decree-Law, a Taxable Person must file a Tax Return, as applicable, to the Authority in the form and manner prescribed by the Authority no later than (9) nine months from the end of the relevant Tax Period, or by such other date as directed by the Authority.

2. The Tax Return shall include at least the following information, as applicable: a. The Tax Period to which the Tax Return relates. b. The name, address and Tax Registration Number of the Taxable Person. c. The date of submission of the Tax Return. d. The accounting basis used in the financial statements. e. The Taxable Income for the Tax Period. f. The amount of Tax Loss relief claimed under Clause 1 of Article 37 of this Decree-Law. g. The amount of Tax Loss transferred under Article 38 of this Decree-Law. h. The available tax credits claimed under Articles 46 and 47 of this Decree-Law. i. The Corporate Tax Payable for the Tax Period.

3. A Taxable Person shall provide the Authority with any such information, documents or records as shall be reasonably required by the Authority for the purposes of implementing the provisions of this Decree-Law.

4. As an exception to the provisions of this Article and any other relevant provision of this Decree-Law, the Minister may prescribe the form and manner in which a Tax Return and other information is to be filed with the Authority by a Taxable Person where the disclosure of information may impede national security or may be contrary to the public interest.

5. The Authority may request a Person under paragraphs (e), (f), (g), (h) and (i) of Clause 1 of Article 4 of this Decree-Law to submit a declaration.

6. The Authority may, by notice or through a decision issued by the Authority, request the authorised partner in an Unincorporated Partnership that has not had an application approved under Clause 8 of Article 16 of this Decree-Law to be Federal Decree-Law No. 47 of 2022 – Unofficial translation 56 treated as a Taxable Person to file a declaration on behalf of all the partners in the Unincorporated Partnership.

7. The Parent Company must file a Tax Return to the Authority on behalf of the Tax Group.

Article 54 – Financial Statements

1. The Authority may, by notice or through a decision issued by the Authority, request a Taxable Person to submit the financial statements used to determine the Taxable Income for a Tax Period in the form and manner and within the timeline prescribed by the Authority.

2. The Minister may issue a decision requiring categories of Taxable Persons to prepare and maintain audited or certified financial statements.

3. For the purposes of Clause 1 of this Article, the Authority may request a partner in an Unincorporated Partnership to provide financial statements showing all of the following: a. The total assets, liabilities, income and expenditure of the Unincorporated Partnership. b. The partner’s distributive share in the Unincorporated Partnership’s assets, liabilities, income and expenditure.

Article 55 – Transfer Pricing Documentation

1. The Authority may, by notice or through a decision issued by the Authority, require a Taxable Person to file together with their Tax Return a disclosure containing information regarding the Taxable Person’s transactions and arrangements with its Related Parties and Connected Persons in the form prescribed by the Authority.

2. If a Taxable Person’s transactions with its Related Parties and Connected Persons for a Tax Period meet the conditions prescribed by the Minister, the Taxable Person must maintain both a master file and a local file in the form prescribed by the Authority.

3. The documentation under Clause 2 of this Article must be submitted to the Authority within (30) thirty days following a request by the Authority, or by any Federal Decree-Law No. 47 of 2022 – Unofficial translation 57 such other later date as directed by the Authority.

4. Upon request by the Authority, a Taxable Person shall provide the Authority with any information to support the arm’s length nature of the Taxable Person’s transactions or arrangements with its Related Parties and Connected Persons, within (30) thirty days following the request by the Authority, or by any such other later date as directed by the Authority.

Article 56 – Record Keeping

1. Notwithstanding the provisions of the Tax Procedures Law, a Taxable Person shall maintain all records and documents for a period of (7) seven years following the end of the Tax Period to which they relate that: a. Support the information to be provided in a Tax Return or in any other document to be filed with the Authority. b. Enable the Taxable Person’s Taxable Income to be readily ascertained by the Authority.

2. Notwithstanding the provisions of the Tax Procedures Law, an Exempt Person shall maintain all records that enable the Exempt Person’s status to be readily ascertained by the Authority for a period of (7) seven years following the end of the Tax Period to which they relate.

Article 57 – Tax Period 1. A Taxable Person’s Tax Period is the Financial Year or part thereof for which a Tax Return is required to be filed.

2. For the purposes of this Decree-Law, the Financial Year of a Taxable Person shall be the Gregorian calendar year, or the (12) twelve-month period for which the Taxable Person prepares financial statements.

Article 57 of this Decree-Law, a Taxable Person can make an application to the Authority to change the start and end date of its Tax Period, or use a different Tax Period, subject to conditions to be set by the Authority.

Article 58 – Change of Tax Period Notwithstanding

Article 59 – Clarifications

1. A Person may make an application to the Authority for a clarification regarding the application of this Decree-Law or the conclusion of an advance pricing agreement with respect to a transaction or an arrangement proposed or entered into by the Person.

2. The application under Clause 1 of this Article shall be made in the form and manner prescribed by the Authority.

Chapter Eighteen – Violations and Penalties

Article 60 – Assessment of Corporate Tax and Penalties

  1. A Person may be subject to a Corporate Tax assessment in accordance with the Tax Procedures Law and the decisions issued in the implementation of its provisions. 2. Notwithstanding the provisions of the Tax Procedures Law and the decisions issued in the implementation of its provisions, the Authority may prescribe the circumstances and conditions under which a Corporate Tax assessment may be requested by a Taxable Person or issued by the Authority. 3. The Tax Procedures Law referred to in the preamble and the decisions issued in the implementation of its provisions shall determine the relevant penalties and fines relevant to the implementation of this Decree-Law.

Chapter Nineteen – Transitional Rules

Article 61 –

Transitional Rules

1. A Taxable Person’s opening balance sheet for Corporate Tax purposes shall be the closing balance sheet prepared for financial reporting purposes under accounting standards applied in the State on the last day of the Financial Year that ends immediately before their first Tax Period commences, subject to any conditions or adjustments that may be prescribed by the Minister.

2. The opening balance sheet referred to in Clause 1 of this Article shall be prepared taking into consideration the arm’s length principle in accordance with Article 34 of this Decree-Law. Federal Decree-Law No. 47 of 2022 – Unofficial translation 59

3. For the purposes of Clauses 1 and 2 of this Article, and as an exception to the provisions of Article 70 of this Decree-Law, the provisions of Article 50 of this Decree-Law shall apply to transactions or arrangements entered into on or after the date this Decree-Law is published in the Official Gazette.

4. The Cabinet may, at the suggestion of the Minister, issue a decision prescribing other transitional measures related to the implementation of this Decree-Law and the application of its provisions.

Chapter Twenty – Closing provisions

Article 62 – Delegation of Power The Minister may delegate his powers under this Decree-Law, in full or in part, to the Authority, where the Minister deems appropriate.

Article 63 – Administrative Policies and Procedures The administrative policies, procedures and general instructions in relation to the requirements imposed on a Person under this Decree-Law shall be issued by the Authority in coordination with the Ministry.

Article 64 – Cooperating with the Authority All governmental authorities in the State shall fully cooperate with the Authority to carry out whatever is required to implement the provisions of this Decree-Law and provide the Authority with any data, information and documentation in respect of a Taxable Person or an Exempt Person as may be requested by the Authority.

Article 65 – Revenue Sharing Corporate Tax revenues and Administrative Penalties collected under this Decree-Law shall be subject to sharing between the Federal Government and the Local Governments based on the provisions of a federal law issued in this regard. Federal Decree-Law No. 47 of 2022 – Unofficial translation 60.

Article 66 – International Agreements To the extent the terms of an international agreement that is in force in the State are inconsistent with the provisions of this Decree-Law, the terms of the international agreement shall prevail.

Article 67 – Implementing Decisions 1. Subject to the powers conferred to the Cabinet under this Decree-Law, the Minister and the Authority shall issue the necessary decisions, within their respective powers, to implement the provisions of this Decree-Law. 2. The Cabinet may, at the suggestion of the Minister, issue implementing decisions for this Decree-Law.

rticle 68 – Cancellation of Conflicting Provisions Any text or provisions contrary to or inconsistent with the provisions of this DecreeLaw shall be abrogated.

Article 69 – Application of this Decree-Law to Tax Periods This Decree-Law shall apply to Tax Periods commencing on or after 1 June 2023.

Article 70 – Publication and Application of this Decree-Law This Decree-Law shall be published in the Official Gazette and shall come into effect (15) fifteen days following the date of publication.

Federal Decree-Law no. (38) of 2021 on Copyrights and Neigbouring Rights

Location: United Arab Emirates

General

Issued On: 2021-09-20
Type: Federal Law

Article 1- Definitions

In implementing the provisions of this Decree-Law, the following terms and expressions shall have the meaning assigned against each of them, unless the context otherwise requires:

State: The United Arab Emirates. Ministry: The Ministry of Economy. Minister: The Minister of Economy.

Competent Court: The Federal Court of Appeal.

Civil Court: The Federal or Local Court of First Instance, as the case may be. Grievances Committee: The committee stipulated in Article (37) of this Decree-Law.

Broadcasting Organisation: Any entity that carries out audio, visual or audio-visual broadcasting by wireless means.

Broadcasting: The means of broadcasting sounds, or images and sounds, or any representations thereof by wireless means for reception by the public. Broadcasting shall include every similar transmission that takes place via

satellite or the transmission of encrypted signals, in cases where the public is granted the means to decode those signals by and with the consent of Broadcasting Organisations.

Accredited Entity: The non-profit establishment that provides braille education, training, reading, or access to information services for the benefit of Beneficiary Persons. This includes government agencies and non-profit organisations that provide the same services to Beneficiary Persons within their basic activities or institutional obligations.

Work: Any innovative production in the fields of literature, arts, or science, of whatever type, manner of expression, significance, or purpose.

Author: The person who creates the work, or the person whose name is mentioned thereon or if, upon Publication, the Work is attributed to him as being the author thereof unless otherwise proven. Shall also be considered author, whoever publishes anonymous or pseudonymous work, or in any other manner, provided that there is no doubt as to the true identity of the Author; otherwise, the publisher or producer of the work, whether a physical or juristic person, shall be deemed as representing the Author in the exercise of his rights, until the true identity of the Author is recognised.

Innovation: The innovative character that bestows originality and distinction upon the work.

Holders of Neighbouring Rights: Performers, Producers of Phonograms, and Broadcasting Organisations, in accordance with the provisions of this Decree-Law.

Performers: Actors, singers, musicians, dancers, and other persons who recite, sing, play music or otherwise perform, in any manner, literary, artistic or other Works or any folklore expressions, that are protected pursuant to the provisions of this Decree-Law, or that have fallen into public domain.

Person: Any physical or juristic person.

Producers of Phonograms: The person who, on his own initiative and responsibility, undertakes the first fixation of the sounds making up the performance or any other sounds or the representation of sounds.

Publication: Making the work, sound or visual recording, radio program, or any performance available to the public, by any means whatsoever.

Public Performance: Communicating the Work to the public by any means, whether directly or otherwise, such as acting and presentation of audio or visual Works, artistic theatrical performances, presenting and playing musical Works and reading literary Works, whether live or recorded.

Public Communication: Wire or wireless Broadcasting of literary and artistic Works, including audio, visual or audio-visual Works, to the public by any means whatsoever, including making them available to the public in a manner that enables individual members thereof to access them at the place and time chosen by each of them separately.

Reproduction: The making of one or more copies of a Work, Sound Recording, Broadcasting program, or any performance, in any form or using any means, including downloading or permanent or temporary electronic storage, regardless of the method or device used for Reproduction.

Audio-Visual Fixation: The embodiment of moving images, whether or not accompanied by sound, or a representation thereof, by which they can be perceived, reproduced, or conveyed using suitable devices.

Sound Recording: Fixation of the sounds that make up the performance or other sounds or the representation of sounds without affecting the rights arising therefrom by including it in a cinematic Work or an audio-visual work.

Producer of Audio-Visual Work: The person who provides the necessary facilities for producing an audio-visual Work and assumes the responsibility thereof.

Collective Work: The Work created with the participation of more than one Author, under the direction and management of a person who commits to publish it in their name, and in which the contribution of such Authors is incorporated, and where the Work of each Author cannot be separated and distinguished independently.

Joint Work: A Work created with the participation of more than one Author, whether or not it is possible to distinguish the contribution of each therein, and which cannot be classified as a Collective Works.

Derived Work: The Work whose origin derives from a previously existing Work, such as translations, collections of literary and artistic Works and collections of folklore expression, as long as they are innovative in their arrangement or the choice of their contents.

National Folklore: Every expression of folk traditions be it oral, musical or of movement as expressed in distinct elements reflecting a popular traditional heritage which arose and is preserved in the State, and which cannot be attributed to a known Author.

Beneficiary Person(s): A person with blindness or visual impairments to an extent that cannot be improved to become equivalent to the vision of a person without impairment, or the person who is unable to read, hold a book or use it for reading due to a physical disability, all without considering any other cases of disabilities.

Accessible Format Copy: A copy of a Work in an alternative style or format that permits the Beneficiary Person to have access to the original Work feasibly and comfortably as a physical person without visual impairment or any other disability preventing him from having access to Works, without prejudice to the moral rights of the original work.

Public Domain Works: All Works that are initially excluded from protection, or of which the economic rights protection period has expired.

 

Article 2- Works under protection

Authors of Works and Holders of Neighbouring Rights shall enjoy the protection provided for in this Decree- Law, if their rights are violated within the State, namely as concerns the following Works:

  1. Books, brochures, articles, and other written Works.

  2. Smart applications, computer programmes and applications, databases, and similar Works determined by a decision of the Minister.

  3. Lectures, speeches, oral and written sermons and other Works of a similar nature. 4- Theatrical Works, musical shows, and pantomime.

5- Musical Works, either with or without words. 6- Audio, visual, or audio-visual Works.

  1. Architectural Works, and engineering drawings and plans.

  2. Works of drawing with lines or colours, sculpting, engraving, and printing on stone, fabrics, wood, or metals, and any other similar Works.

  3. Works of photography and similar Works. 10- Works of applied and plastic arts.

  1. Illustrations, geographical maps, sketches, and three-dimensional Works related to geography, topography, architecture, and others.

  2. Derivative Works, without prejudice to the protection granted to the original Works from which these Works were derived.

Protection shall cover the title of the work, if innovative, as well as the written innovative broadcast program.

 

Article 3

Protection shall not cover the following:

  1. Ideas, procedures, working methods, mathematical concepts, principles, and abstract facts, but it shall however extend to the innovative expression of any thereof.

  2. Official documents, regardless of their original language, or the language transmitted to them, such as texts of laws, regulations, decisions, international agreements, judicial rulings, arbitrators' awards and decisions issued by administrative committees having a judicial jurisdiction.

  3. News and reports on current incidents and events of a purely informative nature. 4- Public Domain Works.

Nevertheless, the items mentioned in clauses (2), (3), (4) of this article shall enjoy protection if their compilation, arrangement, or any effort deployed in their respect is innovative.

 

Article 4- Registration of Works rights

  1. The Implementing Regulation of this Decree-Law shall regulate the registration of the rights to the Work and dispositions made vis-à-vis them, and the registers of the Ministry shall be considered a reference for the data of the Work and its ownership.

  2. The non-registration of the Work or the actions that occur thereto shall not result in a breach of any aspect of the protection or rights established by this Decree-Law.

 

Article 5- Moral rights

  1. The Author and his universal successor shall enjoy perpetual moral rights which may not prescribe or be assigned.

  2. The rights of the Author and his universal successor referred to in clause (1) of this article shall be as follows: a- The right to decide the first Publication of his Work.

  1. The right to claim the right of paternity over his work.

  2. The right to prohibit any modification of the Work if it distorts the Work or prejudicial to the reputation of the Author.

  3. The right to submit a request to the Civil Court to withdraw the Work from circulation, based on justifying reasons, with the exception of smart applications, computer programmes and applications.

 

Article 6- Amendment to the translation

Amendment to the translation shall not be deemed an infringement unless the translator has omitted reference to where the cancellation or change occurred or has caused thereby prejudice to the Author’s reputation.

 

Article 7- Licence to use the Work

Only the Author and his successor, or the holder of the Author’s right may authorise the use of the work, in any manner whatsoever, namely through Reproduction, including downloading or electronic storage; acting, in any manner; Broadcasting; re-broadcasting; Public Performance or Public Communication; translation; assimilation; modification; rental; lending; or Publication in any manner, including making it available through computers, data or communication networks or any other means.

 

Article 8- Renting computer software and audio-visual Works

The rental right is not applicable to computer programmes and smart applications, unless such programme is, in itself, the subject-matter of the rent. It is equally not applicable to audio-visual Works if it does not affect the normal use thereof.

 

Article 9- Transfer and licensing of the Author's economic rights

  1. The Author or his successor may transfer to or license a third party, be it a physical or a juristic person, all or some of his economic rights set forth in this Decree-Law. Such transfer is valid only if made in writing and specifies the transferred right together with mentioning the object of such transfer, duration and place of use.

  2. The Author shall be the owner of all the economic rights that have not been explicitly assigned.

  3. Without prejudice to the moral rights of the Author provided for in this Decree-Law, the Author may not take any action that is likely to obstruct the utilisation of the disposed right.

 

Article 10- Consideration for the transfer of economic rights

The Author or his successor may receive remuneration in cash or in kind, in exchange for transferring any of the economic rights of the Work to a third party. Such consideration shall be in the form of share in the revenue resulting from the utilisation of those rights, or on the basis of a lump sum, or a combination of the both of them.

 

Article 11- Reconsidering the value of the agreed consideration

Should the agreement referred to in Article (10) of this Decree-Law appear to be unfair to the Author or to any of Holders of Neighbouring Rights or should it become so due to circumstances subsequent to the conclusion of the contract, the Author, his successors or their successors may resort to the Civil Court to seek a review of the agreed upon consideration.

 

Article 12- Licensing the economic rights to the Works of smart applications, computers, etc.

Without prejudice to the provisions of Article (9) of this Decree-Law, the licensing of economic rights concerning the Works of smart applications, computer programmes and applications, or databases shall be subject to

the provisions of the contract received or affixed on the program, whether they appear on the support bearing the programme or on the screen of the computer, smart phones, or any other technical device on which the software has been downloaded or stored. The purchaser or user of such programme shall be bound by the terms included in the said contract terms.

 

Article 13- The Author’s disposal of the original copy of the Work

Unless otherwise agreed upon, the Author’s disposal, by any means, of the original copy of his work, shall not entail the assignment of any of his economic rights over this Work.

Nonetheless, it is not permissible to impose upon the assignee, to whom the property of such copy has passed, without prior agreement, to enable the Author to reproduce the Work, exhibit the original copy thereof or communicate it to the public.

 

Article 14- Seizure of the Authors' economic rights

The Author's economic rights related to his published Works may be seized. However, it is not permissible to seize the economic rights contained in the Work whose Author dies prior to its Publication, unless it is decisively proven that he intended to publish it before his death.

 

Article 15- Future production

  1. Any disposition an Author makes of his future intellectual opus shall be deemed null and void.

  2. As an exception to clause (1) of this article, the Author may conclude a contract in respect of a number of his future Works as specified by the Implementing Regulation of this Decree-Law.

 

Article 16- Moral rights of the Performers

Performers and their universal successors shall enjoy perpetual moral rights which may not prescribe or be assigned, entitling them to the following:

  1. Attribute the performance, whether live or recorded, to themselves; and

  2. Prohibit alteration, distortion, defacement, or modification of their performance, in a manner that would prejudice their reputation.

 

Article 17- Exclusive economic rights of Performers

Performers shall enjoy the following exclusive economic rights:

1- The right to broadcast their unrecorded performance and communicate it to the public. 2- The right to fix their performance on Sound Recordings or audio-visual recordings.

  1. The right to reproduce their performance fixed on Sound Recordings or audio-visual recordings.

  2. The right to rent to the public, for commercial purposes, the original or copies of their recorded performance. 5- The right to distribute the original or copies of their recorded performance to the public, via sale or any other

form of transfer of ownership

6- The right to communicate their performance to the public by wire or wireless means so that the public can view or access them in any way they wish.

Shall be deemed a use prohibited for third parties, the recording of such live performance on a tangible support, the rental thereof for the purpose of generating direct or indirect commercial returns; communicating the said performance or making it available to the public, in any manner, without previous consent from the right owner.

 

Article 18- Exclusive economic rights of Producers of Phonograms

Producers of Phonograms shall enjoy the following exclusive economic rights over their recordings: 1- The right to reproduce them in any manner whatsoever.

  1. The right to distribute the original or other copies of their Sound Recordings to the via sale or any other form of transfer of ownership.

  2. The right to right to rent to the public, for commercial purposes, the original or copies of their Sound Recordings.

  3. The right to make their Sound Recordings available to the public in any manner whatsoever.

  4. The right to broadcast and communicate Sound Recordings to the public in any manner whatsoever. 6- The right to prevent any use of their recordings in any manner whatsoever without their permission.

Shall be considered a use prohibited for third parties, the Reproduction, rental, Broadcasting, re-broadcasting or making these recordings available to the public, through computers or any other means.

 

Article 19- Exclusive economic rights of Broadcasting Organisations The Broadcasting Organisation shall enjoy the following exclusive economic rights: 1- The right to grant licence for use of its recordings and broadcasts.

2- The right to prohibit any Public Communication of its programmes and recordings, without its prior authorisation, and in particular, the recording of such programmes by copying, reproducing, renting, re- broadcasting, or communicating them to the public in any manner whatsoever.

 

Article 20- Protection period

  1. The Author's economic rights provided for in this Decree-Law shall be protected throughout his lifetime and for a period of (50) fifty years thereafter commencing on the first day of the calendar year following the year of his death.

  2. The economic rights of Authors of Joint Works shall be protected throughout their lifetime and for a period of

(50) fifty years thereafter commencing on the first day of the calendar year following the year in which the last surviving Author dies.

  1. The economic rights of Authors of Collective Works, without the artists of applied arts Works, shall be protected for a period of (50) fifty years commencing on the first day of the calendar year following the year in which those Works were first published, should the Author be a juristic person. In case the Author is a physical person, the calculation of the protection period shall be computed on basis of the rule provided for in clauses (1) and

(2) of this article.

  1. The economic rights of Works first published after the death of the Author thereof shall be protected for a period of (50) fifty years commencing on the first day of the calendar year following the year in which such Works have been first published.

  2. The economic rights of anonymous and pseudonymous Works shall be protected for a period of (50) fifty years commencing on the first day of the calendar year following the year in which such Works have been first published. In case the Author of such Works has been known or identified, or if he reveals his identity, the protection period shall be calculated according to clause (1) of this article.

  3. The economic rights of the Authors of Works of applied arts shall expire upon the lapse of (25) twenty-five years commencing on the first day of the calendar year following the year in which such Works have been first published.

  4. In case the protection period is calculated as of the date of first Publication, such date shall be taken as a basis for calculating the period, irrespective of re-Publication unless the Author has made substantial modifications to such Work upon re-Publication, so that it may be considered a new work. Should the Work be composed of several parts or volumes that have been separately published at intervals, each part or volume shall be deemed independent when computing the protection period.

  5. The economic rights of the Performers shall be protected for a period of (50) fifty years commencing on the first day of the calendar year following the year in which the performance has taken place. If the performance is fixed on a Sound Recording, the period shall be calculated as of the end of the year in which the Work has been fixed.

  6. The economic rights of the Producers of Phonograms shall be protected for a period of fifty (50) commencing on the first day of the calendar year following the year in which the recording has been published or the year in which the recording has been fixed, if not published.

  7. The economic rights of Broadcasting Organisations shall be protected for a period of twenty (20) years commencing on the first day of the calendar year following the year in which the radio and television programme was first broadcast.

 

Article 21- Compulsory Reproduction or translation licence

Any person may request the Ministry to be granted a compulsory licence for reproducing and/or translating any Work protected in accordance with the provisions of the present Decree-Law, after the lapse of (3) three years as of the date of publishing such work, in case of a licence for translation. Licences shall be issued, pursuant to a reasoned decision, in which is specified the scope of time and place of its use as well as the fair consideration due to the Author, provided that this is done in the manner that ensures that no prejudice shall be unjustifiably caused to the legitimate interests of the Author or his successor or to the normal use of the work, and that the objective of granting such licence is restricted to the fulfilment of the requirements of education, of all kinds and on all levels, or the requirements of public libraries and archives, as stipulated by the Implementing Regulation of the present Decree- Law.

 

Article 22- Restrictions and exceptions

Without prejudice to the moral rights of the Author, provided for in this Decree-Law, and in a manner that does not conflict with the normal use of the Work and does not cause unjustified damage to the legitimate interests, the Author may not prevent third parties, after the Publication of his work, from performing any of the following acts:

  1. Reproducing one single copy of the Work for purely personal use, for non-profit and non-professional purposes, with the exception of the following Works:

    1. Works of fine or applied arts unless they are displayed in a public place with the consent of the right owner or his successor.

    2. Works of architecture if they are permanently located in public places.

    3. Computer programmes, applications, and databases, unless pursuant to the provisions of clause (2) of this article.

  2. Making one single copy of the computer programme or applications or databases, with the knowledge of the legitimate possessor thereof. Such person may alone make extracts thereof provided that they fall within the licensed purpose or for the purpose of saving or replacement in case the original copy is lost, damaged or becomes unfit for use; and on condition that the backup or extracted copy be destroyed, even if downloaded or stored in the computer hardware, once there is no more reason for keeping the original copy.

  3. Reproducing protected Works for use in judicial proceedings, or the like, within the limits required by such procedures and provided that the source and the name of the Author are mentioned.

  4. Making a single copy of the Work by a non-profit archive or library or authentication offices, either directly or indirectly, in one of the two following instances:

  1. If the Reproduction is made for the purpose of preserving the original copy or of an original which is lost, damaged, or unusable, if it has become impossible to obtain a replacement thereof under reasonable conditions.

  2. If purpose of the Reproduction is to respond to a request made by a physical person who wishes to use it for a study or research, provided that the Reproduction is made just once or on separate occasions, in case it was impossible to obtain a licence for Reproduction pursuant to the provisions of the present Decree-Law.

  1. Citations of short paragraphs, excerpts, or analyses, within the customary limits of the work, for the purpose of criticism, discussion or information, with mention of the source and name of the Author.

  2. Performance of a Work in meetings with family members or by students in an educational institution, so long as such performance has not been made for direct or indirect consideration.

  3. Exhibiting Works of fine, applied, plastic or architectural arts in broadcasts, if such Works permanently exist in public places.

  4. Reproducing brief extracts of a Work in the form of manuscripts or sound, visual, or audio-visual recordings, for the purposes of cultural or religious education, or vocational training provided that Reproduction is made within the reasonable limits and does not go beyond the purpose thereof, that mention is made of the name of the Author and the title of the work, whenever possible, that the reproducer does not directly or indirectly seek profit, and that it was not possible to obtain a licence for Reproduction pursuant to the provisions of the present Decree-Law.

  5. Reproduction is an incidental and integral part of the process of transmitting a Work between different parties over a medium or network or a part of a process that involves enabling access to a legal copy of a digitally stored Work.

  6. Reproduction is made by a person authorised by the rightful party or by law to carry out the broadcast or the process referred to in clause (9) of this article.

  7. Reproduction takes place in the context of steps which, from a technical standpoint, are incidental and inevitable in order to accomplish a lawful action, and in a manner that ensures that the copy is automatically erased without being able to be retrieved for any purposes other than those mentioned in the preceding clauses (9) and (10) of this article.

 

Article 23- Accessible Format Copy

  1. The Beneficiary Person or his representative shall make accessible format copies for his personal use.

  2. The Accredited Entity may prepare accessible format copies without making any unnecessary changes or obtain them from another Accredited Entity without the Author’s permission to make them available to Beneficiary Persons inside or outside the country whenever it has legal access to the Work or a copy thereof and when the activity is not seeking profit.

  3. For the purposes of preparing accessible format copies, the Implementing Regulation of this Decree-Law shall specify the conditions and controls that shall be met by the Approved Bodies.

Article 24- Publication of some Works

  1. Without prejudice to the Author’s moral rights pursuant to the provisions of this Decree-Law, the Author shall not prevent Reproduction through the newspapers, periodicals, or Broadcasting Organisations, within the limits justified by the purpose thereof, the Publication any of the following, provided that mention be made as to the source thereof and to the name of the Author:

    1. Extracts of his Works that have been lawfully made available to the public. This shall apply on communicating extracts of a Work which has been seen or heard in the context of current incidents or Broadcasting or communicating the same to the public in any other manner.

    2. Articles published in newspapers and related to discussions of issues, which have preoccupied public opinion at a certain time, as long as upon Publication such articles is not prohibited.

    3. Speeches, lectures, and discussions that take place during public sittings delivered in the course of public sessions of parliamentary councils, judicial councils and public meetings, so long as such speeches, lectures and discussions are addressed to the public, and are reproduced within the framework of reporting current news.

  2. Subject to clause (1) of this article, the Author alone or his successor shall have the right to compile such Works in compilations attributed to him.

 

Article 25- Restrictions on the Holders of Neighbouring Rights

Restrictions applicable to the economic rights of the Author provided for in the present Decree-Law shall apply to the Holders of Neighbouring Rights.

 

Article 26- Special provisions for some Works

If more than one person contributes to the formation of a Joint Work, in such a manner where it is impossible to separate the share of each of them from the others, all joint authors shall be deemed equal Authors of the Work unless otherwise agreed upon in writing, and in this case, no Author may individually exercise the copyrights except by virtue of a prior written agreement reached between them.

If the contribution of each of the Authors to the Joint Work represents a different and distinct form of art such that the contributions can be distinguished from one another, then each of them shall have the right to use the part to which he contributed separately, provided that this does not harm the use of the Joint Work, unless otherwise agreed upon in writing.

Each Author shall have the right file a lawsuit upon infringement of any of the copyrights protected under this Decree-Law.

In case of death of any of the joint authors, without a universal successor, his share shall be transferred to the rest of the joint authors or their successors thereafter, unless otherwise agreed upon in writing.

 

Article 27

Unless there is an agreement to the contrary, the physical or juristic person at whose initiative and under whose guidance a Collective Work is created may solely exercise the moral and economic rights to that Collective Work.

Article 28- The Author's economic rights in relation to third parties

Unless otherwise agreed upon in writing, the Author's economic rights in relation to third parties shall be as follows:

  1. If the Author creates the Work for the benefit of another person, the copyright belongs to the person in whose favour it was made.

  2. If the employee or worker, during his work, creates a Work related to the activities or Works of the employer and is instructed directly or indirectly by him or uses to reach the creation of this Work the experiences, information, tools, machines, or materials of the employer placed at his disposal, the Author’s economic rights shall be for the employer taking into account the intellectual effort of the worker.

  3. If the employee or worker creates a Work that is not related to the business of the employer and does not use the employer’s experiences, information, tools, or raw materials in reaching this Innovation, the Author’s economic rights shall be for the employee or worker.

 

Article 29- Joint author

  1. Shall be considered as a joint author of an audio-visual, sound, or visual Work: a- The scriptwriter or the originator of the written idea for the Work.

  1. The party who modifies an existing literary Work to make it compatible with an audio-visual format.

  2. The dialogist.

  3. The composer of the musical score, if his composition is made specifically for the Work in question.

  4. The director, if he exercised effective supervision over the completion of the Work.

  1. If the Work is derived or extracted from another previous work, the Author of the previous Work shall be considered a joint author of the new work.

  2. Unless otherwise agreed upon in writing, the Author of a literary or musical partition may publish his respective partition in a manner other than that specified for publishing the Joint Work.

  3. Failure by one of the parties contributing to the creation of an Audio-Visual Work to complete his part thereof, does not preclude the right of the other partners to use the part he has completed, without prejudice to the rights accruing to the former party from his contribution to the authorship.

  4. Throughout the period of use of an audio-visual, audio or visual Work that has been agreed upon, the producer shall be the representative of the Authors of such Work and of their successors in the agreement on the use of such work, without prejudice to the rights of the Authors of the extracted or adapted literary or musical Works, unless a written agreement is made to the contrary. The producer shall be deemed the publisher of such Work and shall be entitled to the publisher’s rights on it and on the copies thereof, within the purposes of financial use.

  5. If the Performer agrees to the Audio-Visual Fixation of his performance, the exclusive economic rights for licensing the use of the audio-visual fixed performance provided for in this Decree-Law shall be transferred to the producer of the Audio-Visual Fixation or whomever is authorised to exercise them, unless otherwise agreed in writing between the Performer and an Audio-Visual Fixation producer.

 

Article 30

The publisher of the Work shall be deemed authorised to exercise the rights stipulated in this Decree-Law in the event that the Work is anonymous or pseudonymous, unless the Author appoints another proxy or reveals his identity and proves his capacity or if there is no doubt as to his real identity.

 

Article 31- Architectural copyrights

  1. Copyright in architectural designs shall be considered the property of the property owner or the like, unless explicitly agreed otherwise.

  2. The property owner or the like may make any improvements or changes to the existing building subject of the engineering drawings, designs, and plans in accordance with the legislation in force.

  3. Buildings may neither be attached nor their destruction, change of their characteristics or confiscation be ordered, for the purpose of preserving the architectural rights of the Author whose engineering designs, drawings or plans have been unlawfully used, without prejudice to his right to a fair compensation.

Rules of Work of Associations or Bodies

Undertaking Copyright Administration (Collective Administration)

 

Article 32

Owners of the copyright and Holders of Neighbouring Rights may delegate specialised professional associations to administer such rights or entrust other bodies with the exercise of such rights.

Contracts concluded in this respect through such associations or bodies, shall be construed as civil contracts.

 

Article 33

The associations or bodies provided for in Article (32) of this Decree-Law shall not discriminate between the applicants requesting to conclude agreements therewith for the use of Works whose administration is entrusted to them. Shall not be considered discrimination the act of delivering, by the association or body, licences for use against reduced financial consideration, in the following two instances, provided their decision is justified:

  1. Use of Works in public events through live performance.

  2. Use of Works within the framework of educational or cultural activities, which do not generate direct or indirect income.

 

Article 34

  1. Associations or bodies stipulated in Article (32) of this Decree-Law may not perform the activities of administering copyright and neighbouring rights unless after obtaining a permit from the Ministry.

  2. The Implementing Regulation of this Decree-Law shall specify the conditions, controls, and procedures for the permit, the obligations of the authorised person, and the administrative penalties to be imposed on the authorised person upon violation of the provisions of this Decree-Law and its Implementing Regulation.

Actions to be Taken by the Court Against Infringing Works

 

Article 35

Notwithstanding the provisions of Federal Law no. (11) of 1992, the Magistrate of Summary Justice of the Competent Civil Court may, at the request of the Author or his successor, and pursuant to an order on a petition, order the following procedures be taken in respect of each Work that has been published or displayed without written permission from the Author or his successor:

  1. Stopping the Publication, display, or production of the work.

  2. Effecting provisional seizure on the original or copies of the work, as well as on the materials that are used in re-publishing or reproducing such work, provided that such materials are not valid except for re-publishing or reproducing of the work

  3. Evidencing Public Performance as regards playing, acting, or reciting a Work to the public and preventing the going display or prohibiting it for the future.

  4. Effecting provisional seizure on the revenue resulting from Publication or display.

  5. Proving the fact of the infringement of any of the rights protected in accordance with the provisions of this Decree-Law.

The Magistrate of Summary Justice may order the petitioner to deposit an appropriate surety, and the petitioner shall file a lawsuit as regards the dispute with the Civil Court within (20) twenty days following the issuance of the order, otherwise, it shall be deemed of no effect.

 

Article 36

The person against whom the order mentioned in Article (35) of this Decree-Law was issued may file a grievance against it before the president of the court in which the order was issued within (15) fifteen days following the date of its issuance. In this case, the president of the court shall either confirm the order or cancel it totally or partially or appoint a receiver whose assignment is to re-publish the Work subject-matter of the dispute, use it, exhibit it or make copies thereof. The resulting revenue shall be deposited with the court’s treasury until adjudication of the dispute.

 

Article 37- Grievances Committee

  1. A committee called “The Grievances Committee for Copyrights and Neighbouring Rights” shall be established at the Ministry under the chairmanship of a specialised judge nominated by the Minister of Justice, with the membership of two specialists chosen by the Minister, and it shall be competent to adjudicate grievances filed by the interested parties against the decisions issued by the Ministry.

  2. The Minister shall issue a decision designating the members of the Grievances Committee, its functioning system, and the procedures for filing grievances before it.

  3. Any interested party may file an appeal against the decision of the Grievances Committee before the Competent Court within (30) thirty days from the date of being notified thereof.

  4. In all cases, a lawsuit filed before the competent court requesting the cancellation of the decisions issued by the Ministry in application of the provisions of this Decree-Law shall not be accepted except after a grievance has been filed with the Grievances Committee.

 

Article 38- Customs clearance

  1. Subject to the legislation in force in the country, the customs authorities may, on their own or at the request of the Author, the right holder, their successors, or their representatives, may order by a reasoned decision not to clear customs - for a maximum period of twenty (20) days - in respect of any items in violation of the provisions of this Decree-Law.

  2. The customs authorities may not prevent the Author, the right holder, their successors, or their representatives from inspecting the items ordered not to be cleared by customs.

  3. The Implementing Regulation of this Decree-Law shall specify the conditions, controls, and procedures related to inspection and the filing of an application to stop the customs clearance and decide thereon.

Penalties

 

Article 39

  1. Without prejudice to any more severe penalty provided for in any other law, a penalty of imprisonment for a period of no less than (2) two months and a fine of no less than (10,000) ten thousand dirhams and not more than (100,000) one hundred thousand dirhams, or by either of these two penalties, shall be imposed on whomever, without the written permission of the Author or the Holder of the Neighbouring Right, or their successors, commits any of the following acts:

    1. Infringing one of the moral or economic rights of the Author or the Holder of the Neighbouring Right stipulated in this Decree-Law, including making public any work, performance, Sound Recording, or broadcast programme that is covered by the protection stipulated in this Decree-Law, either through computers, internet, information and communication networks, or other means or devices.

    2. Selling, renting, or putting into circulation, in any manner, a Work, Sound Recording, or broadcast protected under the provisions of this Decree-Law, and the penalty shall be multiplied by the multiplicity of the Work, performance, programme, or recording, subject-matter of the crime.

  2. In case of recidivism, the penalty shall be imprisonment for a period of no less than six months and a fine of no less than (100,000) one hundred thousand dirhams, and not more than (500,000) five hundred thousand dirhams.

 

Article 40

  1. Without prejudice to any more severe penalty stipulated in any other law, a penalty of imprisonment for a period of no less than (6) six months and a fine of no less than (100,000) one hundred thousand dirhams and not more than (700,000) seven hundred thousand dirhams, or either of these two penalties, shall be imposed on whomever commits any of the following acts:

    1. Unlawfully manufacturing or importing, for the purpose of sale, rental or circulation, any counterfeit Work or copies thereof, any apparatuses, equipment, devices or materials specially designed or prepared for defrauding protection or technology used by the Author or the Holder of the Neighbouring Right for transmitting, putting into circulation, regulating or managing such rights, or preserving a specific standard of purity of the copies

    2. Unlawfully disrupting or impairing any technical protection or electronic data aiming at regulating and managing the rights prescribed by this Decree-Law.

    3. Downloading or storing in the computer any copy of the computer programme or applications thereof or databases, without obtaining a licence from the Author or right holder or successors thereof.

  2. In case of recidivism, the penalty shall be imprisonment for a period of no less than (9) nine months and a fine of no less than (500,000) five hundred thousand dirhams and not more than (1,000,000) one million dirhams.

 

Article 41

Whoever uses a computer program, applications, smart applications, or databases without prior permission from the Author or his successor, shall be punished with a fine of no less than (30,000) thirty thousand dirhams and not more than (100,000) one hundred thousand dirhams, for each program, application, or database.

In case of recidivism, the penalty shall be a fine of no less than (100,000) one hundred thousand dirhams, and not more than (1,000,000) one million dirhams.

If the crime is committed in the name or for the account of a juristic person or a commercial or professional establishment, the court may order the closure thereof for a period not exceeding (3) three months.

 

Article 42

Without prejudice to the penalties prescribed in Articles (39), (40) and (41) of this Decree-Law, the court shall order the confiscation and destruction of counterfeit copies, subject-matter of the crime, or copies reproduced therefrom, as well as the confiscation of the equipment and devices used in the perpetration of the offence, and which cannot be used for any other purpose, and may order the closure of the establishment in which the counterfeiting has been committed, for a period not exceeding (6) six months and the Publication of the summary of the conviction judgment in one or more daily newspapers at the expense of the convict.

 

Article 43- Compensation in case of infringement of rights

The Author or the right holder shall have the right to claim compensation in case of infringement of his moral and economic rights in accordance with the general rules.

 

Article 44- Exercising the copyright in the absence of an heir

The moral and economic rights of the Author and Performer over any Work shall devolve to the Ministry in the absence of an heir or legatee. The Ministry shall continue to exercise the moral rights stipulated in this Decree-Law with the aim of preserving the work, after the expiry of the period of protection of the economic rights prescribed for the work.

 

Article 45- Photographs, sound, or visual recordings of others

Subject to Clause (9) of Article (2) of this Decree-Law, it shall not be permissible for anyone with whom it has been agreed to take photograph of another or sound or visual recording, in any way whatsoever, to keep, publish, exhibit, or distribute the original or Reproductions thereof without the permission of that person, unless otherwise agreed upon.

An exception is made for publishing a photograph in the following cases:

  1. On the occasion of public events, unless Publication is prohibited by the competent authorities.

  2. If it is related to the coverage and photography of the events and activities of government agencies that are held for the public in a public place.

  3. If the competent authorities have authorised such Publication in the service of the public interest.

All of this, taking into account that the Publication or circulation of the photograph does not prejudice the honour, reputation, or standing of the person concerned.

In all cases, the person portrayed in the photograph, his successor or the entity he represents if the photograph is in the course of performing his work, may authorise its Publication in the various means of Publication, its exploitation or its use, even without the photographer's permission, unless otherwise agreed upon.

 

Article 46- Obligation of national carriers

Without prejudice to any provision stated in this Decree-Law, national carriers, including planes, ships, and trains, shall abide by the provisions hereof.

 

Article 47- Supervision and control

The Ministry shall supervise and control the implementation of the provisions of this Decree-Law, and the control of crimes and violations that occur in violation of its provisions. A Cabinet decision - based on a proposal by the Minister - may entrust any of the competent local authorities with these tasks or some of them.

 

Article 48- Law enforcement capacity seizure

The employees of the Ministry or the employees of the local authorities who are designated by a decision of the Minister of Justice in agreement with the Minister or the head of the local judicial authority shall be granted the capacity of law enforcement officers in proving violations of the provisions of this Decree-Law or its Implementing Regulation, within the scope of their respective competencies

 

Article 49- Fees

The Council of Ministers shall issue a decision determining the fees necessary to implement the provisions of this Decree-Law.

 

Article 50- The Implementing Regulation

The Council of Ministers, based on a proposal by the Minister, shall issue the Implementing Regulation for this Decree-Law.

 

Article 51- Executive decisions

The Minister shall issue the necessary decisions to implement the provisions of this Decree-Law.

 

Article 52- Abrogation

1- Federal Law no. (7) of 2002 on Copyrights and Neighbouring Rights and its amendments shall be abrogated. 2- Every provision that violates or contravenes the provisions of this Decree-Law shall be abrogated.

3- Decisions and regulations in force prior to the entry into force of the provisions of this Decree-Law shall continue to be in force, in a manner that does not conflict with its provisions, until the issuance of their replacement in accordance with the provisions of this Decree-Law.

 

Article 53- Publication and entry into force of the Decree-Law

This Decree-Law shall be published in the Official Gazette and shall come into force as of 2 January 2022.

Federal Decree Law No. (14) of 2020. Amending Certain Provisions of the Federal Law No. (18) of 1993 Concerning the Commercial Transaction Law

Location: United Arab Emirates

General

Issued On: 2020-09-27
Type: Federal Law

Article One

A. First paragraph and Clause (4) of Article (379) as well as Articles (600), (617), (641), (642), (643), and (644) of the said Federal Law No. (18) of 1993 shall be replaced as follows:

First paragraph of Article (379):

A bank may open a joint account, including a deposit account or any other account, between two or more persons on an equal basis among them unless it is agreed otherwise as evidenced with the bank. The following provisions shall be observed in this respect:

Clause (4) of Article (379):

4. If a joint account holder dies or loses legal competence, the other joint account holders shall notify the bank of the same within ten days from the date of the death or the loss of competence. The bank shall suspend withdrawal from the joint account up to the share of the concerned account joint holder in the joint account’s balance as on the date of the death or the loss of competence. Withdrawal from the share of the account joint holder who dies or loses legal competence shall not be allowed until successor is appointed.

Article (600)

  1. Acceptance does not apply to cheques. Any wording of acceptance written on a cheque shall be null and void.

  2. The drawee of a cheque may initial the cheque for approval. Such approval shall confirm the availability of sufficient fund with drawee to pay the value of the cheque as on the date of initialing. The signature of drawee on the face of the cheque shall constitute an approval.

  3. The drawee may not reject the approval of the cheque if the drawer or bearer asks it to do so should the drawee have sufficient fund to partially or wholly pay the value of the cheque.

  4. The drawee shall freeze with it and under its liability the required fund to pay the value of approved cheque, or the remaining amount of a partially paid approved cheque, for the benefit of the bearer until the expiry date of submitting the cheque for payment.

Article (617)

  1. A cheque shall be due for payment on the date stated thereon as being its date of issue. A cheque may not be submitted for payment prior to such date.

  2. Where the fund for payment is less than the value of the cheque, the drawee shall partially pay the value of the cheque up to the available fund unless the bearer rejects partial payment. In the case of partial payment, upon each partial payment, the drawee shall initial the back of the cheque confirming the partial payment and give back the original of the cheque to the bearer along with a certificate to that effect. Such certificate shall validate the right of the bearer to demand the payment of the remaining amount against the original of the initialed cheque as per Article (635) Bis of this Law or to submit a protest after the expiry of time limits provided for in Article (632) of this Law.

  3. The drawee shall report the details of the account holder to the Central Bank, in accordance with the rules and regulations issued by the Central Bank, in any of the following cases:

    1. Where no sufficient, existing and usable fund for the payment of the value of cheque is available at the date of its maturity,

    2. Where the drawer, after issuing the cheque, withdraw all the fund for payment so it is not possible to pay its value, or

    3. Where the drawee partially pay the value of the cheque in accordance with (2) of this Article.

Article (641)

Whoever commits any of the acts bellow shall be subject to a penalty of no less than 10% of the cheque value, subject to the minimum of AED 5,000 (AED Five Thousand), and no more than twice the cheque value:

  1. Declaring deliberately and contrary to the truth that no fund for payment of the cheque value is available or that the fund available is less than the cheque value.

  2. Rejecting in bad faith the payment of a cheque drawn on the bank where the fund is available to a bearer to whom a valid protest has not been made.

  3. Refusing to write the statement provided for in Article (632) of this Law.

  4. Rejecting partial payment of the cheque value, issuing a certificate to this effect, or giving back the original of the cheque as per the provisions stipulated in (2) of Article (617) of this Law.

Article (642)

Where the Court convict a defendant for any of the crimes provided for in Articles (641) Bis (1) to (641) Bis (3) of this Law, it may order the publication of judgment synopsis at the expense of convicted defendant in two widely circulated daily newspapers in the UAE, one in Arabic and one in English, or in two e-publishing media to be determined through the decision of the Ministry of Justice, one in Arabic and one in English. The published synopsis shall include- in all cases- the convicted defendant’s name, address, profession, and ordered penalty. Publication shall be compulsory in case of repetition of conviction for the crime provided for in Article (641) Bis (4) of this Law.

Article (643)

Where the Court convicts a defendant for any of the crimes provided for in Articles (641) Bis (1), (641) Bis (2) of this Law, it may order the withdrawal of existing chequebook from the convicted defendant and preventing him from obtaining any further chequebooks for up to five years.

Convicted defendant who does not surrender his existing chequebooks to respective banks within fifteen (15) days from notifying him to do so shall be sentenced to a penalty of no less than AED 50,000 (AED Fifty Thousand) and no more than AED 100,000 (AED One Hundred Thousand).

Any bank which violates the order provided for in the above two paragraphs of this Article shall be sentenced to a penalty of no less than AED 100,000 (AED One Hundred Thousand) and no more than AED 200,000 (AED Two Hundred Thousand).

Article (644)

Where a penal action is brought against the drawer for any of the crimes related to cheques provided for in this Law, such an action shall not prejudice the coercive enforceability of the cheque or any judicial remedies as per the provisions, procedures and rules provided for in Article (635) Bis, nor such action shall prejudice the right of the beneficiary or the bearer of the cheque to claim compensation as per the procedures legally applicable.

b. As an exception to the provisions of Article Four below, amendments of Article (379) of the Commercial Transactions Law, as provided for in Clause (a) of this Article shall be applicable starting from the next day after the date of publishing of this Decree by Law.

Article Two

New articles numbered (635) Bis, (641) Bis (1), (641) Bis (2), (641) Bis (3), (641) Bis (4), (643) Bis

  1. , (643) Bis (2), (644) Bis (1) and (644) Bis (2) shall be added to the said Federal Law No. (18) of

1993 as follows:

Article (635) Bis

A cheque, which bears the drawee’s stamp as non-paid for unavailable or insufficient fund, shall constitute an executive instrument as per the Executive Regulation of the Federal Law No. (11) of 1992 and its bearer shall have the right to demand the coercive enforcement, wholly or partially.

With respect to its enforcement and dispute related to it, provisions, procedures and rules provided for in the said Executive Regulation shall apply.

Article (641) Bis (1)

Whoever endorses or delivers a bearer cheque while knowing that there is sufficient funds to pay such cheque or that such cheque may not be drawn shall be subject to a penalty of no less than 10% of the cheque value, subject to the minimum of AED 1,000 (AED One Thousand), and no more than the cheque value.

The penalty shall be double in case of repetition.

Article (641) Bis (2)

Whoever commits any of the acts bellow shall be subject to the punishment of imprisonment for no less than six months and no more than two years in addition to a penalty of no less than 10% of the cheque value, subject to the minimum of AED 5,000 (AED Five Thousand) and no more than twice the cheque value, or any of the two punishments:

  1. Ordering or asking the drawee, prior to due date, not to pay the value of a cheque he has issued, with the exception of the cases provided for in Articles (620) and (625) of this Law.

  2. Closing the account or withdrawing all available fund therein before issuing the cheque or before presenting the cheque for payment or if the account has been frozen.

  3. Deliberately writing or signing the cheque in a way that make it unpayable. Penalty shall double in case of repetition.

Article (641) Bis (3)

Whoever commits any of the acts bellow shall be subject to the punishment of imprisonment for no less than one year in addition to a penalty of no less than AED 20,000 (AED Twenty Thousand) and no more than AED 100,000 (AED One Hundred Thousand):

  1. Forgery or counterfeiting of a cheque or attributing it to a third party by changing details through addition, deletion or other means as provided for in Article (216) of the said Federal Law No. (3) of 1987 with the objective of damaging a third party and with objective of using it for the aim of its forgery.

  2. Knowingly using a forged or counterfeit cheque.

  3. Knowingly accepting funds paid through a forged or counterfeit cheque.

  4. Using a true cheque issued in the name of others, inappropriately benefiting from it, or using it in relation to a crime of fraud.

  5. Knowingly, importing, manufacturing, holding, selling, offering or providing any tools, equipment, software, information or date used in a crime of forgery as provided for in this Article.

Article (641) Bis (4)

Subject to any severer punishment provided for in any other law, the punishment of life imprisonment in addition to a penalty of no less than AED 500,000 (AED Five Hundred Thousand) and no more than AED 1,000,000 (AED One Million) shall apply for any crime provided for in Article (641) Bis (3) of this Decree Law committed for the objective of terrorism.

Article (643) Bis (1)

Without prejudice to the rights of third parties of good faith, where the Court convict a defendant for any of the crimes provided for in Article (641) Bis (3) of this Law, it shall order the confiscation of items seized due used in such crime.

In any case, the Court shall order the confiscation of the said items where using, holding, owning, selling or offering for sale such items constitute a crime, even when they are not the property of the defendant.

Where it is not possible to seize any of the items mentioned herein or it is not possible to confiscate them because they relates to the rights of third parties of good faith, the Court shall order a penalty equal to their value at the time of committing the crime.

Article (643) Bis (2)

Where the Court convict a defendant for any of the crimes provided for in Articles (641) to (641) Bis (4) of this Decree by Law, it may prohibit the convicted defendant from conducting any professional or commercial business for up to three (3) years if the crime committed in relation to or due to conducting the business.

Whoever repeat committing the same crime after having been prohibited in accordance with the above paragraph of this Article, shall be subject to imprisonment for no less than one year and a penalty of no less than AED 50,000 (AED Fifty Thousand) and no more than AED 100,000 (AED One hundred Thousand) or any of them.

Article (644) Bis (1)

Where a crime provided for in this chapter is committed in the name or for the benefit of a corporate person, the person in charge of actual administration shall not be liable to punishment unless it is evident that such person has been aware of the crime or that such person has committed the crime for the benefit of himself or third parties.

Where the liability of the natural person is not evident as provided for in the above paragraph, the legal person shall be subject to a penalty of no less than twice the legally applicable penalty for this crime and no more than five times of it. The Court may order the suspension of the legal person’s business for no more than six months, and in case of repetition, cancelation of trade license and insolvency of the legal person. The Court shall order the publication of judgment at

the expense of legal person in two widely circulated daily newspapers in the UAE, one in Arabic and one in English, or in two e-publishing media to be determined through the decision of the Ministry of Justice, one in Arabic and one in English.

The Court may order any other punishments legally applicable.

Previsions of the second paragraph of this Article shall not apply to licensed financial establishments subject to the said Federal Decree Law No. (14) of 2018.

Article (644) Bis (2)

Penal lawsuit with respect to the crimes provided for in Article (641) Bis (1) and Article (641) Bis

  1. of this Decree by Law shall expire if the full or remaining cheque value is paid before the initiation of coercive enforcement procedures as provided for in Article (635) Bis of this Decree by Law or should the full or remaining cheque value is paid or a reconciliation is reached before the issuance of final judgement. If a reconciliation is reached after the issuance of a final judgement, the execution of the judgement shall be suspended.

Article Three

  1. Articles (401), (402) and (403) of the Federal Law No. (3) of 1987 on the Promulgation of the said Penal Code shall be null and void.

  2. Any other provisions contradicting the provisions of this Decree by Law shall be null and void.

Article Four

This Decree by Law shall be published in the Official Gazette and shall come into force on 2 January 2022.

Federal Decree Law No. (9) of 2016 On Bankruptcy

Location: United Arab Emirates

Finance

Issued On: 2016-09-20
Type: Federal Law

Section 1 Definitions and Scope of Application

Article (1)

In the application of the provisions of this Decree Law, the following words and phrases shall have the meanings assigned thereto respectively, unless context otherwise requires:

State:

The United Arab Emirates.

Minister:

The Minister of Finance.

Court:

The competent court according to the jurisdiction rules provided in the Civil Procedures Law.

Competent Controlling Body:

The controlling federal or local governmental body designated under a resolution issued by the Cabinet.

Debts of Debtor:

The debts owed by the debtor on the date of issue of the Court’s decision to initiate procedures, according to the provisions of Section 3 or 4 of this Decree Law or those arising from an

 

obligation assumed by the debtor, before the issue of the decision of initiating procedures.

Properties of Debtor:

The elements credited to the financial account of the debtor on the date of the commencement decision or during any of the procedures provided in this Decree Law.

Business of Debtor:

The activities that are or were transacted by the debtor during taking any of the procedures provided in this Decree Law.

Account Receivable:

The condition where it is indicated that the properties of the debtor are insufficient to cover at any time his due liabilities.

Default of Payment:

Failure of the debtor to repay any due debt.

Free Zone:

Any free zone existing or established in the State under any federal or domestic legislation.

National Currency:

Emirati Dirham (AED).

Interested Party:

Any natural or juristic person has a right or an interest in any of the procedures provided in this Decree Law.

Exchange Rate:

The Emirati Dirham exchange rate against the foreign currencies announced by the Central Bank of the UAE.

Interim Measures:

Any necessary measures taken by the Court to safely maintain or manage the debtor’s properties, according to the provisions of this Decree Law.

Business Day:

Any official business day in the State.

Table of Experts:

The Table of approved financial restructuring and bankruptcy experts, according to Federal Law No. (7) of 2012 referred to.

 

 

Article (2)

The provisions of this Decree Law shall apply to the following:

  1. The companies governed by the provisions of the Commercial Companies Law.

  2. The companies that are not established according to the Commercial Companies Law and wholly or partially owned by the federal or local government and whose establishing legislations, memoranda of association or articles of association provide for their submission to the provisions of this Decree Law.

  3. The companies and the establishments in the Free Zones that are not governed by special provisions regulating preventive composition procedures, restructuring or bankruptcy procedures, subject to the provisions of Federal Law No. (8) of 2004 on the Financial Free Zones.

  4. Any person enjoying the capacity of a trader, according to the law provisions.

  5. Licensed civil companies of professional character.

 

Section 2

Financial Restructuring

Article (3)

    1. Based on proposition of the Minister, a standing committee called (“Financial Restructuring Committee”) shall be formed under a resolution issued by the Cabinet.

    2. The Resolution issued by the Cabinet, referred to in paragraph (1) of this Article, shall define the work of the Committee and the executive and procedural rules that enable the Committee to practice its competencies. The Committee may solicit any experienced and competent persons it thinks appropriate.

 

Article (4)

The Committee shall:

  1. Oversee the management of the financial restructuring procedures of financial institutions licensed by the competent controlling bodies to facilitate reaching a consensual arrangement between the debtor and his creditors, by assistance of one expert or more appointed by the Committee for this purpose, on the conditions and procedures set out in the Cabinet Resolution referred to in paragraph (2) of Article (3) hereof.

  2. Sign off the table of experts in the financial restructuring and bankruptcy affairs to handle any of the works assigned to them, according to this Decree Law, in coordination with the Ministry of Justice or the local authority in the domestic judiciary Emirates; and sign off the conditions and procedures of enrollment in the table of experts.

  3. Determine the table of fees of the appointed experts and any costs incurred due to the financial restructuring procedures. The expert appointed in the financial restructuring procedures, within limits of works performed to execute the task assigned to him, shall be considered a public servant.

  4. Set up and regulate a register for the persons against whom judgments are delivered, whether by imposition of any restrictions ordered by the Court or by the loss of their capacity, according to the provisions of this Decree Law. The Committee shall issue a resolution to determine the form of registers, the data to be inserted, the persons entitled to have access thereto and its conditions and other related provisions.

  5. Submit periodical reports on the works, achievements and propositions of the Committee to the Minister to be enabled to handle the tasks assigned thereto under this Decree Law.

  6. Any other competencies described in this Decree Law or assigned thereto by the Cabinet.

Section 3

Preventive Composition

Application and Deciding thereonChapter 1

Article (5)

The purpose of the preventive composition procedures provided in this Section is to assist the debtor to reach settlements with his creditors under a preventive composition scheme, under supervision of the Court, and by assistance of a composition trustee appointed according to the provisions of this Section.

 

Article (6)

  1. Only the debtor may apply to the Court for preventive composition, if he encounters financial hardships that require assistance to reach a settlement with his creditors.

  2. In order for the preventive composition application to be accepted, the debtor shall not be in default for more than (30) thirty consecutive business days due to his unstable financial position or in the condition of account receivable.

 

Article (7) The debtor’s preventive composition application shall entail the termination of his obligation provided in Article (68) of this Decree Law, during the period extending from the date of application submission to the issue of the Court’s decision that accepts or rejects the initiation of preventive composition procedures. Such termination shall continue, if the application is accepted, throughout the period of such procedures.

 

Article (8)

If the debtor is subject to a competent controlling body, the debtor may apply for preventive composition provided that he notifies the competent controlling body in writing thereof (10) ten business days before the date of the application submission. The competent controlling body may submit any documents or pleas, in this regard, to the Court.

 

Article (9)

  1. The preventive composition application, in which the reasons of application are stated, shall be submitted to the Court, accompanied by the following documents:

    1. A memorandum of brief description of the debtor’s economic and financial position and information of his properties in addition to detailed data of his employees.

    2. Certified copy of the trade, industrial or professional license and commercial or professional registration of the debtor issued by the competent licensing authority in the Emirate.

    3. Photocopy of the commercial books or financial statements of the debtor’s business for the fiscal year that precedes the application submission.

    4. A report that states:

    1. The debtor’s cash flow projections and loss and profit projections for the [12] twelve months period following the application submission.

    2. List of names of the debtor’s creditors including their addresses, rights or debts and the provided guarantees, if any.

    3. Detailed statement of movable and immovable properties of the debtor and the estimated value of each property, on the date of application submission, and any resulting third party guarantees or rights.

    1. Propositions of preventive composition and guarantees of its execution.

    2. Designation of a trustee nominated by the debtor to handle the procedures, according to the provisions of this Decree Law.

    3. If the applicant is a company, a photocopy of decision of the competent body in the company that authorizes the applicant to submit the application of taking the preventive composition procedures and photocopy of the company’s incorporation documents and any amendments made thereto lodged at the competent authority in the Emirate, shall be attached to the application.

    4. A report issued by the body in charge of credit information in the state.

    5. Any other documents support the application.

 

  1. If the applicant cannot submit any data or documents required under paragraph (1) of this Article, the reasons shall be expressed in the application.

 

Article (10)

  1. The Court that considers the preventive composition application may decide, at request of any interested party or on its own initiative, to take the necessary measures to maintain or manage any properties of the debtor, including affixation of seals to the headquarters of business of the debtor, until the application is decided on.

  2. The Court may decide to continue the effectiveness of any measures of the kind or decide taking any further interim measures, after accepting the preventive composition application.

 

Article (11)

The Court shall verify that the application is accompanied by all supporting documents. The Court may grant the debtor an intermission to provide the Court with any further data or documents that support his application.

 

Article (12)

The debtor shall bring into the Court an amount of money or bank guarantee in such way and on such date determined by the Court to meet the expenses and costs of the preventive composition procedures, including the fees and charges of the trustee and any appointed expert.

 

Article (13)

  1. The Court may appoint one of the experts enrolled in the table of experts or other, if the Court fails to find a person of the required experience.

  2. The appointed expert shall prepare a report on the financial position of the debtor including his opinion in the satisfaction of the conditions necessary to accept the preventive composition procedures application. The expert shall manifest whether the properties of the debtor are sufficient or insufficient to execute the preventive composition.

  3. The Court shall define the tasks and fees of the expert and the period in which he must submit the report. Such period shall not exceed (20) twenty business days from the date of notifying the expert of the appointment decision.

  4. The provisions of Articles (19) and (20) hereof shall apply to the expert.

Article (14)

  1. The Court shall decide on the preventive composition application, without the need for the appearance of the litigants, within no later than (5) five business days from the date of submitting the application that fulfills the requirements or from the date the expert submits his report, as the case may be.

  2. If the Court accepts the application, the preventive composition procedures shall be initiated.

 

Article (15)

The Court shall reject the preventive composition application in the following cases:

  1. The debtor is subject to preventive composition, restructuring or bankruptcy procedures and liquidation of his properties in the state, according to this Decree Law.

  2. The debtor fails to provide the documents and data provided in Articles (9) and (11) of this Decree Law or submits same incomplete without reason;

  3. The applicant evidently acts in bad faith or the application constitutes an abuse of litigation proceedings.

  4. A final judgment of conviction is delivered against the debtor in one of the crimes set out in Section 6 of this Decree Law or in a crime of forgery, stealth, fraudulence, breach of trust or appropriation of public monies, unless he is rehabilitated.

  5. The preventive composition procedures are evidently inappropriate to the debtor, based on the data and documents submitted with the application, or the report prepared by the expert, according to paragraph (2) of Article (13) of this Decree Law.

  6. The Court decides initiating the bankruptcy procedures, according to Section 4 of this Decree Law.

  7. The debtor fails to lodge the amount to be lodged or provide the required bank guarantee, according to Article (12) of this Decree Law.

 

Article (16)

The Court may summon any person who has information related to the preventive composition application. The said person shall provide the court with any information requested by the Court.

 

 

Chapter 2

Appointment of Trustee

Article (17)

  1. If the Court decides to accept the preventive composition application, the Court shall appoint in its decision a trustee from the natural or juristic persons designated according to paragraph (1.f) of Article (9) of this Decree Law or one of the experts enrolled in the table of experts or other, if the Court fails to find a person of the required experience.

  2. The Court may, proprio motu or at request of the debtor or the supervisor, appoint more than one composition trustee provided that their number shall not exceed three trustees concurrently.

  3. If more than one composition trustee is appointed, they shall jointly perform their tasks and their decisions shall be taken by majority. In case of tie, the question shall be referred to the Court to be decided. The Court may divide the tasks among the appointed trustees and determine the way of their work, whether jointly or severally.

  4. If the Court appoints a juristic person as a composition trustee, the trustee shall designate one representative or more to handle the tasks of the trustee. Such representative shall be enrolled in the table of experts, according to the provisions of this Decree Law.

  5. The Court shall notify the trustee of the decision of his appointment on a date no later than the day following the issue of the decision.

  6. Any creditor may lodge grievance against the decision of the Court in respect of the trustee appointment within (5) five business days from the date of publication made according to Article (35) of this Decree Law, before the Court that issues its decision regarding the grievance within (5) five business days without pleading. The decision in this regard shall be final. The grievance shall not suspend any of the procedures set out in this Section.

 

Article (18)

The trustee may apply to the Court to request whatever may assist him to perform his task perfectly, including the application of appointment and delegation of one expert or more from the table of experts to assist him in any of the matters falling within his competency. The appointed expert may be not enrolled in the table, if required, based on the approval of the Court. On recommendation of the trustee, the Court shall define the tasks and fees of the expert.

 

Article (19)

Composition trustees shall not be one of the following persons:

    1. A creditor.

    2. Spouse, relative by marriage or up to fourth degree relative of the debtor.

    3. Any person against whom a final judgment in a felony or misdemeanor of stealth, embezzlement, fraud in commercial transactions, breach of trust, fraudulence, forgery, false testimony or one of the crimes provided in this Decree Law, bribery or any misdemeanor affecting the national economy, even if rehabilitated.

    4. Any person who was a partner, employee, auditor or agent of the debtor, within the two years prior to initiating the preventive composition procedures.

 

Article (20)

  1. The appointed trustee shall charge his fees against the performed tasks. The incurred charges shall be reimbursed to the trustee as determined by the Court from the lodged amount or the bank guarantee provided under Article (12) of this Decree Law.

  2. The Court may decide disbursement of amounts, against the fees and charges, to the trustee appointed according to this Section, at any time, after he performs his tasks, by deduction from the amount lodged for the fees and charges.

  3. Every interested party may lodge grievance to the Court regarding the estimation of fees and charges of the trustee. The lodging of grievance shall not entail the suspension of procedures. The Court shall decide on the grievance within (5) five business days from the date of lodging and the decision in this regard shall be final.

  4. If the lodged amount or the provided bank guarantee is insufficient to meet the fees and charges, the Court shall order the debtor to lodge the difference during the specified period, or the Court may judge the termination of the preventive composition procedures.

 

Article (21)

  1. The Court may, of its own volition, substitute the trustee, if necessary. The creditor or the debtor has the right to request the court to substitute the trustee, if he can prove that the continuity of his appointment may prejudice interests of the debtor or the creditors. Any substitute trustee shall be appointed in the same

way followed for the trustee’s appointment in to this Decree Law. The substituted trustee shall cooperate as necessary to enable the substitute trustee to perform his tasks.

  1. The trustee may request the Court to relieve him of his tasks. The Court may accept same and appoint a substitute. The Court may specify fees for the trustee, whom the Court accepted his request, against the performed services.

 

Chapter 3

Inventory of the Debtor’s Properties Article (22)

  1. Upon his appointment, the trustee shall conduct inventory for the properties of the debtor, in presence of the debtor or his representative, having been notified. A report shall be executed containing the taken procedures including a list of inventory signed by the trustee and the debtor, in case of his presence, and a copy thereof shall be delivered to the Court.

  2. The trustee may request the Court to issue an order to affix or remove seals on any properties of the debtor.

  3. The properties, subject of inventory, shall exclude rights of the beneficiaries to retirement pension of the debtor, whether acquired before or after the date of the decision of commencement, and shall remain their property.

 

Article (23)

  1. The Court shall provide the trustee, upon his appointment, with all information available with the Court regarding the debtor.

  2. The debtor shall provide the trustee with any further details related to the requested composition procedures, within the period of time set by the trustee.

 

Article (24)

  1. The trustee shall prepare a record where all creditors of the debtor, known to him, are listed. An updated copy of entries of this record shall be submitted to the Court.

  2. The trustee shall note down the following in the record:

    1. Address, and amount of claim and its date of maturity of every creditor.

    2. Identify the creditors of debts backed up by a pledge or lien together with the details of the guarantees of each and the estimated value of such guarantees, in case of enforcement.

    3. Any setoff application submitted according to Chapter 5 of Section 5 of this Decree Law.

    4. Any other data the trustee thinks necessary to perform his tasks.

 

Article (25)

  1. The trustee may request any data or information related to the properties or business of the debtor from any person might have such information.

  2. Every person has information regarding the properties or business of the debtor shall give the trustee the necessary requested information, including any documents and accounts’ books pertinent to the debtor. The trustee shall keep confidential any information related to the debtor, if such disclosure is detrimental to the debtor. The trustee shall abstain from disclosing same beyond the scope of the preventive composition procedures.

  3. If such person rejects tocooperate with the trustee by providing him with the requested information, the trustee may submit the matter to the Court to decide the amount of information that can be requested and order its provision to the trustee.

 

Article (26)

  1. The debtor or any of his staff shall, during the preventive composition procedures, manage the business of the debtor, under supervision of the trustee.

  2. The trustee may request the debtor to make all necessary dispositions to maintain interests of the debtor and his creditors, during the preventive composition procedures.

  3. During the performance of his duties, the trustee may make the following actions and dispositions on behalf of the debtor, whenever such actions and dispositions fulfill the purpose of the preventive composition, having attained the consent of the debtor or the permission of the Court: a. Hold any of properties of the debtor in possession.

    1. Request verification and proving the title of the debtor to any properties.

    2. Appraise the properties of the debtor and submit a report thereof to the court.

    3. Collect any monies or rights on behalf of the debtor.

    4. Conclude or maintain any insurance policies necessary to continue the practice of business of the debtor.

    5. Pay any amounts or discharge any claims that must be paid or discharged as part of executing the preventive composition scheme.

    6. Hire any properties of the debtor or terminate lease contracts and lease any properties, if necessary.

    7. Enter on behalf of the debtor into any arrangement, quittance or settlement with one or more of creditors of the debtor.

    8. Obtain any guarantee which the debtor neglected to obtain or renew.

    9. Any other works that fulfill the purpose of preventive composition and approved by the Court.

 

Article (27)

  1. The Court may decide to suspend any of the works of the debtor, based on an urgent application submitted by the trustee.

  2. The Court shall finally decide on the partial suspension, based on the report of the trustee, after the lapse of a period of not more than the Court’s approval period to the preventive composition scheme draft, according to Chapter 10 of this Section.

 

Article (28)

  1. The trustee may apply to the Court, on behalf of the debtor, to permit him to have a new finance with or without guarantee, during the preventive composition procedures to secure the continuity of business of the debtor, according to the provisions of Chapter 4 of Section 5 of this Decree Law.

  2. Any guarantees on the properties of the debtor, after the decision of initiating preventive composition procedures, shall not be enforced unless taken based on a prior permission of the Court.

 

Chapter 4

Appointment of Supervisors

Article (29)

  1. The Court may appoint one supervisor or more from the creditors nominating themselves for appointment as supervisors to supervise the execution of the preventive composition procedures. If there are two nominated creditors of the holders of ordinary debts and holders of debts backed up by a pledge or lien, at least one supervisor shall be appointed for each group.

  2. If there are many creditors apply for appointment as supervisors from one group, the Court shall choose whoever it thinks fit. The Court shall take into consideration the level of their representation of the number of creditors and the amount of debt represented by each nominee to be appointed as a supervisor.

  3. Every supervisor may be represented by one of his employees or his legal representative.

  4. If the debtor is subject to a competent controlling body, the Court may appoint a supervisor from this body, at such body’s request.

  5. The supervisor or the representative of the juristic person appointed as a supervisor shall not be a spouse, relative by marriage or up to the fourth degree relative of the debtor.

  6. No fees shall be charged, and no liability shall be assumed by the supervisor except for his fatal or intentional mistake in the course of performance of his tasks.

  7. The debtor or any creditor may lodge grievance to the Court in respect of the appointment of the supervisor or his representative. The grievance shall not entail the suspension of procedures. The Court shall decide on the grievance within (5) five business days from lodging. The Court’s decision shall be final in this regard.

  8. The Court may, on its own initiative or at request of the trustee, remove the supervisor and appoint a substitute supervisor.

  9. The Court may relieve the supervisor from his tasks, at his request, and appoint a substitute supervisor.

 

Article (30)

The supervisor shall assist the trustee and the Court and serve the general interest of the creditors. The supervisor shall follow up the satisfaction of conditions of the preventive composition scheme and notify the Court of any breach of such conditions.

 

Chapter 5

Restriction of Disposition of Properties

Article (31)

1. As of the date of the decision of the procedures commencement, the debtor shall not:

  1. Pay any claims arising before the issue of the commencement decision, except any setoff payments made according to Chapter 5 of Section 5 of this Decree Law.

  2. Dispose of any properties or borrow any amounts except under the provisions of this Decree Law and in the usual course of the debtor’s works, having attained the prior consent of the trustee or the Court.

  3. Dispose of stock or shares of, or change the ownership or legal form of the company, if the debtor is a juristic person.

2. The Court shall judge the non-enforcement of any disposition by the debtor, at request of any interested party, in breach of paragraph (1) of this Article.

Chapter 6

Suspension of Judicial Proceedings and Interest Effectiveness

Article (32)

  1. In the cases other than those provided in this Decree Law, the issue of the procedures commencement decision until the approval of the preventive composition scheme, shall result in the suspension of the judicial claims and proceedings and the judicial enforcement procedures over the properties of the debtor, unless otherwise is decided by the Court.

  2. By way of exception from paragraph (1) of this Article, the creditors holding debts backed up by a pledge or lien may enforce over their guarantees whenever their debts fall due. The Court shall consider granting permission within (10) ten business days from the date of application. The consideration of the permission application shall require no notice or exchange of memoranda. The Court shall, upon granting the permission, verify that there is no collusion between the debtor and the guaranteed creditor and the degree of priority of the guaranteed creditor, if there are many guaranteed creditors for the same property.

  3. The decision of the Court that rejects the permission may be contested before the competent Court of Appeal. The contestation shall not result in the suspension of the preventive composition procedures. The decision issued on the contestation shall be final and conclusive.

 

Article (33)

The decision of procedures commencement of the approval of the preventive composition scheme shall not cause the debts owed by the debtor to fall due or suspend the interests’ effectiveness.

 

Chapter 7

Performance of Obligations and Contracts

Article (34)

  1. Subject to Articles (26) and (31) of this Decree Law, the issue of commencement decision shall not rescind or terminate any effective contract between the debtor and the contracting party. The contracting party shall perform his contractual obligations unless he obtains a judgment of stay of execution, due to the failure of the debtor to perform his obligations, before the date of issue of the procedures’ commencement decision.

  2. At request of the trustee, the court may order the rescission of an effective contract to which the debtor is a party, if necessary to enable the debtor to transact his business; or if such rescission would fulfill interest of all creditors of the debtor and would not fatally prejudice the interests of the party contracting with the debtor.

  3. If the debtor owns common properties, the trustee or any of the partners in the common properties may request the division of properties, even if there is an agreement among them that does not permit the division. Any partner may have propriety over the other, if he wishes to purchase the share of the debtor against equitable consideration, as decided by the Court.

 

Chapter 8 Preventive Composition Procedures and Claims

 

Article (35)

The trustee shall within (5) five business days from the date of being notified of the decision of his appointment:

 

  1. Publish summary of the decision issued on initiating the preventive composition procedures in two widely spread daily local newspapers, one issued in Arabic and the other issued in English. The publication shall include the invitation of the creditors to file their claims and the supporting documents within not more than (20) twenty business days from the date of publication.

  2. Notify all creditors of known addresses to provide him with the claims and documents within (20) twenty business days from the publication of the summary of decision of initiating preventive composition procedures.

 

Article (36)

  1. All creditors shall deliver to the trustee, within the period provided in Article (35) of this Decree Law, the documents of their debts together with stating those debts and its guarantees, if any, its maturity dates and amounts denominated in the national currency on the basis of the prevailing exchange rate on the day of issue of initiating the procedures decision.

  2. The trustee may request the creditor who files his claims to provide clarifications about the debt, complete his documents or determine its amount or characters. The trustee may further request the certification of any claims by the auditor or the accountant of the creditor.

 

Article (37)

  1. The trustee shall, after the expiration of the term specified in Article (35) of this Decree Law, develop a list of names of the creditors who filed their claims and a statement of the amount of each debt apart, the supporting documents, guarantees if any, his opinion whether to accept, amend or reject the debt and his propositions regarding the way of repayment, if possible. The trustee shall lodge this list at the Court within (10) ten business days from the expiration date of the period specified in Article (35) of this Decree Law. When necessary, such period may be extended for a similar period for once, by decision of the Court.

  2. The trustee shall, within (3) three consecutive business days referred to in paragraph (1) of this Article, publish the list of debts and the statement of amounts accepted from each debt, in two widely spread local daily newspapers, one issued in Arabic and the other in English.

 

Article (38)

  1. The debtor and every creditor, whether his name is mentioned in the list of debts or not, may object to the list within (7) seven business days from the date of publishing the list in the newspapers. This shall not entail the suspension of the preventive composition procedures.

  2. The Court shall decide on the objection submitted under paragraph (1) of this Article within (10) ten business days from the date of submission.

  3. The decision issued by the Court may be contested before the competent Court of Appeal within (5) five business days from the date of issue of the decision. The contestation shall not result in the suspension of the preventive composition procedures. The decision issued on the contestation shall be final.

  4. Before deciding on the contestation, the Court may admit the debt temporarily and inform the trustee thereof.

  5. The debt shall not be temporarily admitted, if a criminal action is filed in its regard.

  6. If the objection is related to the debt guarantees, it shall be temporarily admitted as an ordinary debt.

  7. The portion of the temporarily admitted debt in the proceeds of selling the guaranteed properties shall be maintained. Upon making any distribution to the creditors, according to the provisions of this Decree Law,

and if the Court decides not to recognize the temporarily admitted debt or the debt is reduced, the maintained portion shall be returned insofar its rate to the general guarantee of the creditors.

  1. The Court shall approve a list of names of the creditors whose debts are finally or temporarily admitted.

 

Article (39)

  1. Unless for acceptable reasons evaluated by the trustee and the Court, the creditor who fails to present the documents of his debts during the specified period in Article (35) of this Decree Law shall not be engaged in the preventive composition procedures. The creditors whose debts are not finally admitted shall not be engaged in the preventive composition procedures.

  2. By way of exception from paragraph (1) of this Article, the creditor who fails to present the documents of his debts during the specified period in Article (35) of this Decree Law may present same to the trustee to accept the debt supporting documents and to be engaged in the procedures, for accepted reasons. The consent of the trustee to same shall be approved by the Court. If the trustee rejects or fails to reply within (3) three business days, the creditor may apply to the Court to accept the submission of the debt supporting documents. The Court shall promptly, after consulting with the trustee, consider the application and issue decision within (7) seven business days from the date of the application submission. If the Court orders the admission of debt, it may assign the trustee to submit a report on the effect of the new debt on the scheme project. The result shall be submitted to the Court for approval. In all events, the procedures described in this paragraph shall not suspend the preventive composition procedures.

 

Chapter 9 Preventive Composition Scheme Article (40)

  1. The debtor shall assist the trustee to prepare the preventive composition scheme draft and submit it to the Court within (45) forty five business days from the date of publishing the decision of initiating preventive composition procedures. At request of the debtor or the trustee, the Court may extend this period for such period or periods which in total do not exceed (20) twenty business days. Periodical reports on the preparation of the scheme draft shall be submitted to the Court every (10) ten business days.

  2. The preventive composition scheme draft shall include the following:

  1. The possibility of the debtor’s business to re-generate profits.

  2. Activities of the debtor that must be suspended or terminated.

  3. Terms and conditions of settlement of any liabilities.

  4. Any performance bonds that may be requested from the debtor, if any.

  5. Any proposal to purchase all or part of business of the debtor, if any.

  6. Grace periods and payment deductions.

  7. The possibility of converting the debt to share capital of any draft.

  8. Any proposal to consolidate, create, redeem, sell or replace any guarantees, if necessary, to implement the scheme draft.

  9. The scheme implementation period, subject to paragraph (1) of this Article.

3. The trustee may insert any other matters useful in implementation of the scheme draft in the preventive composition scheme.

 

Article (41)

The preventive composition scheme shall include a timetable for implementation of not more than (3) three years from the date of approving the scheme by the Court. The scheme may be extended for a similar term, by consent of the majority of the creditors holding two thirds of the debts which are not paid according to the scheme and any amendments made thereto.

 

 

Article (42)

  1. The Court shall, within (10) ten business days from the date of submission of the preventive composition scheme, review the scheme draft to verify that the scheme observes the interest of all parties. The Court may request the trustee during this period to make any necessary amendments to the scheme draft and return it to the Court within not more than (10) ten business days from the date of being notified of the Court’s request, renewable for a similar period and for once.

  2. If the Court is satisfied with the scheme draft, it shall request the trustee within (5) five business days to invite the creditors to meeting to discuss and vote on the preventive composition scheme draft. The trustee shall furnish the creditors whose debts are admitted with a photocopy of the preventive composition scheme draft.

  3. The invitation to the meeting referred to in paragraph (2) of this Article shall be made through publication in two widely spread daily local newspapers, one issued in Arabic and the other issued in English. The invitation shall specify the place and time of meeting. The Court may additionally assign the trustee to direct the invitation of meeting in all possible communication means.

  4. The meeting shall be convened within (15) fifteen business days from the date of directing the invitation by publication, as determined by the Court, in consistency with the interest of the preventive composition procedures.

  5. The Court may decide to invite the creditors to other meetings in the same procedures or postpone the meeting of the creditors, taking into consideration the number of known creditors and any other circumstances of significance to convening the meeting.

  6. If the debtor is subject to a competent controlling body, the Court shall invite such body to attend the meetings.

 

Article (43)

  1. After consulting with the trustee, the Court may issue a decision of forming one committee or more of the creditors, holders of ordinary debts, and one committee or more of the creditors, holders of the debts guaranteed by pledge or lien. The Court may form one committee or more of the holders of bonds and instruments for purpose of discussing the preventive composition scheme and proposing amendments thereto at the meetings convened according to Article (42) of this Decree Law.

  2. Every committee may choose a representative from the creditors or from the legal or financial advisors and determine the questions authorized to him, according to the provisions of this Decree Law. All correspondencesrelated to the meeting shall becommunicated to the representative ofeach committee. The committee shall be responsible for notifying the related creditors of such procedures.

  3. On proposition of the trustee, the Court may limit the powers of the representative chosen or relieved of his tasks, if the Court finds that the powers conferred upon him are broad and detrimental to interest of the creditors.

  4. The Court may re-form any of the committees referred to in paragraph (1) of this Article, if it thinks necessary.

 

Article (44)

  1. The trustee and the debtor shall explain the items of the preventive composition scheme draft during the meetings convened to discuss the scheme.

  2. Any creditor may propose at the meetings convened for voting on the preventive composition scheme draft making any amendments thereto. The committee before which the amendment is made and any other committee affected by the proposed amendment shall express its opinions regarding such amendments.

  3. The Court may invite the creditors for further meetings to consider the proposed amendments. The Court may approve or reject any of the proposed amendments in preparation for the approval of the preventive composition scheme draft, according to Article (49) of this Decree Law.

 

Article (45)

  1. The right to vote on the preventive composition scheme draft shall be confined to the ordinary creditors whose debts are finally admitted.

  2. By way of exception from paragraph (1) of this Article, the Court may permit the creditors whose debts are temporarily admitted to vote on the preventive composition scheme draft, on proposition of the trustee. The Court shall in its decision specify the conditions and limits of granting this permission.

 

Article (46)

 

  1. The creditors, holders of debts guaranteed by pledge or lien, shall not vote on the preventive composition scheme by their guaranteed debts, unless they assign such guarantees in advance. The assignment shall be taken down in the minutes of meetings.

  2. If one of the creditors referred to in paragraph (1) of this Article takes part in voting on the preventive composition scheme, without declaring the assignment of his guarantees, this shall be considered an assignment of such guarantee.

  3. The assignment of guarantee shall be final only if the preventive composition scheme is approved. If the composition is invalidated, the assigned guarantee shall be returned.

 

Article (47)

  1. The preventive composition scheme draft shall be approved by the majority of the creditors whose debts are finally admitted and the creditors whose debts are temporarily admitted and permitted to vote. Such majority shall hold minimum two thirds of total ordinary admitted debts.

  2. If either of the two majorities referred to in paragraph (1) of this Article is not fulfilled,the meeting shall be postponed for (7) seven business days.

  3. If either of the two majorities after extension according to in paragraph (2) of this Article is not fulfilled, this shall be considered a rejection of the preventive composition scheme.

  4. The creditors who attended or were represented at the first meeting and voted by consent to the preventive composition scheme may be absent at the second meeting. In this case, their consent to the preventive composition scheme at the first meeting shall be outstanding and enforced and complements the quorum at the second meeting, unless they attend the meeting and retract their previous consent or a change is made to the composition scheme.

  5. Minutes of the meeting of voting on the preventive composition scheme shall be executed. The minutes shall be signed by the trustee, the debtor and the present creditors permitted to vote. If either of them rejects the signature, his name shall be mentioned in the minutes and the reason of rejecting the signature.

  6. All creditors who take part in voting on the preventive composition scheme draft shall provide the trustee with the addresses for notification including the email addresses. Notification made through such means shall produce its legal effects, in connection with all subsequent procedures.

  7. The scheme clauses shall apply to the creditors who voted by rejection.

 

Article (48)

The joint debtors with the debtor or his guarantors in the debt shall not utilize the preventive composition. However, if the composition is concluded with a company, the partners held liable in all their properties for the debts of the company shall make benefit of its conditions, unless otherwise is provided in the composition.

 

Chapter 10

Approval and Implementation of the Preventive Composition Scheme Article (49)

  1. The trustee shall, within (3) three business days from the date of meeting at which the voting by the required majority on the preventive composition scheme is made, lay the scheme draft before the Court to issue its decision either to approve or reject the scheme.

  2. Any creditor, whose debt is admitted and rejects the scheme in the vote, may object to the draft submitted to the Court within (3) three business days from the expiration date of the intermission specified in paragraph (1) of this Article. The Court shall decide on the submitted objection within (5) five business days from the date of submitting the objection. The Court’s decision in this regard shall be final.

  3. The Court shall urgently issue its decision of approving the preventive composition scheme, having verified that all conditions are satisfied. The Court may advance the maturity dates of paying dues of the creditor who accepts reduction of his debt, in a way that fulfills the interest of the preventive composition scheme. The Court’s decision shall be binding to all creditors.

  4. The Court shall verify that the preventive composition scheme secures that all affected creditors receive at least the amounts they would have received, if the properties of the debtor are liquidated on the date of voting on the scheme, as evaluated by the Court for such properties.

  5. The preventive composition scheme shall not affect the right of priority of the debts guaranteed by pledge or lien, in the way provided in this Decree Law.

 

Article (50)

  1. If the Court disapproves the preventive composition scheme, the scheme shall be returned to the trustee for amendment within (10) ten business days from the date of being disapproved, then shall be submitted to the Court to approve it or decide initiating the debtor’s declaration of bankruptcy procedures, according to this Decree Law.

  2. The debtor or any of the creditors, whose debts are finally admitted, may submit a grievance to the Court against its decision of disapproving or amending the scheme. The Court shall decide on the grievance within (10) business days from the date of grievance. The Court’s decision shall be final.

 

Article (51)

  1. The debtor may offer his creditors an alternative guarantee equivalent to the outstanding guarantee. If the creditors reject such offer, the Court may order the replacement of the guarantee, if the Court finds that the alternative guarantee is equal in value to the outstanding guarantee and is not detrimental to the interest of the creditor to whom the alternative guarantee is offered.

  2. The decision issued by the Court may be contested before the competent Court of Appeal within (5) five business days from the date of issue of the decision. The contestation shall not result in the suspension of the procedures. The decision issued on the contestation shall be final.

 

Article (52)

  1. The trustee shall verify that any properties of the debtor, decided to be sold under the preventive composition scheme, shall be sold at the best price that can be obtained under the prevailing circumstances in the market on the date of sale. The trustee shall deposit, in the bank account determined by the Court, the sale proceeds representing the value of claims backed by the sold properties.

  2. Upon approval of the preventive composition scheme, the trustee shall pay the creditors of guaranteed debts their debts upon maturity from the sold properties according to paragraph (1) of this Article, from the revenues of selling such properties, based on their priorities.

 

Article (53)

 

  1. If certain properties of the debtor are considered substantial to continue his business, the Court may order that neither of such properties shall be disposed of, without obtaining the Court’s approval, for a specific period that does not exceed the period of the preventive composition scheme. If such properties are subject to guarantee, the Court may replace the guarantee, according to the provisions of this Decree Law.

  2. Each interested party may apply to the Court to annul any disposition made in breach of paragraph (1) of this Article within (3) three years from the date of issue of the Court’s decision or from the date of approving the preventive composition scheme, whichever is later.

Article (54)

The trustee shall, within (7) seven business days from the date of approving the preventive composition scheme by the Court, register the Court’s decision of the scheme approval in the commercial or professional registration of the debtor, as the case may be, and publish the decision in two widely spread local daily newspapers, one issued in Arabic and the other issued in English. The decision shall include a summary of the most important conditions of the composition scheme, the name, address and registration number of commercial or professional registration of the debtor, as the case may be, and the date of approving the scheme.

 

 

Article (55)

  1. The trustee shall supervise the preventive composition scheme throughout the period of implementation.

  2. The trustee shall:

    1. Monitor the progress of the scheme and inform the court of any failure of implementation.

    2. Submit a report to the Court on the progress of implementing the scheme every three months. Every creditor has the right to receive a photocopy of the report.

  3. If the trustee thinks the necessity to make amendments to the preventive composition scheme during its implementation, and such amendments would cause a change to the right or duties of any party thereto, the approval of the Court to such amendments shall be attained. The court shall, before deciding on the application, notify all parties who took part in voting on the scheme and any creditors the Court thinks necessary to notify, within (5) five business days from the date of the request of the trustee to express any remarks on the required amendments, within (10) ten business days from the date of notice. The Court may issue decision of approving in whole or part, or rejecting the amendment.

 

Article (56)

Upon the discharge of all obligations provided in the preventive composition scheme, the Court shall at request of the trustee, the debtor or any interested party, issue its decision of the complete implementation of the preventive composition scheme. This decision shall be published in two widely spread daily newspaper, one issued in Arabic and the other issued in English.

 

 

Article (57)

In case of death of the debtor after the issue of decision of initiating procedures, the successors of the debtor or their representative may replace the debtor in the perfection of the preventive composition procedures.

Chapter 11 Nullification and Rescission Article (58)

If investigation with the debtor is initiated in one of the crimes described in Section 6 of this Decree Law, or a criminal action is filed against him in those crimes after approving the preventive composition scheme, the Court that judged the approval of the scheme may, at request of every interested party, take necessary measures to attach the properties of the debtor. Such measures shall be cancelled, if it is decided to close investigation or the acquittal of the debtor is judged.

 

 

Article (59)

  1. Every interested party may apply to annul the preventive composition scheme procedures, within (6) six months from the date of initiating the investigation provided in Article (58) of this Decree Law, or the application shall be rejected. In all cases, the preventive composition annulment application shall be rejected, if submitted after the expiration of two years from the date of issue of the preventive composition scheme approval decision.

  2. The preventive composition scheme shall be null and void, if a judgment convicting the debtor in one of the crimes described in Section 6 of this Decree Law is delivered after approving the scheme, unless the Court otherwise decides to protect interest of the creditors.

  3. The annulment of preventive composition scheme procedures shall result in the clearance of the good faith guarantor who guarantees the satisfaction of all or part of the scheme conditions.

 

Article (60)

  1. Any creditor may request the Court that approved the preventive composition scheme to rescind the preventive composition scheme, if the debtor fails to satisfy its conditions or is deceased and its satisfaction becomes impossible for any reason.

  2. The rescission of the preventive composition scheme shall not result in the clearance of the guarantor who guarantees the satisfaction of its conditions. The guarantor shall be ordered to appear at the hearing where the application of rescission is heard.

 

Article (61)

The Court shall provide in its judgment, issued on the annulment of the preventive composition scheme procedures or rescission of the preventive composition scheme, affixation of seals to the properties of the debtor, except the properties that cannot be legally attached and the subsidy established for the debtor and his dependents. The Court shall assign the trustee, within (5) five business days from the date of delivery of the annulment or rescission judgment, to publish the summary of judgment in two widely spread local daily newspapers, one issued in Arabic and the other issued in English. The trustee shall undertake a supplementary inventory of properties of the debtor.

 

Article (62)

The dispositions made by the debtor, after the issue of the decision of preventive composition scheme approval and before the annulment of procedures or rescission of preventive composition scheme, shall be enforced against the creditors. The creditors may request the non-enforcement of such dispositions only according to the rules described in the Civil Transactions Law in respect of the disposition non-enforcement action. Such action shall not be heard after the expiration of two years from the date of annulment of procedures or rescission of the preventive composition scheme.

 

 

Article (63)

The annulment of procedures or rescission of preventive composition scheme shall not result in obligating the good faith creditors to return the amounts paid from the debts before judging the annulment or rescission. Such amounts shall be deducted from their debts.

 

 

Chapter 12

Judging the Termination of Preventive Composition Procedures and Conversion of Procedures into

Declaration of Bankruptcy and Liquidation of Properties

 

Article (64)

 

The Court shall deliver a judgment terminating the preventive composition procedures, declaration of bankruptcy, and liquidation of properties of the debtor, according to Chapter 12 of Section 4 of this Decree Law, upon judging the annulment of the preventive composition procedures or rescission of the preventive composition scheme, according to this Chapter.

 

Article (65)

The Court may, on its own initiative or at request of an interested party, decide to terminate the preventive composition procedures and convert the preventive composition procedures into procedures of declaration of bankruptcy of the debtor, according to Section 4 of this Decree Law, in the following two cases:

 

  1. If the debtor is evidently in default of payment for over (30) thirty consecutive business days due to his shaken financial position or being in the condition of account receivable on the date of initiating the preventive composition procedures, or if this is revealed to the Court during the implementation of the preventive composition scheme.

  2. If the application of the preventive composition scheme is impossible and the termination of the preventive composition procedures leads to the cessation of repayment for over (30) thirty consecutive business days, due to his shaken financial position or being in the condition of account receivable.

Article (66)

If the Court decides the termination of the preventive composition procedures, declaration of bankruptcy and liquidation of properties of the debtor according to Article (64) of this Decree Law, or conversion of the preventive composition procedures according to Article (65) of this Decree Law, this shall result in the following:

 

  1. The appointment of the composition trustee shall be terminated, unless the Court decides his continuity as a trustee in bankruptcy and liquidation of properties according to Articles (82) and (126) of this Decree Law.

  2. The Court that decides the termination of preventive composition procedures according to Articles (64) and (65) of this Decree Law shall continue to consider the procedures of declaration of bankruptcy and liquidation of properties of the debtor.

 

Section 4 Bankruptcy

 

Article (67)

The procedures set out in this Section shall regulate the following:

  1. The debtor’s restructuring, if possible, by assisting him to apply the business restructuring scheme.

  2. Declaration of bankruptcy and fair liquidation of properties of the debtor to discharge his obligations.

 

Chapter 1

Application for Initiation of Bankruptcy Procedures

 

Article (68)

  1. The debtor shall apply to the Court to initiate procedures, according to this Section, if he ceases repayment of his debts on the maturity dates for over (30) thirty consecutive business days due to his shaken financial position or being in the condition of account receivable.

  2. If the debtor is subject to a competent controlling body, the debtor shall notify such body of his desire to submit the application referred to in paragraph (1) of this Article, (15) fifteen business days before the date of the application submission. The competent controlling body may submit any documents or pleas, in this regard, to the Court.

 

Article (69)

  1. The creditor or group of creditors holding an ordinary debt of at least AED (100,000) one hundred thousand Dirhams may apply to the Court to initiate the procedures, according to this Section, if the creditor previously notified the debtor in writing to discharge the due debt and the debtor fails to repay same within (30) thirty consecutive business days from the date of being notified.

  2. On recommendation of the Minister, the Cabinet may issue a resolution of amending the amount of debt referred to in paragraph (1) of this Article.

Article (70)

If any of the creditors retracts his request to receive a due payment before initiating procedures, the debtor shall not be considered in this case to be in default of repayment, in connection with this due payment.

 

Article (71)

If the debtor is subject to a competent controlling body, the application may be submitted to the Court according this Section by such body, provided that such body provides the proof that the debtor is in the condition of account receivable.

 

Article (72)

For sake of public interest exigencies, the Public Prosecution may request the Court to initiate procedures, according to this Section, provided that the Prosecution proves that the debtor is in the condition of account receivable.

 

Article (73)

1. The application shall be submitted by the debtor or the competent controlling body to the Court in which the reasons of application are stated. The following documents shall be attached to the application:

  1. A memorandum of brief description of the debtor’s economic and financial position and information of his properties in addition to detailed data of his employees.

  2. Certified copy of the trade, industrial or professional license and commercial registration of the debtor issued by the competent authority in the Emirate.

  3. Photocopy of the commercial books or financial statements of the debtor’s business for the fiscal year that precedes the application submission.

  4. A report that states:

    1. the debtor’s cash flow projections and loss and profit projections for the twelve months period following the application submission.

    2. List of names of the debtor’s known creditors including their addresses, rights or debts and the provided guarantees, if any.

    3. Detailed statement of movable and immovable properties of the debtor and the estimated value of each property, on the date of application submission, and any resulting third party guarantees or rights.

  5. Designation of a trustee nominated by the debtor to handle the procedures, according to the provisions of this Decree Law.

  6. If the applicant is a company, a photocopy of decision of the competent body in the company that authorizes the applicant to submit the application of initiating procedures and photocopy of the company’s incorporation documents and any amendments made thereto lodged at the competent authority in the Emirate, shall be attached to the application.

  7. Any other documents that support the application submission.

  8. A report issued by the body in charge of credit information in the state.

 

  1. If the applicant cannot submit any of the data or documents required in paragraph (1) of this Article, the reasons shall be stated in the application.

  2. If the Court finds that the provided documents are insufficient to decide on the application, it may grant the applicant an intermission to provide any further data or documents to support his application.

 

Article (74)

The application shall be submitted by the creditor to the Court with the following documents attached:

  1. Copy of the notice referred to in paragraph (1) of Article (69) of this Decree Law.

  2. Any data related to the debt inclusive the amount of debt and any available guarantees.

 

Article (75)

  1. If the debtor is a company, the application may be submitted, even if the company is in the liquidation condition or its termination is judged and continues in actual way.

  2. The submission of the application of initiating procedures according to paragraph (1) of this Article shall suspend deciding on every application which subject is the liquidation or placement of the company under receivership.

 

Article (76)

Except the applications submitted by the Public Prosecution, the applicant shall bring into the Court an amount of money or a bank guarantee of not more than (20) thousand Dirhams in such way and on such date determined by the Court to meet the expenses and costs of initial procedures of deciding on the application. The Court however may postpone lodging the amount or the guarantee referred to, if the necessary liquidity is not available with the debtor for lodging on the date of the application submission.

 

Chapter 2 Deciding on Applications

 

Article (77)

  1. The Court may appoint one of the experts enrolled in the table of experts or other, if the Court fails to find a person of the required experience, to assist the Court to evaluate the position of the debtor. The Court shall determine in the same decision the tasks and fees of the expert and the period during which the report must be submitted which shall not exceed (10) ten business days from the date of decision of his appointment.

  2. The appointed expert shall prepare a report on the financial position of the debtor, during the period specified by the Court, including his opinion in the possibility of the debtor’s restructuring and whether the properties of the debtor are sufficient or insufficient to cover the costs of restructuring.

 

Article (78)

  1. The Court shall decide on approving the application without litigation within not more than (5) business days from the date of submitting the application that satisfies conditions or from the date of submitting the expert report, as the case may be.

  2. If the Court approves the application, the procedures shall be initiated, if the Court finds that the necessary conditions are satisfied, according to this Section.

 

Article (79)

The Court shall reject the application if the documents and data provided in Articles (73) and (74) of this Decree Law are not provided, or if provided incomplete without reason, unless the Court decides to accept the application on the conditions it thinks appropriate, in observation of interest of the creditors.

Article (80)

  1. The court may summon any person who has information related to the application. The said person shall provide the court with any reasonable information requested by the court.

  2. The Court may decide to intervene any natural or juristic person in the procedures prescribed in this Section on such conditions that secure appropriate and adequate protection of the creditors, if the properties of such person are associated with the properties of the debtor in a way that cannot be easily separated; or if the Court considers that it shall not be practical or feasible in terms of cost to initiate separate proceedings in connection with those persons.

  3. The decision of intervention issued by the Court may be contested before the competent Court of Appeal. The contestation shall not result in the suspension of procedures. The decision issued on the contestation shall be considered final.

 

Article (81)

  1. The Court that considers the application may decide, at request of any interested party or on its own initiative, to take the necessary measures to maintain or manage any properties of the debtor, including affixation of seals to the headquarters of business of the debtor, until the application is decided on.

  2. The Court may decide the continuous effectiveness of any measures of the kind or decide taking any further interim measures.

 

Chapter 3 Appointment of Trustee and Supervisor

 

Article (82)

  1. If the Court decides to accept the application submitted according to this Section, the Court shall appoint in its decision one of the experts designated according to paragraph (1/e) of Article (73) of this Decree Law or from the natural or juristic persons enrolled in the table of experts or other, if the Court fails to find a person of the required expertise.

  2. The Court may, on its own initiative or at request of the debtor or the supervisor, appoint more than one trustee provided that their number shall not exceed three trustees concurrently.

  3. If more than one trustee is appointed, they shall jointly perform their tasks and their decisions shall be taken by majority. In case of tie, the question shall be referred to the Court to be decided. The Court may divide the tasks among the appointed trustees and determine the way of their work, whether jointly or severally.

  4. If the Court appoints a juristic person as a trustee, the trustee shall designate one representative or more to handle the tasks of the trustee. Such representative shall be enrolled in the table of experts, according to the provisions of this Decree Law.

  5. The Court may decide that the preventive composition trustee continues to handle the task of the trustee, according to this Section. The Court may further appoint other trustees or remove any of them, according to this Section.

  6. The Court shall notify the appointed trustee of the decision of his appointment on a date no later than the day following the issue of decision.

  7. The debtor or any creditor may lodge grievance against the decision of the Court in respect of the trustee appointment within (5) five business days from the date of publication made according to Article (88) of this Decree Law, before the competent Court that issues its decision regarding the grievance within (5)

five business days without pleading. The decision in this regard shall be final. The grievance shall not suspend any of the procedures set out in this Section.

 

Article (83)

The trustee appointed according to this Section may apply to the Court to request whatever may assist him to perform his task perfectly, including the application of appointment and delegation of one expert or more from the table of experts to assist him in any of the matters falling within his competency. The Court may appoint an expert who is not enrolled in the table, if required. On recommendation of the trustee, the Court shall define the task and fees of the expert.

 

Article (84) Trustees or experts shall not be one of the following persons:

 

  1. A creditor of the debtor.

  2. Spouse, relative by marriage or up to fourth degree relative of the debtor.

  3. Any person against whom a final judgment is delivered in a felony or misdemeanor of stealth, embezzlement, fraud in commercial transactions, breach of trust, fraudulence, forgery, false testimony or one of the crimes provided in this Decree Law, bribery or any misdemeanor affecting the national economy, even if rehabilitated.

  4. Any person who was a partner, employee, auditor or agent of the debtor, within the two years prior to initiating the preventive composition procedures.

 

Article (85)

 

  1. Any trustee and any expert appointed according to the provisions of this Section shall charge his fees against the performed tasks. The incurred charges shall be reimbursed from the properties of the debtor known to the Court. By decision of the Court, a payment of such fees and expenses may be disbursed.

  2. If the properties of the debtor are not identified or sufficient to meet such fees and charges, the trustee or the expert may apply to the chief justice to receive his dues from the Court’s treasury. In case any dues are paid from the Court’s treasury, the amounts paid by priority over all creditors from the initial amounts added to the properties of the debtor shall be recovered.

  3. Every interested party may lodge grievance to the Court regarding the estimation of fees of the trustee or the expert appointed according to this Section. The lodging of grievance shall not entail the suspension of procedures. The Court shall decide on the grievance within (5) five business days from the date of lodging and the decision in this regard shall be final.

 

Article (86)

 

1. The Court may, of its own volition, substitute the trustee appointed according to the provisions of this Section or any expert, or appoint additional trustees or experts, if required. The debtor has the right to apply to the court to substitute the trustee or the expert, if he can prove that the continuity of his appointment may prejudice interests of the creditors. The application shall not result in the suspension of procedures. Any substitute trustee or expert shall be appointed in the same way followed for their appointment in this Decree Law. The substituted trustee shall cooperate as necessary to enable the substitute trustee to perform his tasks.

The trustee may request the Court to relieve him of his tasks. The Court may accept same and appoint a substitute. The Court may specify fees for the trustee, whom the Court accepted his request, against the performed services.

 

Article (87)

 

The Court shall appoint supervisors to whom appointment and determination of tasks Section 3 of this Decree shall apply.

 

Chapter 4 Preparation of Creditors List

 

Article (88)

 

  1. The Court shall notify the trustee of the decision of his appointment on a date no later than the day following the issue of decision. The Court shall provide the trustee, upon his appointment, with all available information in respect of the debtor.

  2. The trustee shall within (5) five business days from the date of being notified of the decision of his appointment:

 

    1. Publish summary of the decision issued on initiating procedures in two widely spread daily local newspapers, one issued in Arabic and the other issued in English. The publication shall include an invitation of the creditors to file their claims and the supporting documents within not more than (20) twenty business days from the date of publication.

    2. Notify all creditors of known addresses to provide him with the claims and documents within (20) twenty business days from the publication of the summary of decision of initiating procedures.

  1. The debtor shall provide the trustee with any further details not notified to the Court, whether regarding his creditors or amounts of debts, details of any contracts in progress and any pending or current judicial proceedings to which the debtor is a party, during the period of time determined by the trustee.

 

Article (89)

 

  1. The trustee shall prepare a record where all creditors of the debtor, known to him, are listed. An updated copy of entries of this record shall be submitted to the Court.

  2. The trustee shall note down the following in the record:

    1. Address, and amount of claim and its date of maturity of every creditor.

    2. Identify the creditors of debts backed up by a pledge or lien together with the details of the guarantees of each and the estimated value of such guarantees, in case of enforcement.

    3. Any setoff application submitted according to Chapter 5 of Section 5 of this Decree Law.

    4. Any other data the trustee thinks necessary to perform his tasks.

 

Article (90)

The trustee may request any data or information related to the properties or business of the debtor from any person might have such information.

Every person hasinformation regarding the properties or business of the debtor shall give the trustee the information requested reasonably, including any documents and accounts’ books pertinent to the debtor. The trustee shall keep confidential any information related to the debtor, if the disclosure thereof is detrimental to the debtor. The trustee shall abstain from disclosing same beyond the scope of the restructuring procedures.

3. If such person rejects to cooperate with the trustee by providing him with the requested information, the trustee may submit the matter to the Court to decide the amount of information that can be requested and order its provision to the trustee.

 

Article (91)

 

  1. All creditors, even if their debts are not fall due or guaranteed by pledge or lien, established by final judgments, shall deliver the trustee within the period set out in the invitation directed to them, according to Article (88) of this Decree Law, the documents of their debts together with stating such debts and their guarantees, if any, maturity dates and their amount denominated in the national currency on the basis of the prevailing exchange rate on the day of issue of the decision.

  2. The trustee may request the creditor who filed his claims to provide clarifications about the debt, complete his documents or determine its amount or characters. The trustee may further request the certification of any claims by the auditor or the accountant of the creditor.

 

Article (92)

 

The creditor who received an advance payment on the account of his claim from the guarantors of the debtor shall deduct the amount received from any claim submitted to the trustee. Any guarantor of the debtor may file his claims to the trustee within limits of the amount paid to discharge the debt of the debtor.

 

Article (93)

 

  1. The trustee shall, after the expiration of the term specified in Article (88) of this Decree Law, develop a list of names of the creditors who filed their claims and a statement of the amount of each debt apart, the supporting documents, guarantees if any, his opinion whether to accept, amend or reject the debt and his propositions regarding the way of repayment, if possible. The trustee shall lodge this list at the Court within (10) ten business days from the expiration date of the period specified to the creditors to file their claims. When necessary, such period may be extended for a similar period for once, by decision of the Court.

  2. The trustee shall, within three business days following lodging, publish the list of debts and the statement of amounts admitted from each debt, in two widely spread local daily newspapers, one issued in Arabic and the other issued in English.

  3. The debts due to the government for taxes or charges of various kinds shall be considered admitted debts without the need for audit by the trustee.

 

Article (94)

The debtor and every creditor, whether his name is mentioned in the list of debts or not, may object to the listed claims within (7) sevenbusiness days from the date of publishing the list in the newspapers.

The Court shalldecide on the objectionsubmitted under paragraph (1) of this Article within (10) ten business days from the date of submission.

  1. The decision issued by the Court may be contested before the competent Court of Appeal. The contestation shall not result in the suspension of the procedures. The decision issued on the contestation shall be final.

  2. Before deciding on the grievance, the Court may admit the debt temporarily of an amount estimated by the Court and inform the trustee thereof.

  3. The debt shall not be temporarily admitted, if a criminal action is filed in its regard.

  4. If the grievance is related to the debt guarantees, it shall be temporarily admitted as an ordinary debt.

  5. The portion of the temporarily admitted debt in the proceeds of selling the guaranteed properties of the debtor shall be maintained. Upon making any distribution to the creditors, according to the provisions of this Decree Law, and if the Court decides not to recognize the temporarily admitted debt or the debt is reduced, the maintained portion shall be returned insofar its rate to the general guarantee of the creditors.

  6. The Court shall approve a list of names of the creditors whose debts are finally or temporarily admitted.

 

Article (95)

 

The creditor who fails to present the documents of his debts during the specified period in Article (88) of this Decree Law may present same to the trustee to accept the debt supporting documents and to be engaged in the procedures, for acceptable reasons. The consent of the trustee to same shall be approved by the Court. If the trustee rejects or fails to reply within (3) three business days from the date of application, the creditor may apply to the Court to accept the submission of the debt supporting documents. The Court shall promptly, after consulting with the trustee, consider the application and issue decision within (7) seven business days from the date of the application submission. If the Court orders the admission of debt, it may assign the trustee to submit a report on the effect of the new debt on the scheme draft. The result shall be submitted to the Court for approval. In all events, the procedures described in this paragraph shall not suspend the restructuring, or declaration of bankruptcy and liquidation of properties procedures, as the case may be.

 

Chapter 5 Trustee Report

 

Article (96)

 

The trustee shall prepare a report regarding the works of the debtor. A copy of the report shall be submitted to the Court within the period it specifies:

  1. Evaluation of the possibility of restructuring the business of the debtor and whether a restructuring scheme must be laid before the creditors of the debtor. In this case, a statement shall be attached to the report manifesting the readiness of the debtor to continue his business.

  2. Evaluation of the possibility to sell business of the debtor in whole or in part on “existing and transacted activity” basis, in case of declaration of bankruptcy and liquidation of properties of the debtor.

 

Article (97)

The Court shall review the report of the trustee within (10) ten business days from the date of submission to verify that the report includes all claims.

The period provided in paragraph (1) ofthis Article shall be interrupted, if the Court requests the trustee during this period to make necessary amendments to the report. The trustee shall make such amendments within not more than (10) ten business days from the date of being notified of the request of the Court. Such period shall be renewable by decision of the Court for similar period and for once.

3. The creditors, whose debts are finally or temporarily admitted, shall be provided by the trustee with a copy of the report within (3) three business days from the expiration date of the period set out in paragraph (2) of this Article in order to express their remarks on the report.

Chapter 6 Deciding on the Report

 

Article (98)

 

  1. The Court shall assign the trustee to invite the debtor and the creditors whose debts are finally or temporarily admitted and any appointed supervisor to attend a session or more to consider the report, within the (10) ten days following the period set out in paragraph (3) of Article (97) of this Decree Law.

  2. Invitation shall be made through publication in two widely spread local daily newspapers, one issued in Arabic and the other issued in English. The Court may additionally assign the trustee to direct the invitation in all possible communication means.

  3. Unless the Court judges the declaration of bankruptcy and liquidation of properties of the debtor, according to Chapter 12 of this Section, the Court may decide initiating the restructuring procedures and assign the trustee to prepare the debtor’s business restructuring scheme, according to Chapter 7 of this Section.

  4. The Court shall not decide the preparation of the debtor’s business restructuring scheme, unless the debtor shows his readiness to continue his business and the Court finds through the documents and data made available thereto, after hearing statements of the trustee, that there is a possibility that the business of the debtor re-generates profits during reasonable period proportionate to the size and nature of his business and amount of his indebtedness.

  5. The trustee shall publish the decision of the Court of initiating procedures within (5) five business days from the date of issue in two widely spread daily local newspapers, one issued in Arabic and the other issued in English.

 

Chapter 7 Initiation of Restructuring Procedures

Article (99)

If the Court issues a decision of initiating the restructuring procedures, the appointed trustee shall handle his tasks and prepare and develop the scheme by assistance of the debtor, within not more than (3) three months from the date of the decision. The Court may extend this period, at request of the trustee, for once or many times provided that their total is not more than (3) three additional months.

 

Article (100)

 

The trustee shall regularly notify the Court every no later than (21) twenty one days of the progress of preparation of the restructuring scheme draft.

 

Article (101)

 

  1. The trustee shall lodge a copy of the restructuring scheme draft at the Court with a summary of the restructuring scheme attached that indicates the possibility of accepting the scheme draft by the creditors of the debtor and whether it is feasible to invite them for meeting to examine the scheme draft.

  2. The restructuring scheme draft shall indicate the following:

    1. The possibility of the debtor’s business to re-generate profits.

    2. Activities of the debtor that must be suspended or terminated.

    3. Terms and conditions of settlement of any liabilities.

    4. Any performance bonds might be requested from the debtor, if any.

    5. Any proposal to purchase all or part of business of the debtor, if any.

    6. Grace periods and payment deductions.

    7. The possibility of converting the debt to share capital of any project.

    8. The possibility to consolidate, create, redeem, sell or replace any guarantees, if necessary, to implement the scheme draft.

    9. Propose a period or periods to repay the whole debt.

 

  1. The trustee may insert any other matters useful in implementation of the scheme in the restructuring scheme draft.

 

Article (102)

 

The restructuring scheme shall include a timetable for implementation of not more than (5) five years from the date of approving the scheme by the Court. The scheme may be extended for not more than other (3) three years, by consent of the majority of the creditors holding two thirds of the debts which are not paid according to the scheme and any amendments made thereto.

 

Article (103)

 

  1. The Court shall, within (10) ten business days from the date of submission of the restructuring scheme, review the scheme draft to verify that the scheme observes the interest of all parties. The Court may request the trustee during this period to make any necessary amendments to the scheme draft and return it to the Court within not more than (5) five business days from the date of being notified of the Court’s decision, renewable for similar period.

  2. The Court shall request the trustee, within (5) five business days from the date of submission or re- submission of the scheme draft – as the case may be – to invite the creditors within (5) five business days to meeting to discuss and vote on the restructuring scheme draft. The trustee shall furnish the creditors whose debts are admitted with a photocopy of the restructuring scheme draft.

  3. The invitation to the meeting referred to in paragraph (2) of this Article shall be made through publication in two widely spread daily local newspapers, one issued in Arabic and the other issued in English. The invitation shall specify the place and time of meeting. The Court may additionally assign the trustee to direct the invitation of meeting in all possible communication means.

  4. The meeting shall be convened within not less than (3) three business days and not more than (15) fifteen business days from the date of directing the invitation by publication, as determined by the Court, in consistency with the interest of the restructuring procedures.

  5. The Court may request the trustee to invite the creditors to other meetings in the same procedures described in this Article, taking into consideration the number of known creditors and any other circumstances of significance to convening the meeting.

  6. If the debtor is subject to a competent controlling body, the Court shall invite such body to attend the meeting.

Chapter 8 Committees of Creditors

 

Article (104)

 

  1. After consulting with the trustee, the Court may issue a decision of forming one committee or more of the holders of ordinary debts and one committee or more of the holders of the debts guaranteed by pledge or lien. The Court may form one committee or more of the holders of bonds and instruments for purpose of discussing the scheme and proposing amendments thereto at the meetings convened according to Article (103) of this Decree Law.

  2. Every committee may choose a representative from the creditors or from the legal or financial advisors and determine the questions authorized to him, according to the provisions of this Decree Law.

  3. All correspondences related to the meeting, minutes and procedures shall be communicated to the representative of each committee. The representative of such committee shall notify the related creditors.

  4. On proposition of the trustee, the Court may limit the powers of the representative chosen or relieved of his tasks, if the Court finds that the powers conferred upon him are broad and detrimental to all creditors or the creditors represented by the committee.

  5. The Court may re-form any of the committees referred to in paragraph (1) of this Article, if it thinks necessary.

  6. The committees formed under this Article shall be equally treated.

 

Article (105)

 

  1. The trustee and the debtor shall explain the items of the restructuring scheme draft during the meetings convened to discuss the scheme.

  2. Any creditor may propose at the meeting convened for voting on the restructuring scheme draft making any amendments thereto. The committee before which the amendment is made and any other committee affected by the proposed amendment shall express its opinions regarding such amendments.

  3. The Court may invite the creditors affected by the proposed amendments for further meetings to consider such amendments. The Court may approve or reject any of the proposed amendments in preparation for the approval of the restructuring scheme draft, according to Chapter 9 of this Section.

 

Article (106)

 

  1. The right to vote on the restructuring scheme draft shall be confined to the ordinary creditors whose debts are finally admitted.

  2. The creditors, holders of debts guaranteed by pledge or lien, shall not vote on the restructuring scheme by their guaranteed debts, unless they expressly assign such guarantees. The assignment shall be recorded in the minutes of meeting. The assignment of guarantee shall be enforced only if the restructuring scheme is approved. If the scheme is invalidated, the assigned guarantee shall be recovered.

  3. By way of exception from paragraph (1) of this Article, the Court may permit the creditors whose debts are temporarily admitted to vote on the restructuring scheme draft, on proposition of the trustee. The Court shall in its decision specify the conditions and limits of granting this permission.

 

Article (107)

 

  1. The restructuring scheme draft shall be approved by the majority of the creditors whose debts are finally admitted and the creditors whose debts are temporarily admitted and permitted to vote. Such majority shall hold minimum two thirds of total ordinary admitted debts.

  2. If either of the two majorities referred to in paragraph (1) of this Article is not fulfilled, the meeting shall be postponed for (7) seven business days.

  3. If either of the two majorities after extension according to in paragraph (2) of this Article is not fulfilled, this shall be considered a rejection of the restructuring scheme.

  4. The creditors who attended or were represented at the first meeting and voted by consent to the restructuring scheme may be absent at the second meeting. In this case, their consent to the restructuring scheme at the first meeting shall be outstanding and enforced and complements the quorum at the second meeting, unless they attend the meeting and retract their previous consent or a change is made to the restructuring scheme.

  5. Minutes of the meeting of voting on the restructuring scheme draft shall be executed. The minutes shall be signed by the restructuring officer, the debtor and the present creditors permitted to vote. If either of them rejects the signature, his name shall be mentioned in the minutes and the reason of rejecting the signature.

  6. All creditors who take part in voting on the restructuring scheme draft shall provide the restructuring officer with the addresses for notification including the email addresses. Notification made through such means shall produce its legal effects, in connection with all subsequent procedures.

  7. The restructuring scheme clauses shall apply to the creditors who voted by rejection.

 

Chapter 9 Approval of the Restructuring Scheme

Article (108)

  1. The trustee shall, within (3) three business days from the date of meeting at which the voting by the required majority on the restructuring scheme is made, lay the scheme draft before the Court to issue its decision either to approve or reject the scheme.

  2. Any creditor, whose debt is admitted and rejects the scheme in the vote, may object to the draft submitted to the Court within (3) three business days from the expiration date of the intermission specified in paragraph (1) of this Article. The Court shall decide on the submitted objection within (5) five business days from the date of submitting the objection. The Court’s decision in this regard shall be final.

  3. The Court shall urgently issue its decision of approving the restructuring scheme, having verified that all conditions are satisfied. The Court may advance the maturity dates of paying dues of the creditor who accepts reduction of his debt, in a way that fulfills the interest of the restructuring scheme. The Court’s decision shall be binding to all creditors at the meetings of the committee or committees of creditors.

  4. The Court shall verify that the scheme secures that all affected creditors receive at least the amounts they would have received, if the properties of the debtor are liquidated on the date of voting on the scheme, as evaluated by the Court for such properties.

  5. The restructuring scheme shall not affect the right of priority of the debts guaranteed by pledge or lien, in the way provided in this Decree Law.

Article (109)

 

  1. If the Court disapproves the restructuring scheme, the scheme shall be returned to the trustee for amendment within (10) ten business days from the date of disapproval and submitted to the Court to approve it or decide initiating the debtor’s declaration of bankruptcy and liquidation of properties procedures, according to this Decree Law.

  2. The debtor or any of the creditors, whose debts are finally admitted, may submit a grievance to the Court against its decision of disapproving or amending the scheme. The Court shall decide on the grievance within (10) business days from the date of grievance. The Court’s decision shall be final.

 

Article (110)

 

  1. The trustee shall verify that any properties of the debtor, decided to be sold under the restructuring scheme, shall be sold at the best price that can be obtained under the prevailing circumstances in the market on the date of sale. The trustee shall deposit, in the bank account determined by the Court, the sale proceeds representing the value of claims backed by the sold properties.

  2. The trustee shall pay the creditors of guaranteed debts their debts upon maturity from the sold properties according to paragraph (1) of this Article, from the revenues of selling such properties, based on their priorities.

 

Article (111)

 

  1. The trustee or the debtor may offer the creditors an alternative guarantee equivalent to the existing guarantee. If such offer is rejected by the creditors, the Court may order the replacement of guarantee, if the Court finds that the alternative guarantee is equivalent to the existing guarantee and is not detrimental to the interest of the creditor to whom the alternative guarantee is offered.

  2. The decision issued by the Court may be contested before the competent Court of Appeal within (5) five business days from the date of the Court’s decision. The contestation shall not result in the suspension of the procedures. The decision issued on the contestation shall be final.

 

Article (112)

 

  1. If certain properties of the debtor are considered substantial to continue his business, the Court may, on its own initiative or at request of any interested party, order that neither of such properties shall be disposed of, without obtaining the Court’s approval, for a specific period that does not exceed the period of the restructuring scheme. If such properties are subject to guarantee, the Court may replace the guarantee, according to the provisions of this Decree Law.

  2. Each interested party may apply to the Court to annul any disposition made in breach of paragraph (1) of this Article within three years from the date of issue of the Court’s decision or from the date of approving the restructuring scheme, whichever is later.

 

Chapter 10

Publication and Implementation of the Approved Restructuring Scheme

Article (113)

The trustee shall, within (7) seven business days from the date of approving the restructuring scheme by the Court, register the Court’s decision of the scheme approval in the commercial or professional registration of the debtor, as the case may be, and publish the decision in two widely spread local daily newspapers, one issued in Arabic and the other issued in English. The decision shall include a summary of the most important conditions of the restructuring scheme, the name, address and registration number of commercial or professional registration of the debtor, as the case may be, and the date of approving the scheme.

 

Article (114)

 

  1. The trustee shall supervise the restructuring scheme throughout the period of implementation.

  2. The trustee shall:

    1. Monitor the progress of the scheme and inform the court of any failure of implementation.

    2. Submit a report to the Court on the progress of implementing the scheme every three months. Every creditor has the right to receive a photocopy of the report.

  3. If the trustee sees it necessary to make amendments to the restructuring scheme, and such amendments would cause a change to the right or duties of any party thereto, the approval of the Court to such amendments shall be attained. The court shall, before deciding on the application, notify all parties who took part in voting on the scheme and any creditors the Court thinks necessary to notify, within (5) five business days from the date of the request of the trustee to express any remarks on the required amendments, within (10) ten business days from the date of notice. The Court may issue a decision approving in whole or part, or rejecting the amendment.

 

Article (115)

 

Upon the discharge of all obligations provided in the restructuring scheme, the Court shall at request of the trustee, debtor or any interested party, issue its decision of the complete implementation of the scheme and the perfection of the debtor’s restructuring procedures. This decision shall be published in two widely spread daily newspaper, one issued in Arabic and the other issued in English.

 

Chapter 11 Nullification and Rescission

 

Article (116)

 

If investigation is initiated with the debtor in one of the crimes described in Section 6 of this Decree Law, or a criminal claim is filed against the debtor in one of those crimes, after the approval of the restructuring scheme, the court that approves the scheme, at request of each interested party, may order taking the measures it thinks fit to attach the properties of the debtor. Such measures shall be cancelled, if the investigation is closed or the debtor’s acquittal is judged.

 

Article (117)

 

  1. Every interested party may apply to nullify the restructuring scheme procedures, within (6) six months from the date of initiating the investigation provided in Article (116) of this Decree Law, or the application shall be rejected. In all cases, the annulment application shall be rejected, if submitted after the expiration of two years from the date of issue of the restructuring scheme approval decision.

  2. The restructuring scheme shall be null and void, if a judgment convicting the debtor in one of the crimes described in Section 6 of this Decree Law is delivered after approving the restructuring scheme, unless the Court otherwise decides to protect interest of the creditors.

  3. The annulment of restructuring scheme procedures shall result in the clearance of the good faith guarantor who guarantees the satisfaction of all or part of its conditions.

 

Article (118)

 

  1. Every interested party may request the Court that approved the restructuring scheme to rescind the scheme, if the debtor fails to satisfy its conditions or is deceased and its satisfaction becomes impossible for any reason.

  2. The rescission of the restructuring scheme shall not result in the discharge of the guarantor who guarantees the satisfaction of its conditions. The guarantor shall be ordered to appear at the hearing where the application of rescission is heard.

 

Article (119)

 

The Court shall provide in its judgment, issued on the annulment of the restructuring scheme procedures or rescission of the restructuring scheme, affixation of seals to the properties of the debtor, except the properties that cannot be legally attached and the subsidy established for the debtor and his dependents. The Court shall assign the trustee, within (5) five business days from the date of delivery of the annulment or rescission judgment, to publish the summary of judgment in two widely spread local daily newspapers, one issued in Arabic and the other issued in English. The trustee shall undertake a supplementary inventory of properties of the debtor.

 

Article (120)

 

If the Court judges the annulment of the restructuring procedures or rescission of the restructuring scheme, the trustee shall invite the new creditors to provide the documents of their debts for verification according to debt verification procedures. The debts previously admitted shall not be re-verified. The trustee shall exclude the debts fully settled and reduce the debts, which part thereof is settled, by the amount of such settled part.

 

 

 

Article (121)

 

The dispositions made by the debtor, after the issue of the decision of restructuring scheme approval and before the annulment of procedures or rescission of scheme, shall be enforced against the creditors. The creditors may request the non-enforcement of such dispositions only according to the rules described in the Civil Transactions Law in respect of the disposition non-enforcement action. Such action shall not be heard after the expiration of two years from the date of annulment of procedures or rescission of the restructuring scheme.

 

Article (122)

 

The annulment of procedures or rescission of restructuring scheme shall not result in obligating the creditors to return the amounts paid from the debts before judging the annulment or rescission. Such amounts shall be deducted from their debts.

 

Article (123)

 

At request of any interested party, after hearing the opinion of the trustee, the Court may judge the termination of restructuring procedures, if the debtor dies while the procedures are heard, together with observing the interest of the creditors. The Court shall judge the declaration of bankruptcy and liquidation of properties of the deceased debtor in the same judgment, subject to Article (150) of this Decree Law.

 

Chapter 12 Judgment of Bankruptcy and Liquidation

Article (124)

The Court shall deliver a judgment declaring bankruptcy and liquidation of properties of the debtor, in any of the following cases:

  1. If the Court judges the termination of preventive composition procedures, according to Article (64) of this Decree Law.

  2. If the debtor is the applicant and he acts in bad faith or the application is intended for procrastination or evasion of financial obligations.

  3. If the restructuring procedures are inappropriate to the debtor, based on the data and documents submitted with the application, or the report prepared by the expert, according to Article (77) of this Decree Law or the report of the trustee according to Article (96) that the restructuring is impossible.

  4. If either of the two majorities provided in Article (107) of this Decree Law is not fulfilled.

  5. If the Court rejects the restructuring scheme, according to Article (109) of this Decree Law.

  6. If the annulment of procedures or rescission of restructuring scheme is judged, according to Articles (117) and (118) of this Decree Law.

 

Article (125)

 

The Court shall prohibit the debtor, whose bankruptcy is declared, from taking part in the management of any company or transacting any business, if the debtor breaches the obligation provided in Article (68) of this Decree Law, if it is evident that his disposition or default led to the declaration of his bankruptcy and liquidation of his properties, for a period of not more than the date of rehabilitation of the debtor according to the provisions of this Decree Law.

 

Article (126)

 

If the Court judges initiating procedures of the declaration of bankruptcy and liquidation of properties of the debtor, a trustee shall be appointed in the judgment to handle the tasks of bankruptcy and liquidation of properties of the debtor, unless the Court judges the continuity of work of any trustee or expert appointed during the restructuring or preventive composition procedures.

 

Article (127)

 

The Court may reduce the periods of time provided in this Chapter in the cases it thinks fit.

 

Article (128)

 

The trustee shall, within (3) three business days from the date of delivery of judgment of the declaration of bankruptcy and liquidation of properties of the debtor, publish the judgment in two widely spread daily local newspapers, one issued in Arabic and the other issued in English.

 

Article (129)

 

  1. The trustee shall direct the creditors to file any final claims that were not filed before. The claims shall be filed within (10) ten business days from the date of the judgment publication. Any claims filed after this date shall be discarded, unless for a reason accepted by the Court.

  2. Any claims rejected by the Court according to this Section shall be discarded.

 

Article (130)

 

The trustee shall finally audit the claims of the creditors. The trustee shall not conduct or complete such audit if he finds that the revenues of selling the properties of the debtor will be all disbursed to pay any legal fees or repay the debts guaranteed by pledge or lien.

 

Article (131)

 

At request and under supervision of the trustee, the Court may permit the debtor to transact all or part of his business to sell such business in the best possible price. The period of such permission shall not exceed (6) six months from the date of granting the permission and may be extended for not more than (2) two additional months, if the continuity would fulfill interests of the creditors or the public interest.

Article (132)

 

  1. The trustee shall liquidate all properties of the debtor except the properties that the debtor may keep according to this Decree Law.

  2. If properties are bequeathed by or passed to the debtor, for any reason, during the bankruptcy procedures, the debtor shall disclose same. The trustee shall liquidate such properties.

  3. The trustee shall sell the properties of the debtor in public auction, by consent and under supervision and control of the Court.

  4. The Court may permit the trustee to sell all or part of properties of the debtor by other than the public auction, on such conditions set by the Court.

  5. The trustee shall apply the revenues of liquidation of the debtor’s properties towards any claims owed by the debtor, under supervision of the Court. The debtor shall be handed any surplus of such revenues.

 

Article (133)

 

All correspondences of the debtor’s business during the declaration of bankruptcy procedures shall state that the debtor is subject to declaration of bankruptcy and liquidation of properties procedures.

 

Article (134)

 

  1. The trustee shall notify the Court and the debtor every month of the progress of declaration of bankruptcy and liquidation procedures.

  2. The trustee shall notify the Court, the debtor and the supervisors of the substance of any proposals received for the sale of all or part of business of the debtor. The Court shall promptly decide on any objection to the conditions of sale submitted by any interested party. The decision of the Court on this regard shall be final.

 

Article (135)

 

  1. All debts owed by the bankrupt debtor, whether ordinary or guaranteed by lien, shall fall due upon the delivery of judgment of bankruptcy and liquidation of properties of the debtor.

  2. The Court may deduct, from the deferred debt where no interests are stipulated, an amount equals the legal interest for the period from the date of the judgment of the Court of initiating declaration of bankruptcy and liquidation of properties procedures to the maturity date of the debt.

  3. If the value of claims are denominated in a foreign currency, the value of claim shall be converted to the national currency in the prevailing exchange rate on the date of delivery of the declaration of bankruptcy and liquidation of properties judgment, unless otherwise is agreed on.

 

Article (136)

 

  1. The following persons shall not, directly or through an agent, purchase or offer the purchase of all or part of the properties of the debtor offered for sale, according to Article (131) of this Decree Law: a. The debtor.

    1. Spouse, relative by marriage or up to fourth degree relative of the debtor.

    2. Any person who was a partner, employee, accountant or agent of the debtor, within the (2) two years prior to the delivery of judgment of initiating procedures of the declaration of bankruptcy and liquidation of properties of the debtor.

    3. Any person works or worked as the auditor after initiating bankruptcy procedures.

 

  1. By way of exception from Clause (1) of this Article, the persons referred to in paragraphs (b, c & d) in paragraph (1) of this Article may purchase the properties of the debtor, by approval of the Court, if this would fulfill the interest of the creditors.

 

Article (137)

 

  1. Subject to any claims before the Court, the trustee shall distribute the liquidation revenues based on priorities among the creditors, according to Chapter 6 of Section 5 of this Decree Law, having attained the approval of the Court.

  2. The trustee shall distribute the liquidation revenues after every sale operation or after collection of the monies resulting from all sale operations.

  3. The trustee shall, after each sale operation, submit a list of distribution to the Court for approval.

  4. The creditor shall receive his share from the distribution proceeds at the place where the trustee performs his tasks, unless otherwise is agreed between the trustee and the creditor.

  5. The shares of debts, which are not finally admitted and those which are not objected to, shall be set aside according to this Decree Law and shall be kept in the treasury of the Court until finally decided.

  6. The creditor whose debt is guaranteed by pledge or lien shall be paid the amounts generated from the sale of properties that guarantee his debt, if the guarantee-burdened properties are insufficient to discharge the entire debt guaranteed by pledge or lien. The remainder of the unpaid debt shall be ranked an ordinary debt.

  7. The trustee shall deliver the debtor any excess amounts upon the liquidation, after the discharge of all its obligations.

 

Article (138)

 

  1. After the completion of final distribution of properties of the debtor to the creditors, the Court shall issue decision of closure of all procedures including a list of creditors of admitted debts and their amounts, and the amounts unpaid from such debts. The Court shall order the trustee to publish the decision in two widely spread daily local newspapers, one issued in Arabic and the other issued in English.

  2. The trustee shall return all documents in his possession to the debtor, after the completion of procedures and performance of his works.

  3. The declaration of bankruptcy and liquidation of properties procedures may be terminated, at request of the debtor at any time, if the reasons that cause declaration of his bankruptcy and liquidation of his properties no longer exist.

  4. After closure of declaration of bankruptcy and liquidation of properties procedures, every creditor whose debt is admitted and not fully paid, may enforce on the properties of the debtor to receive the remainder of his debt. The admission of the debt referred to in paragraph (1) of this Article shall be considered a conclusive judgment in connection with such enforcement.

Chapter 13 Provisions of Corporate Bankruptcy

Article (139)

In addition to the Articles provided in this Section, Articles (172) and (173) of Section 5 of this Decree Law shall apply to the corporate bankruptcy.

 

Article (140)

 

Upon the delivery of declaration of bankruptcy judgment, the company shall not be liquidated or placed under receivership beyond the framework of this Decree Law.

 

Article (141)

 

  1. The creditor of company may request declaration of its bankruptcy, even if he is a partner in the company. Non-creditor partners shall not in their individual capacity request the bankruptcy of the company.

  2. The Court may, on its own initiative or at request of the debtor company or the competent controlling body, postpone the declaration of bankruptcy of the company for not more than one year, if it is possible to support its financial position and this is required by the national economy. In this case, the Court shall decide taking the measures it thinks fit to maintain the properties of the company.

 

Article (142)

 

  1. If the declaration of bankruptcy and liquidation of properties of the company is judged, the bankruptcy of all general partners shall be declared. The declaration of bankruptcy includes the general partner dissociated from the company after the company was in default of payment provided that the period lapsed from the date of his dissociation from the company in the commercial registration is not more than one year.

  2. The Court shall deliver one judgment of declaration of bankruptcy of all general partners, even if the Court is not competent to declare bankruptcy of those partners.

  3. In addition to the trustee appointed according to the provisions of this Decree Law for the corporate bankruptcy procedures, the Court shall appoint one trustee or more for the general partners and their bankruptcy procedures shall remain independent in terms of management, verification of debts and way of completion.

 

Article (143)

 

If the court judges the declaration of bankruptcy of company, the Court may, on its own initiative or at request of any interested party, judge the declaration of bankruptcy of every person undertook in the company’s name business for himself and disposed of the company’s properties as if such properties are his own.

Article (144)

 

If it is evident that the properties of the company are insufficient to pay at least (20%) twenty percent of its debts, the Court that declared the bankruptcy may order all or part of the directors of board or managers, jointly or severally, to pay all or part of the debts of the company, in such cases where their responsibility for the losses of the company is evident, according to the Commercial Companies Law.

 

Article (145)

 

The legal representative of the company, which bankruptcy is declared, shall act on behalf of the company within limits of his authorities in every matter in which the law requires the opinion of the company or his presence. The representative of the company shall appear before the Court or the trustee, whenever requested, to give the requested information or clarifications.

 

Article (146)

 

At request of the trustee, the Court may order the partners or shareholders in the company to discharge the remaining debts from the value of their stock or shares, even if its maturity date has not fallen yet. The Court may decide confining this claim to the necessary limit to discharge the debts of the company.

 

Article (147)

 

  1. If declaration of bankruptcy is judged, the Court may order the directors of board, managers or those in charge of liquidation in liquidation procedures taken beyond the scope of this Decree Law, to pay an amount to repay the debts of the debtor, if any of them evidently commits any of the following acts, within the two years following the date of initiating the procedures, according to this Section:

    1. Adopts commercial methods without considering its risks such as disposition of commodities in prices less than its market value to receive monies to avoid or delay initiating the bankruptcy procedures.

    2. Engages in transactions with third party to dispose of properties without consideration or against insufficient amount and without certain benefit or not proportionate to the properties of the debtor.

    3. Discharges the debts of any creditor to harm other creditors, during the period of being in default of payment or in the condition of account receivable.

 

  1. The Court shall not deliver its judgment provided in this Article, if it is satisfied that the natural or juristic person has taken all precautionary procedures that can be taken to minimize the potential losses of the properties of the debtor and his creditors.

  2. If the directors of board of any entity, the manager or those in charge of liquidation are evidently not engaged in the acts provided in this Article or evidently reserve to the decision issued in his regard shall be relieved of responsibility for the acts provided in this Article.

Article (148)

 

Debentures and instruments issued by the company in the cases described in the Commercial Companies Law shall not be subject to the verification of debts procedures. Such debentures and instruments shall be admitted in its nominal value within the debts of the debtor, after deduction of the amount that might be paid by the company.

 

Chapter 14

Bankruptcy of the Deceased, Trade Quitted or Incapacitated Debtor

Article (149)

The creditor may apply for initiating bankruptcy procedures of the debtor for declaration of his bankruptcy and liquidation of his properties, after his death, quitting trade or incapacity, if the declaration of bankruptcy and liquidation conditions are satisfied, according to the provisions of this Decree Law. The application shall not be submitted in those cases after the expiration of one year from the date of death or from the date of striking off the name of the trader from the commercial register in case he quits trade or from the date of judging his incapacity.

 

Article (150)

 

  1. The Court shall judge the declaration of bankruptcy and liquidation of properties of the deceased debtor, if his successors fail to provide a security in rem or a bank security issued by a bank operating in the state or any other security accepted by the Court and sufficient to guarantee the discharge of debt of the creditor, within the period specified by the Court.

  2. The successors of the deceased debtor may apply for declaration of bankruptcy and liquidation of properties of the debtor on the date specified in Article (149) of this Decree Law. If certain successors object to the declaration of bankruptcy, the Court shall hear their statements then decide on the application urgently as required by interest of creditors of the deceased debtor and the successors.

  3. The declaration of bankruptcy and liquidation of properties of the deceased debtor shall be governed by all provisions set out in this Decree Law, subject to:

    1. The declaration of bankruptcy application shall be served, in case of death of the trader, at the last domicile without the need to appoint successors.

    2. The successors of the debtor whose bankruptcy is declared shall act for him in the bankruptcy and liquidation of properties procedures.

 

Article (151)

 

The successors of the deceased or their legal representatives shall choose whoever represents them in the bankruptcy and liquidation of properties procedures. In case of failure to choice a representative within (7) seven business days from the date of notifying them thereof by the trustee, the Court shall at request of the trustee appoint one of them to act as a representative. The Court may remove the representative of the successors and appoint another onefrom the successors or whoever legally represents them.

Chapter 15 Common Provisions

 

Article (152)

 

The provisions set out in this Chapter shall apply to each of the restructuring or bankruptcy and liquidation of properties, as the case may be, unless otherwise is provided.

 

Item 1 Recovery

 

Article (153)

 

  1. The goods held in possession of the debtor on trust, for sale for, or for delivery to its owner may be recovered. The price of goods may be recovered from the seller debtor, if not delivered to the purchaser, or if not paid in cash, by commercial paper, setoff or crediting to a current account between the debtor and the purchaser.

  2. If the debtor deposited goods with third party, the goods may be recovered.

  3. The commercial papers and other valuable instruments delivered to the debtor to collect its value or profits or to allocate it for particular discharge may be recovered, if found in kind in the properties that are subject to inventory and its value was not paid when the bankruptcy was declared. However, no recovery shall be made if the papers and instruments are credited to a current account between the recovery applicant and the debtor.

  4. The cash deposited with the debtor shall not be recovered, unless the recovering party proves his title to such cash.

  5. The recovering party shall in the cases provided in this Article pay the trustee any dues might be due to the debtor.

 

Article (154)

 

If the contract of sale is terminated by final judgment before the issue of decision of initiating procedures, the seller may apply to the Court to recover all or part of the sold object from the properties subject to inventory, provided that such sold object is found in kind.

 

Article (155)

 

  1. If it is decided to initiate bankruptcy procedures against the debtor, before payment of price of goods that the debtor purchased before initiating the procedures and the goods are still in possession of the seller, the latter may hold back the goods.

  2. If it is decided to initiate procedures after sending the goods to the purchaser debtor and before its entry to the warehouses of the debtor or his agent who is assigned to sell the goods, the seller may recover its possession. However, there shall be no recovery if the goods lose their characters or are disposed of by the debtor before its arrival without fraudulence, under the title lists or transport documents to a good faith purchaser.

  3. In all cases, the trustee may by approval of the Court request receiving the goods provided that the trustee pays the seller the agreed price. If this is not requested by the trustee, the seller may insist on termination and request remedy.

 

Article (156)

 

Without prejudice to Article (48) of the Commercial Transactions Law, if it is decided to initiate procedures against the debtor before payment of price and after entry of goods to the warehouses of the debtor or his agent who is engaged for the sale of goods, the seller shall not terminate the sale or recover the goods. No objection shall be made under any condition that enables the seller to recover the goods against the creditors.

 

Item 2 Withdrawal of Management and Disposition Right

Article (157)

  1. As of the date of the decision of initiating procedures, the debtor shall not perform any of the following acts:

    1. Manage his properties or pay any claims created before the issue of decision of initiating procedures, except any setoff payments made according to the provisions of Chapter 5 of Section 5 of this Decree Law.

    2. Dispose of any of his properties or pay or borrow any amounts, unless made according to this Decree Law. The dispositions made on the day of issue of the decision of initiating procedures shall be considered to have been made after its issue.

    3. If the disposition is concluded or enforced against third party only through registration or other procedures, it shall apply not apply to the creditors unless the procedure is taken before the issue of decision of initiating procedures.

    4. Dispose of stock or shares of, or change the ownership or legal form of the company, if the debtor is a juristic person.

  2. At request of any interested party, the Court may judge the non-enforcement of any disposition taken by the debtor against the creditors, in breach of paragraph (1) of this Article.

 

Article (158)

 

  1. The prohibition of the debtor of management and disposition shall include all properties owned by the debtor on the date of issue of the decision of initiating procedures and the properties which title passed to him, after the issue of the decision of initiating procedures. The Court may, at request of any interested party, judge the non-enforcement of such dispositions.

  2. By way of exception from paragraph (1) of this Article, the prohibition of management and disposition shall exclude the following:

    1. The properties that cannot be legally attached and the subsidy determined for the debtor and his dependents.

    2. Properties owned by other than the debtor.

    3. Rights related to personal status of the debtor.

  3. The debtor’s prohibition of management and disposition referred to in paragraph (1) of this Article shall exclude the rights related to the person or capacity of the debtor as the householder or the rights related to a pure moral interest.

 

Article (159)

 

Except the case of having a new finance according to the provisions of Chapter 4 of Section 5 of this Decree Law, no guarantees on the properties of the debtor shall be arranged upon the issue of the decision of initiating procedures, unless otherwise is permitted by the Court.

 

Article (160)

 

  1. The Court may decide the termination of any business of the debtor, based on an urgent application by the trustee.

  2. The Court shall decide the partial suspension based on the report of the trustee, within not more than the period of approval or rejection of the restructuring scheme draft by the Court, according to the provisions of this Section.

 

Article (161)

 

The trustee may, during the management of procedures, request the debtor to do everything necessary to maintain interests of his business. The trustee may further request the debtor to perform the effective contracts to which the debtor is a party, subject to the provisions of Chapter 9 of this Section. The trustee may handle such works by himself, including the exercise of all powers vested into the trustee in the preventive composition procedures, according to the provisions of Section 3 of this Decree Law.

 

Item 3

Suspension of Judicial Proceedings and Interest Effectiveness

Article (162)

  1. In other than the cases provided in this Decree Law, the issue of the procedures initiating decision, according to Article (78) of this Decree Law, until the approval of the restructuring scheme according to Article (108), shall result in the suspension of the judicial claims and proceedings and the judicial enforcement procedures over the properties of the debtor, unless otherwise is decided by the Court.

  2. By way of exception from paragraph (1) of this Article, the creditors holding debts backed by a pledge or lien may enforce over their guarantees whenever their debts fall due. The Court shall consider granting permission within (10) ten business days from the date of application. The consideration of the permission application shall require no notice or exchange of memoranda. The Court shall, upon granting the permission, verify that there is no collusion between the debtor and the guaranteed creditor and the degree of priority of the guaranteed creditor, if there are many guaranteed creditors for the same property.

  3. The decision of the Court that rejects the permission may be contested before the competent Court of Appeal. The contestation shall not result in the suspension of the procedures. The decision issued on the contestation shall be final.

Article (163)

 

At request of the trustee, and after notification of the concerned party, the Court may suspend the effectiveness of legal and contractual interest including the due interest or due remedy for the late payment, from the date of initiating procedures to the date of approval or rejection of the scheme draft by the Court, according to the provisions of this Section.

 

Item 4 Performance of Obligations and Contracts

Article (164)

  1. The trustee shall ensure that the debtor is capable to perform his obligations.

  2. In the framework of implementing the restructuring scheme, the trustee may pay any amount that must be paid by the debtor to the party with whom the debtor contracted under an enforceable contract, unless the contracting party grants the debtor a term for payment.

  3. If the trustee fails to perform or continue the performance of the Contract, the other contracting party may apply to the Court to rescind the contract. This shall not result in the suspension of procedures.

  4. If the debtor owns any common properties, the trustee or any of the partners in the common properties may request the division of properties, even if there is an agreement among them that does not permit the division. Any partner may have propriety over the other, if he wishes to purchase the share of the debtor against equitable consideration, as decided by the Court.

 

Article (165)

 

  1. The decision of initiating restructuring procedures shall not result in the abatement of any term agreed on for the repayment of a debt owed by the debtor. Every contractual provision to the contrary shall be null and void.

  2. Initiating the restructuring procedures shall not result in the rescission or termination of any effective contract between the debtor and third party, unless the contract is based on personal considerations. The party contracting with the debtor shall perform his contractual obligations, unless he entered plea of non- performance for the failure of the debtor to perform his obligations, before the date of issue of decision of initiating procedures.

  3. At request of the trustee, the court may order the rescission of any effective contract to which the debtor is a party, if necessary to enable the debtor to transact his business; or if such rescission would fulfill interest of all creditors of the debtor and would not substantially prejudice the interests of the party contracting with the debtor.

  4. The contracting party in the two cases referred to in paragraph (3) of Article (164) of this Decree Law and paragraph (3) of this Article may be engaged in the restructuring procedures as an ordinary creditor for the compensation resulting from the rescission, if required, unless the Court decides that he keeps the compensation for the lien legally established for him.

Article (166)

 

By way of exception from Article (26) of the Civil Procedures Law and paragraph (3) of Article (164) of this Decree Law:

  1. The issue of decision of initiating restructuring procedures shall not result in the termination of the lease or investment contract or falling due of the rent for the remaining period, if the debtor is a lessee or an investor of the real property in which the debtor transacts his business. Every condition to the contrary shall be considered as if never made.

  2. The trustee may terminate the lease or investment contract of the real property used by the debtor to transact his business before the date agreed on in the contract falls due. The trustee shall notify the landlord or the lessor thereof by a notice of (45) forty five business days, unless the contract provides for a shorter period.

  3. The landlord or the lessor may claim the termination of contract of lease or investment of the real property used by the debtor to transact his business due to the failure to pay the due rent, if such failure continues for more than (3) three months from the date of issue of the decision of initiating procedures.

  4. At request of the landlord or the lessor, the Court may judge the rescission of the lease or investment contract of the real property used by the debtor to transact his business, if it is evident that the guarantees granted to pay the rent are insufficient.

  5. If it is decided to terminate or rescind the lease or investment contract of the real property used by the debtor to transact his business, the landlord or the lessor of such property shall have a lien over the proceeds of sale of the movables of the debtor which are considered the furniture of the leased or invested property.

  6. The Court may permit the debtor or the trustee to sell the movables of the debtor which are considered the furniture of the leased or invested property, in any of the following cases:

    1. If such properties are liable to damage or quick impairment and keeping same requires heavy costs.

    2. If the sale thereof would not result in the debtor’s failure to transact his business.

    3. If the sale of such properties would not affect the adequacy of the guarantees intended in favor of the lessor or the landlord.

  7. Having attained the approval of the Court, the trustee may sublease the property occupied by the debtor to transact his business, even if otherwise is provided in the lease contract concluded between the debtor and the landlord or the lessor provided that such disposition shall fulfill real interest of the creditors and shall not cause harm to the landlord or lessor of the property and the lessor is fairly compensated.

 

Article (167)

 

Without prejudice to the rights legally established to the worker, the Court may terminate the effective employment contracts between the debtor whose properties are subject to restructuring or whose bankruptcy is declared and any of his employees, if required, irrespective of the provisions contained in such contracts.

Item 5 Non-Enforcement of Dispositions

Article (168)

  1. Neither of the following dispositions shall be made against the creditors, if the debtor performs same within two years before the date of initiating procedures, unless the Court approves the enforcement of such dispositions in observation of public interest or good faith third party:

    1. Donations, gifts or transactions without consideration except small gifts in usage.

    2. Any transactions in which the liabilities of the debtor remarkably exceed the liabilities of counterparty, whether such liabilities are in specie or in kind.

    3. Pay any debts before its maturity regardless the way of payment.

    4. Pay the due debts by other than the object agreed on between the debtor and his creditor or in a way that differs from that usually followed to pay such kind of debts. The payment through commercial paper or bank transfer shall be considered as payment in cash.

    5. Create any kind of new guarantee on his properties to guarantee the payment of a previous debt.

  2. The Court may judge the non-enforcement of any of the dispositions not mentioned in paragraph (1) of this Article, if the disposition is detrimental to the creditors and the party contracting with the debtor is aware or should have been aware, upon taking the disposition, that the debtor is in default of payment or in the condition of account receivable.

 

Article (169)

 

  1. If any disposition is judged to be non-enforced against the creditors, the alienee shall return to the properties of the debtor the object received from the debtor, under such disposition or the value of object at time of receiving. The alienee shall further return the result of the object received from the date of receiving and the consideration of its benefits.

  2. The alienee has the right to recover the consideration given to the debtor, if he finds that such consideration is one of the properties of the debtor, or the alienee has the right to claim the creditors of the benefit gained from the disposition and to take part in the procedures set out in this Section, as an ordinary debt for the amount in excess.

 

Article (170)

 

The Court may dismiss the claim of disposition non-enforcement filed based on Article (168) of this Decree Law, if the Court finds that the debtor has taken such dispositions in good faith and to transact his business; and that upon taking same, there were grounds lead to the belief of the possibility that the disposition would achieve benefit for his business.

Section 5 General Provisions

 

Article (171)

 

Unless otherwise is provided, the provisions set out in this Section shall apply to the procedures contained in Section 3 and 4, as the case may be.

 

Chapter 1 Applications Submitted in Case of Juristic Person

Article (172)

If the application of initiating procedures is submitted according to the provisions of Section 3 or 4 of this Decree Law, a proof of the issue of a resolution by the majority of partners in general partnerships and special partnerships, and by the extraordinary general assembly in other companies shall be attached.

 

Article (173)

 

If it is decided to initiate procedures for the debtor, if the debtor is a company, the examination of each application which subject is the liquidation of company or placement under receivership shall be suspended. The personality of the company subject to liquidation shall continue until the procedures provided in Section 3 and 4 of this Decree Law are completed.

 

Chapter 2 Tasks and Authorities of the Trustee

Article (174)

  1. The trustee appointed according to the provisions of this Decree Law shall handle his task under control of the Court. The trustee shall promptly follow up the procedures and verify that all measures that secure protection of the debtor and the creditors are taken.

  2. Subject to the provisions of rights, powers and duties of the trustee provided in Section 3 and 4 of this Decree Law, the trustee in performance of his duties shall be subject to the same obligations of the expert, according to the Federal Law No. (7) of 2012 on Regulating the Expert Witness Profession before the Judicial Bodies, in consistency with the provisions of this Decree Law.

  3. The trustee may appraise the properties of the debtor, whenever needed.

  4. The trustee, the debtor or any creditor may request the Court to outline the scope of powers of the trustee in a specific question. This however shall not suspend or disrupt the procedures.

Article (175)

 

  1. Upon his appointment, the trustee shall receive, access and keep all correspondences of the debtor, related to his business. The trustee in bankruptcy shall enable the debtor to have access to such correspondences.

  2. The trustee shall promptly deliver the debtor any personal correspondences or those subject to professional confidentiality rules and not related to the procedures.

 

Article (176)

 

  1. The trustee shall deposit any amount received in the procedures in an account at such bank designated by the Court within not more than two business days from the date of receiving this amount. The trustee shall provide the Court with an account statement of such amounts within (5) five business days from the date of deposit.

  2. If the trustee delays the deposit of any amounts received for purpose of deposit, without a reason accepted by the Court, the Court may order him to pay a fine for each delay day of not more than (12%) per annum from the value of the amounts not deposited. This fine shall be deposited in the account referred to in paragraph (1) of this Article and shall be included in the general guarantee of the creditors.

 

Article (177)

 

The trustee shall estimate the reasonable amount of money to meet the necessary needs of the debtor and his dependents. The Court shall urgently issue its decision of approving or amending the estimation and determination and its decision is this regard shall be final. This amount shall not be considered within the properties of the debtor that guarantee his debts.

Chapter 3 Recovery

 

Article (178)

 

  1. Every interested party may apply to the trustee to exclude the particular objects that prove his title thereto, which the debtor has no right in, from the inventory undertaken according to the provisions of this Decree Law, at time of issue of the Court’s decision of initiating the procedures and he may request its recovery. The trustee shall issue decision of approval or rejection of the application as soon as possible.

  2. Every interested party may lodge grievance against the decision issued by the trustee in the recovery applications before the Court within not more than three business days from the date of being informed of the decision to decide on the application by a final judgment within five business days from the date of submission. The grievance shall not result in suspension of procedures.

 

Article (179)

 

  1. The debtor’s spouse may determine the contents of properties owned thereby in the inventory according to any rules set out in the financial system followed in marriage.

  2. The debtor’s spouse may, within two months from the date of publication of initiating the concerned procedures, apply to the Court to urgently recover his own movable and immovable properties from the properties of the debtor.

 

Article (180)

 

The trustee shall apply for the permission of court to include any properties purchased by the debtor’s spouse by the monies of the debtor, or the donations established by the debtor to him/her, within the (3) three years preceding the issue of the decision of initiating the procedures and considering same as part of the properties of the debtor.

 

Chapter 4 Obtaining New Finance

 

Article (181)

 

The Court may, at request of the debtor or the trustee, in the preventive composition procedures or restructuring procedures permit the debtor to obtain a new finance with or without guarantee, as follows:

  1. The new finance has the priority over any ordinary outstanding debt owed by the debtor, on the date of initiating procedures, according to the provisions of Section 3 or 4 of this Decree Law.

  2. The possibility to guarantee the new finance by pledging any of the non-pledged properties of the debtor.

  3. The possibility to guarantee the new finance by arranging a pledge on the pledged properties of the debtor which are appraised of more than the value of the debt guaranteed by the previous pledge. In this case, the new pledge shall have a rank lower than the existing pledge on the same properties, unless the creditors of debts guaranteed by the pledged property agree that the new pledge is ranked equally to or higher than the outstanding pledge on the same property.

 

Article (182)

 

The Court may permit in the preventive composition or restructuring procedures that the debtor obtains finance with a guarantee higher than or equal to any outstanding guarantee on his properties, if the Court finds that the new finance shall not affect the interest of the holder of the outstanding guarantee.

 

Chapter 5 Setoff

 

Article (183)

 

  1. A setoff may be conducted between the debtor and the creditor, if its conditions are satisfied before initiating procedures, according to the provisions of Section 3 or 4 of this Decree Law.

  2. No setoff shall be conducted between debts created after initiating procedures, according to the provisions of Section 3 or 4 of this Decree Law, unless conducted based on the implementation of the preventive composition scheme, the restructuring scheme or the decision of the Court.

  3. The remainder of the debt due to the creditor, after the setoff, shall be included in the debts of the debtor and shall be ranked the same as the principal debt. The remainder due to the debtor shall be included in the properties of the debtor and shall be paid to any trustee appointed according to the provisions of Section 3 or 4 of this Decree Law, as the case may be.

  4. If the creditor transfers his debt to third party, the setoff between the debtor and the third party shall apply only if the Court finds that this is made in good faith including the condition of the creditor’s acquisition by third party.

 

Chapter 6

Order of Debts Repayment

 

Item 1

Debts Repayment at Preventive Composition or Restructuring Stage

Article (184)

The following debts shall be repaid upon maturity in the order of priority below:

  1. Any judicial fees or charges or fees and costs of any trustee appointed according to the provisions of Section 3 or 4 of this Decree Law and any amount disbursed during the related procedures or transactions according to the provisions of Section 3 or 4 of this Decree Law.

  2. Any fees, expenses or costs incurred after the issue of decision of initiating procedures, due to supplying the debtor with commodities and services or to continue the performance of any contract, according to the provisions of this Decree Law, to the extent such fees, costs and expenses realize benefit for the business or properties of the debtor.

  3. Any non-guaranteed new finance obtained according to the provisions of Chapter 4 of Section 5 of this

Decree Law including the principal debt, interests and unpaid related expenses. This shall apply if the

value of the guarantee granted to the new finance is insufficient to pay the whole amounts due to repay such finance.

 

Item 2 Order of Priorities upon Bankruptcy and Liquidation

Article (185)

  1. If the Court judges the declaration of bankruptcy and liquidation of properties of the debtor, according to the provisions of Section 4 of this Decree Law, the holders of debts guaranteed by pledge or lien shall ranked higher than other ordinary creditors, insofar their guarantees.

  2. All reasonable fees and expenses incurred by the trustee in the procedures of selling the guaranteed properties shall be deducted from the proceeds of sale of the properties that guarantee the guaranteed debts, before the distribution to the creditors of guaranteed debts.

 

Article (186)

 

If the trustee fails to initiate selling the guarantee-burdened properties within one month from the date of delivery of judgment of the declaration of bankruptcy and liquidation of properties of the debtor, the creditors, holders of debts guaranteed by pledge or lien, have the right to apply for the permission of the Court to enforce their guarantees, even if not admitted yet. The Court shall decide on granting permission within (10) ten business days from the date of application.

 

Article (187)

 

  1. By way of exception from Article (185) of this Decree Law, if the trustee finds that the revenues generated from the sale of any guarantee-burdened properties are insufficient to meet the fees of the trustee and any related costs pertinent to the sale of such properties, he may elect not to continue such sale. The trustee shall notify the creditor, the guarantee holder, in writing immediately of any decision taken in respect of not continuing the sale of guarantee-burdened properties.

  2. The creditor may object to the decision of the trustee within (3) three business days from the date of notifying him. The Court shall issue its decision in respect of the objection within (5) five business days without pleading. The Court’s decision on this regard shall be final.

 

Article (188)

 

  1. If there is a surplus of the proceeds of selling the properties that guarantee the guaranteed debt, the surplus shall be delivered to the trustee, for benefit of the debtor.

  2. If the proceeds of selling the properties of guarantee are less than the value of the guaranteed debt, having paid the fees and expenses, the remainder of the guaranteed debt shall be considered an ordinary debt owed by the debtor.

 

Item 3 Order of Preferential Debts

Article (189)

1. The following debt classes shall be preferential debts and shall be repaid in the following order:

  1. Any judicial fees or charges including the fees of trustees and experts and any expenses disbursed in benefit of the common interest of the creditors to maintain and liquidate the properties of the debtor.

  2. Unpaid end of service gratuity, wages and salaries of the employees, workers and staff of the debtor periodically paid (save for any kind of allowances, bonuses, other incidental payments or any other benefits, whether in specie or in kind) which total shall not exceed maximum the wage or salary of (3) three months. The Court may permit the payment of wages and salaries due to the employees, workers and staff of the debtor for a period of not more than (30) thirty days, from the properties of the debtor in his hand.

  3. Debts of maintenance paid by the debtor under a judgment delivered by a competent court.

  4. The amounts payable to the governmental bodies.

  5. Any fees, costs or expenses incurred after the date of decision of initiating procedures to procure commodities and services to the debtor or to continue the performance of any other contract that fulfills benefit of business or properties of the debtor; or any fees, costs or expenses incurred to continue the course of business of the debtor after the date of initiating procedures, according to the provisions of this Decree Law.

 

2. Subject to the order of priorities set out in paragraph (1) of this Article, the creditors in each class of debts abovementioned shall be equally ranked, unless the properties of the debtor are insufficient to meet same. In this case, the rank of debts shall be equally reduced.

 

Chapter 7 Grievance and Appeal

 

Item 1 Grievances

 

Article (190)

 

If the trustee appointed according to the provisions of Section 3 or 4 of this Decree Law fails to notify any creditor to attend any meeting of the creditors or no publication is made according to the provisions of this Decree Law, the aggrieved creditor may lodge grievance to the Court, according to the specific provisions in the following paragraphs:

  1. The grievance applicant shall file his grievance within (10) ten business days begin from the day following his knowledge of the meeting. The grievance shall not suspend the procedures.

  2. The Court shall urgently decide on the grievance after the trustee’s invitation and shall issue decision of approving or rejecting the grievance. The Court’s decision in this regard shall be final.

  3. If the Court approves the grievance, it may judge the stay of execution or revocation of any decision previously issued based on the results of such meeting, provided that the remaining creditors shall not be harmed.

 

Article (191)

 

  1. Any interested party may submit grievance to the court, if the trustee commits any of the following works:

    1. Proposed to act or acted unfairly to the detriment of his interests.

    2. Neglects or fails to duly perform his tasks in due diligence; or

    3. Abuses or retains any monies or properties of the debtor or breaches any obligation due to the debtor.

 

  1. The grievance shall be submitted within (5) five business days from the date of knowing about such act. The Court shall either reject the grievance or issue any appropriate decision, including the decision whereby the appointment of any trustee, appointed according to the provisions of Section 3 or 4 of this Decree Law, is terminated and a substitute trustee shall be appointed in the same decision. The grievance shall not suspend the procedures.

 

Item 2 Appeal

 

Article (192)

 

Without prejudice to the express provisions of this Decree Law, the decisions or judgments issued by the Court, according to this Decree Law, shall not be appealed. Further, no grievance shall be submitted against the decisions of the Court or the decisions issued by any trustee appointed according to the provisions of Section 3 or 4 of this Decree Law.

 

Article (193)

 

The Court of Appeal, at request of the appellant, may decide the stay of execution of the appealed decision until the subject of appeal is decided. In this case, the Court may request the appellant to provide a security in rem or a bank security issued by a bank operating in the state or any other security accepted by the Court which is sufficient to rectify any damage due to the invalidity of the application, during the period specified by the Court.

 

Article (194)

 

The debtor or the creditor may appeal any decision or judgment issued by the Court in respect of the approval or rejection of initiating procedures, according to the provisions of Section 3 or 4 of this Decree Law.

 

Article (195)

 

If the debtor is a natural person, he or any of his dependents may appeal the decision of the Court regarding the sale, pledge or disposition made to any properties allocated for their support, according to the provisions of Section 3 or 4 of this Decree Law.

 

Section 6 Penalties and Rehabilitation

 

Chapter 1 Penalties

 

Article (196)

 

Every person works at the juristic person subject to the provisions of this Decree Law and plays an effective role in making decisions therein shall be considered a manager, in this Section. This shall include the person under whose directives and instructions the managers act.

 

Article (197)

 

Everyone declared bankrupt by a final judgment shall be sentenced to prison for not more than five years, if he commits either of the following acts:

  1. Hides, damages or alters all or part of his books to harm his creditors.

  2. Embezzles or hides part of his properties to harm his creditors.

  3. Knowingly admits debts which are not due, whether the representation is made in writing, orally, in the balance sheet or by abstention from providing papers or clarifications, while he knows the consequences of such abstention.

  4. Procures preventive composition or restructuring through fraudulence.

  5. Fraudulently increases his liabilities or undervalues his properties or obtains any other settlement.

 

 

Article (198)

 

The directors of board, managers and those in charge of liquidation of the company shall be sentenced to prison for not more than five years and a fine of not more than (1,000,000) one million Dirhams, if after the issue of a final decision of initiating procedures against the company, they commit either of the following acts:

  1. Hide, damage or alter all or part of books of the company to harm the creditors.

  2. Embezzle or hide part of properties of the company.

  3. Knowingly admit debts which are not owed by the company, whether the representation is made in writing, orally, in the balance sheet or by abstention from providing papers or clarifications in their possession, while they know the consequences of such abstention.

  4. Procure preventive composition or restructuring of the company through fraudulence.

  5. Fail to announce the truth of the subscribed or paid capital, distribute simulating profits or seize remunerations in excess to the amount provided in the law, memorandum of association or articles of association of the company.

  6. The penalty provided in this Article shall not apply to whoever is evidently not engaged in the work of crime or evidently reserved to the decision issued in his regard.

 

Article (199)

 

Whoever is declared bankrupt by final judgment and it is evident that the declaration of bankruptcy was due to his gross default that caused the loss of his creditors for committing one of the following acts shall be sentenced to prison for not more than two years and/or a fine of not more than (60,000) sixty thousand Dirhams:

  1. Expends considerable amounts in false speculations not required by his business or makes gambling works.

  2. Discharges the debt of one creditor to harm the remaining creditors, after being in default of payment for more than (30) consecutive business days or if he is in the condition of account receivable, even if for purpose of procuring preventive composition or restructuring.

  3. Disposes in bad faith of his properties in less than its price in the market or seeks means harmful in nature or course to harm the creditors for purpose of delaying the declaration of his bankruptcy and liquidation of his properties or delaying the rescission of preventive composition scheme or financial restructuring scheme.

 

Article (200)

 

Whoever is declared bankrupt by final judgment shall be sentenced to prison for not more than one year and a fine of not more than (30,000) thirty thousand Dirhams, if he commits either of the following acts:

  1. Fails to keep adequate commercial books to reflect his real financial position or fails to conduct the inventory imposed by the law.

  2. Concludes, for benefit of third party, undertakings without consideration, which are deemed substantial compared to his financial condition when made.

  3. Abstains from providing the data requested by the trustee appointed according to the provisions of Section 4 of this Decree Law or the Court, or deliberately provides them with false data.

  4. After being in default of payment, permits a special privilege to a creditor to procure the approval of the preventive composition or restructuring.

  5. Expends considerable amounts on his personal expenses or his house expenses whether before or after being in default of payment.

  6. Repay any debt in breach of the preventive composition scheme or restructuring scheme approved by the Court or disposes of any properties in breach of the scheme.

 

Article (201)

 

The directors of board, managers and liquidators of the company which bankruptcy is declared by final

judgment shall be sentenced to prison for not more than two years, if they commit either of the following acts:

  1. Fail to keep adequate commercial books to reflect the real financial position of the company or fail to conduct the inventory imposed by the law.

  2. Abstain from providing the data requested by the trustee appointed according to the provisions of Section 4 of this Decree Law or the Court, or deliberately provide them with false data.

  3. Dispose of properties of the company after being in default of payment, to hide the properties from the creditors.

  4. After the company was in default of payment, repay the debt of a creditor to harm the remaining creditors or give special securities or privileges to a creditor in preference over the remaining creditors, even if for purpose of procuring preventive composition or restructuring.

  5. Dispose in bad faith of the properties of the company in less than its price in the market or seek means or ways detrimental to interest of the creditors for purpose of procuring money to avoid or delay the default of payment or declaration of bankruptcy or rescission of preventive composition or restructuring.

  6. Expend considerable amounts in false speculations or gambling not required by business of the company.

  7. Concludes, for benefit of third party, undertakings without consideration, which are deemed substantial compared to his financial condition when made.

  8. The penalty provided in this Article shall not apply to whoever is evidently not engaged in the work of crime or evidently reserved to the decision issued in his regard.

 

Article (202)

 

  1. Any trustee or expert appointed by the Court, according to the provisions of this Decree Law, shall be sentenced to prison for not more than five years and a fine of not more than (1,000,000) one million Dirhams, if he seizes or embezzles any of the properties of the debtor during its management.

  2. The penalty shall be prison and/or fine, if he provides deliberately false information related to procedures.

Article (203)

 

Every person embezzles, steals or hides properties of the debtor, after the decision of initiating procedures, according to the provisions of Section 3 or 4 of this Decree Law, even if the person is a spouse, ascendant or descendant of the debtor or the ascendant or descendant of his spouse, shall be sentenced to prison and/or fine. The Court shall, proprio motu, judge returning the properties, even if judgment of acquittal is delivered in the crime. At request of the concerned parties, the Court may judge compensation, if required.

 

Article (204)

 

Every creditor of a debtor whose bankruptcy is declared shall be sentenced to prison, if he commits either of the following acts:

  1. Fraudulently increases his debts owed by the debtor.

  2. Agree with the debtor or other on special privileges for himself against voting in the composition or restructuring deliberations.

  3. Enters into secret arrangement with the debtor after being in default of payment which acquires him special privileges that harm the remaining creditors, while he is aware thereof.

The Court shall, proprio motu, judge the invalidity of the said arrangements for the debtor and any other person and order the creditor to return whatever is seized under the void arrangement, even if a judgment of acquittal is judged. The Court may judge compensation, if required, at request of the concerned parties.

 

Article (205)

 

Everyone fraudulently provides simulating debts in name of his own or others, during the preventive composition, restructuring or bankruptcy and liquidation procedures, shall be incarcerated.

 

Article (206)

 

Every debtor shall be sentenced to prison for not more than five years, if:

  1. Deliberately hides all or part of his properties or exaggerates its appraisal to procure preventive composition or restructuring.

  2. Deliberately enables a false creditor or a creditor who is prohibited from engagement in the preventive composition or restructuring or exaggerating his debt to be engaged in the deliberations and voting, or let him deliberately to be engaged therein.

  3. Deliberately omits stating a creditor in the list of creditors.

 

Article (207)

 

Every creditor shall be incarcerated, if:

  1. Deliberately overestimates his debts.

  2. Engaged in deliberations or voting on the preventive composition scheme or restructuring, while he knows that he is legally restricted to.

  3. Enters into secret arrangement with the debtor that acquires him special privileges that harm the remaining creditors, while he is aware thereof.

 

Article (208)

 

Everyone who is not a creditor and is knowingly engaged in preventive composition or restructuring deliberations or voting on the preventive composition scheme or restructuring scheme, without permission of the trustee or the Court shall be incarcerated.

 

Article (209)

 

If the crime is pertinent to an arrangement concluded by the debtor with a creditor to confer special privileges on the creditor, against voting on the preventive composition scheme or restructuring in detriment to the remaining creditors, the Criminal Court may, proprio motu, judge the annulment of such arrangement and order the creditor to return whatever he seized under the void arrangement, even if a judgment of acquittal is delivered in the crime. The Court may judge compensation, if required, at request of the concerned parties.

 

Article (210)

 

Every supervisor deliberately provides or supports false data regarding the financial condition of the debtor shall be incarcerated.

 

Article (211)

 

  1. Any trustee appointed according to the provisions of Section 3 or 4 of this Decree Law shall provide the Public Prosecution during investigation or criminal trial with all requested instruments, documents, clarifications and information.

  2. The instruments and documents during the investigation or criminal trial shall be kept with the process server department of the Court. Unless otherwise is decided by the Court, such instruments and documents may be accessible and formal copies thereof may be requested.

  3. The instruments and documents shall be returned after the completion of investigation or trial, against a receipt.

 

Article (212)

 

  1. If the Court decides initiating preventive composition or restructuring procedures, according to the provisions of Section 3 or 4 of this Decree Law, any criminal procedures taken or will be taken against the debtor, if arising from lawsuits of issuing a bad cheque for the cheques issued by the debtor before initiating the preventive composition or restructuring procedures, shall be suspended.

  2. If the Court judges suspension of criminal procedures, according to paragraph (1) of this Article, the creditor, bearer of bad cheque, shall be included in the creditors and his debt shall become part of total debts of the debtor.

  3. The effect of suspension of criminal procedures against the debtor shall continue until the Court that hears the preventive composition or restructuring application, as the case may be, decides on the application and approves the settlements concluded with the creditors of the debtor, according to the rules regulating the required procedures in this Decree Law.

  4. If the Court approves the arrangement reached by the debtor and his creditors, according to the provisions of this Decree Law, this shall automatically extend the suspension of criminal procedures taken against the debtor until the preventive composition or restructuring procedures, as the case may be, are completed.

  5. If the debtor obtains a decision from the competent body of the completion of implementing the required procedures and settlement of debts owed by the debtor to the cheque bearer creditor, the debtor may apply to the Court that hears the criminal action, according to Article (401) of the Penalty Code, to issue decision of termination or stay of execution of the criminal action, as the case may be.

 

Article (213)

 

Unless otherwise is provided by the law, any civil or commercial claims or applications related to the application of the provisions of this Decree Law shall remain independent from any criminal action filed according to the provisions of this Section. Such claims or applications shall not be heard by or referred to the Criminal Court.

 

Article (214)

 

The Court may publish all criminal judgments delivered in the crimes provided in this Decree Law in the ways prescribed for the publication of the declaration of bankruptcy according to the provisions of Section 4 of this Decree Law.

 

Article (215)

 

Upon conviction in the crimes provided in Articles (197, 198, 199, 200 & 201) of this Decree Law, the Court may prohibit the sentenced person from directly operating, managing, supervising or playing any role in the management of any company established according to the provisions of the Commercial Companies Law or transacting any other business, for not more than (5) five years from the date of completion of the bankruptcy and liquidation procedures. The name of the sentenced person shall be added to the commercial or professional registration, as the case may be.

 

Article (216)

 

The penalties set out in this Section shall not prejudice any harsher penalty provided in any other law.

 

Chapter 2 Rehabilitation of the Debtor Declared Bankrupt

Article (217)

Unless otherwise is required by the provisions of this Chapter, the rights stripped of the debtor who is declared bankrupt under the provisions of this Decree Law or any special laws shall return upon the expiration of five years from the date of completion of the declaration of bankruptcy and liquidation of properties procedures.

 

Article (218)

 

The debtor who is declared bankrupt shall be rehabilitated, even if the period provided in Article (217) of this Decree Law has not expired yet, if the debtor discharges all his debts in terms of principal amounts, charges and interests for one year period, including the part in which he was cleared.

 

Article (219)

 

The debtor who is declared bankrupt may be rehabilitated, even if the period provided in Article (217) of this Decree Law has not expired yet, in the two following cases:

  1. If he obtains a settlement from his creditors and satisfies its conditions. This provision shall apply to the general partner in a company which bankruptcy is declared, if the partner obtains a special settlement and satisfies its conditions.

  2. If the creditors evidently discharged the debtor of all debts that remained outstanding, after the completion of bankruptcy and liquidation procedures.

 

Article (220)

 

The debtor, who is declared bankrupt against whom a judgment of conviction in one of the crimes provided in Article (197) of this Decree Law, shall be rehabilitated only after the expiration of (3) three years after serving the judged penalty, his pardon, or time bar, provided that the debtor discharges all his debts in terms of principal amount, interests and charges or concludes a settlement with the creditors, in its regard.

 

Article (221)

 

The debtor who is declared bankrupt may be rehabilitated after his death, at request of the successors. The dates provided in Articles (219) and (220) of this Decree Law shall be calculated from the date of death.

 

Article (222)

 

If a creditor abstains from receiving his debt, is absent or his address cannot be identified, the debt may be brought into the Court. The deposit receipt shall be considered an acquittal in connection with rehabilitation.

 

Article (223)

 

  1. The rehabilitation application shall be submitted with the attached supporting documents to the Court that delivered the judgment of declaration of bankruptcy and liquidation.

  2. The Court shall send a photocopy of the application to the Public Prosecution and the Commercial or Professional Register Administration in which the debtor is registered, as the case may be. The Court shall notify the creditors whose debts are admitted in the bankruptcy procedures of the rehabilitation application.

 

Article (224)

 

The Public Prosecution shall submit to the Court, within (20) twenty business days from the date of receiving the photocopy of the rehabilitation application, a report that contains data of the judgments delivered against the debtor who is declared bankrupt in bankruptcy crimes or the trials or investigations conducted with him in this regard and its opinion in acceptance or rejection of the rehabilitation application, provided that such opinion is accounted for.

 

Article (225)

 

Every creditor whose debts are admitted and has not received his debts may submit an objection to the rehabilitation application, within (15) fifteen days from the date of being notified. The objection shall be made by a written application to the Court with the attached supporting documents.

 

Article (226)

 

After the expiration of the period provided in Article (225) of this Decree Law, the Court shall notify the creditors who submitted objections to the rehabilitation application on the date of the hearing scheduled to hear the application.

 

Article (227)

 

  1. The Court shall decide on the rehabilitation application by a judgment appealable before the competent Court of Appeal.

  2. If the rehabilitation application is rejected, the application may be re-submitted after the expiration of six months from the date of delivery of the final judgment of its rejection.

 

Article (228)

 

If investigations with the debtor who is declared bankrupt are conducted in one of the bankruptcy crimes, before deciding on the rehabilitation application, or a criminal action is filed against him in this regard, the Public Prosecution shall notify the Court immediately. The Court shall suspend deciding on the rehabilitation application until the investigations are closed without filing the criminal action or the delivery of final judgment therein.

 

Article (229)

 

If a final judgment of conviction is delivered against the debtor in one of the bankruptcy crimes, after the delivery of judgment of rehabilitation, the latter judgment shall be considered as if never delivered. The debtor shall not be rehabilitated unless on the conditions provided in Article (220) of this Decree Law.

 

Section 7 Closing Provisions

 

Article (230)

 

  1. Articles (417, 418, 419, 420, 421 and 422) of the Federal Law No. (3) of 1987 on the Issue of the Penalty Code shall be repealed.

  2. The Fifth Book of the Federal Law No. (18) of 1993 on the Issue of the Commercial Transactions Law shall be repealed.

  3. Every provision contravenes or contradicts the provisions of this Decree Law shall be repealed.

 

Article (231)

 

This Decree Law shall be published in the official gazette and shall come into force three months after the date of publication.

Federal Decree-Law No.9 Of 2022 Concerning Domestic Workers

Location: United Arab Emirates

Labour And Immigration

Issued On: 2022-09-05
Type: Federal Law

Article 1 Definitions

For the purposes of implementing the provisions of this Decree-law, the following terms and expressions shall have the meanings opposite thereto unless the context requires otherwise:

State : United Arab Emirates

 

Ministry : Ministry of Human Resources and Emiratisation

 

 

Minister : Minister of Human Resources and Emiratisation

 

Domestic Service : Services performed by a worker to an employer

or his/ her family in the employer’s residence in accordance with the provisions of this law.

 

Domestic Worker : A natural person who performs a household

service for a wage under the direction, supervision, and guidance of his / her employer

 

Employer : Any individual or recruitment agency that hires a

worker for domestic duties.

 

Family/ the Employer's Family

: Any individual bound by kinship or marriage to the employer or receiving financial support from the employer in accordance with applicable laws.

 

Workplace : Permanent or temporary residence of the

employer/beneficiary or his/her family, including residential properties , farmland or similar facilities

 

Recruitment Agency : A company authorized to act as an intermediary )

whether through a physical location or a digital channel) to recruit workers upon the employer's request, or to assign temporary employees to jobs in accordance with the provisions of this decree law.

 

Direct recruitment of a Named Domestic Worker

 

 

Temporary Employment

: A domestic worker may be recruited by the domestic worker recruitment office from outside the list of domestic workers registered with the office based upon the employer's request and demand.

 

: In this system, an agency hires a worker for the purpose of assigning the worker to a third party

 

 

 

 

 

 

Recruitment of Domestic Workers through Mediation

(the beneficiary), in accordance with the requirements of this law, to perform a particular category of tasks under the beneficiary’s supervision and direction.

 

: A service provided by the recruitment agency in which domestic workers are recruited to be registered under the employer's file without the agency becoming a party.

 

Beneficiary : Any natural person who employs a domestic

worker to perform certain tasks under his/her supervision and direction pursuant to a temporary employment terms and conditions. It may be for a specific period of time or for the purpose of performing a specific task or service.

 

Employment Contract

: Any Contract between an employer and a domestic worker governing the rights and obligations of both parties in accordance with the unified standard contract adopted by the Ministry.

 

Probation Period : A trial period required by the employer for a

newly hired domestic worker, which allows the employer to evaluate the worker’s performance, conversely, allow the domestic worker to be familiar with his/her responsibilities and the work environment, and accordingly, the employment contract may be continued or terminated in accordance with this Decree-Law, its Implementing Regulation, and the decisions issued in implementation thereof.

 

Basic Remuneration : The basic salary specified in the employment

contract, without additional bonuses, allowances, or any other benefits.

 

 

 

 

Total Remuneration : Basic wage plus all allowances, bonuses in

addition to any other benefits stipulated in the domestic worker's employment contract –if any.

 

Article 2 Objectives of the Decree-Law

The following objectives are intended to be achieved by this Decree-Law:

  1. Establishing a framework for employment relationships with domestic workers in the state, outlining the responsibilities of the parties, in a manner that ensures an equitable balance between the rights of both parties.

  2. Maintaining a safe and healthy working environment for domestic workers in compliance with local laws and international agreements.

 

 

Article 3 Scope of Application

  1. The provisions of this Decree-law shall apply to the recruitment and employment of domestic workers whose occupations are listed in its Implementing Regulation.

 

  1. The Minister may amend the occupations stipulated in Clause (1) of this Article in order to meet market demand for domestic workers.

 

  1. In the event that the domestic worker travels abroad with his / her employer or family members, it is mandatory for all parties to the employment contract to abide by the terms of the employment contract unless otherwise provided by the laws of the foreign country of destination.

 

Article 4

 

 

Licensing of Domestic Workers Recruitment Agencies

  1. Domestic workers may not be hired or temporarily employed without a license from the Ministry, in accordance with the provisions of the Implementing Regulation of this Decree-Law and the decisions of the Ministry relating thereto.

  2. Domestic workers may only be recruited or employed in accordance with the requirements, regulations, and procedures stipulated in this Decree- Law, its implementing its Implementing Regulation and the decisions of the Ministry relating thereto, as well as any other relevant legislation in force in the UAE, subject to compliance with any licensing requirements for each occupation, where applicable.

  3. Recruiting or hiring a domestic worker under the age of 18 is prohibited.

  4. The following acts must not be committed by employers and recruiters of domestic workers, whether they are hired on a temporary basis or retained on a permanent basis:

    1. Discrimination against domestic workers on the basis of race, color, gender, religious belief, nationality, ethnic origin, or disability, which would hinder equal opportunities or prejudice adequate employment opportunities and rights.

    2. Any form of sexual harassment perpetrated against a domestic worker, whether it is verbal or physical in nature.

    3. Forced labor or any practice that constitutes human trafficking according to local laws and state-ratified agreements.

  5. The Ministry prohibits the employment of domestic workers for any tasks that are not covered by this decree-law without obtaining a prior approval.

  6. The Minister shall issue a decree regulating recruitment agencies setting forth the conditions that should be satisfied by employers in order to be able to recruit and employ domestic workers governed by the provisions of this decree-law, as well as the rules, procedures, statements and forms that must be used by these recruitment agencies.

 

 

 

 

 

Article 5 Recruitment Agencies' Obligations

The following principles are to be observed by recruitment agencies:

  1. Avoid recruiting a domestic worker from his/her country of origin without first providing him/her with information regarding the type, nature, and wages of the work required. Furthermore, it is necessary to proof that the domestic worker is physically, psychologically, and professionally fit, taking into consideration the nature of each profession, in addition to other conditions specified in the Implementing Regulation of this decree-law and the decisions of the Ministry relating thereto.

 

  1. It is prohibited for the Agency to demand or accept, directly or indirectly, any commission for securing the job from any domestic worker or to charge them any expenses.

 

 

  1. Required medical examinations for the domestic worker must be conducted within a period of 30 days prior to the domestic worker's arrival in the UAE.

 

  1. Provide education and exposure to the customs and traditions of UAE society to the domestic worker.

 

 

  1. The Agency should provide a decent equipped temporary accommodation for domestic workers (whether they are registered under the office or mediated by the office for that purpose, for the period before moving to their workplace or those who are returned to the office for any reason), in accordance with the rules and regulations pertaining to labor accommodations in the state and any other requirements set by the Ministry.

 

  1. Being courteous to the domestic worker and treat him/her with respect and avoid exposing him/her to violence.

 

 

 

 

  1. Make certain that domestic workers are aware of their rights and direct them to the proper channels in the event that their rights or freedom are violated.

 

 

  1. Provide the employer with a booklet of wage receipts or any other documentation that proves the payment of wages to the domestic worker to ensure that the latter receives his/her wages in accordance with the process and channels specified by the Ministry.

 

  1. Assume the cost of repatriating the domestic worker, and provide the employer with a suitable replacement without incurring any additional expenses, or reimburse the employer for all payments made, in accordance with the decisions issued by the Ministry.

 

 

  1. Additional obligations of Recruitment Agencies towards domestic workers, employers, the Ministry, and recruitment agencies outside the country, as outlined by the Implementing Regulation of this Decree-Law and the decisions of the Ministry relating thereto.

 

Article (6)

Domestic Worker's Employment Contract

  1. Recruitment agencies and employers shall enter into a Contract, in accordance with the unified standard contract mandated by the Ministry, defining their respective responsibilities relating to the recruitment of domestic workers, in particular, this contract shall include the following:

 

  1. Recruiting domestic workers based on the employer's requirements

  2. Employers must comply with domestic workers rights and privileges, particularly those related to the type of work and total wages.

 

  1. Amounts incurred by the employer in connection with the domestic worker's travel from their home country to the UAE and the

 

 

compensation for the services rendered by the recruitment office. The Minister may, after the approval of the UAE Cabinet, establish the controls and fees structure for recruitment services.

 

  1. Time required for the completion of the recruitment process.

 

  1. In the event that the recruitment agency fails to comply with the provisions contained in clause (1) herein, the recruited domestic worker may be refused employment by the employer. In this case, the provisions outlined in the Implementing Regulation and any relevant decisions issued by the Ministry regarding the provision of an alternative domestic worker or reimbursement of recruitment fees to the employer will apply. This is without prejudice to the employer's right to seek compensation from the recruitment office for any damages incurred as a result of the breach of contract.

 

Article 7 Employment Contract

  1. Employers are required to enter into an employment contract with domestic workers in accordance with the unified standard contract mandated by the Ministry of Labor, and a copy of the contract must be given to the worker.

 

  1. The employment contract shall clearly indicate the names of both parties, the date of the contract, date of joining, nature and place of work, duration of the contract, total amount of remuneration, payment method, authorized leave, probation period, rest periods, as well as any instances that may result in the termination of the contract, as outlined in the Ministry's standard contract unified standard.

  2. The duration of a limited employment contract is two years and may be renewed for a similar period. A contract may be extended under the same conditions if both parties continue to apply the contract after the expiration of its initial term it should be understood that the original contract has been extended, under the same conditions including the duration of the contract. Upon mutual agreement of the parties to the

 

 

employment contract, the contract may be terminated prior to its expiration date.

 

Article 8 Probation Period

The employer may appoint a domestic worker on a probationary basis for a period of not more than (6) six months from the date of employment.

 

Article 9

Working Hours and Weekly Holiday

  1. Domestic workers are entitled to a paid weekly rest day under the Implementing Regulation of this Decree-Law. If the domestic worker is required to work during his rest day, she/ he shall be granted alternate one day off for rest or be compensated cash in lieu for this rest day.

  2. Domestic workers are entitled to rest of at least twelve hours (12) per day, of which at least eight (8) hours are consecutive working hours, in accordance with the executive decisions issued by the Ministry.

 

Article 10 Leaves

  1. The domestic worker is entitled to an annual leave of not less than 30 days for each year of service which shall be paid in full before his/her departure on annual leave. For periods exceeding six months but less than one year of service, the domestic worker shall be entitled to two days per month. Depending on the circumstances, the employer may determine the date on which annual leaves are to commence, and he may choose to divide the leave into two parts if necessary.

 

  1. The employer should pay the domestic worker's wage in addition to cash in lieu of leave for the days during which he/she worked if the exigencies of his/her work necessitate the domestic worker to work during his/her annual leave in whole or in part, and the period of leave during which

 

 

he/she has worked has not been carried forward to the next year. However, it is prohibited for a domestic worker to work during his/her annual leave more than once during two consecutive years.

 

  1. A domestic worker's annual leave includes holidays prescribed by law that occur during the period of his/her annual leave.

 

  1. In the event that a domestic worker wishes to spend his/her annual leave in his/her home country, the employer must incur the cost of the return ticket once every two years. In the event that both parties agree to terminate the contract following the domestic worker annual leave, the employer will bear the cost of the return ticket only.

 

  1. Upon expiration or termination of the domestic worker's employment contract, he / she will be entitled to receive cash in lieu of the unused annual leave days. The cash in lieu of leave is calculated on the basis of the last remuneration received by the worker.

 

  1. Domestic workers are entitled to a sick leave of 30 days for each year of service either continuous or intermittent, which may be availed whenever a medical report issued by an approved health authority demonstrates that the worker is in need of such leave, calculated in the following manner:

 

    1. The first fifteen days are paid in full.

    2. The next thirty days at half pay.

 

  1. If the domestic worker's behavior contributed to the illness, no payment will be made during sick leave.

 

Article 11 Obligations of the Employer

Employers are required to follow the obligations outlined in employment contracts in addition to the following:

 

 

  1. Provide all the facilities needed for the domestic worker to perform his/ her duties effectively.

 

  1. Prepare an appropriate accommodation for the domestic worker.

 

  1. Provide the domestic worker with meals and clothing necessary for the performance of their duties, provided that the worker is employed on a full-time basis and not on temporary basis unless agreed otherwise.

 

  1. Timely payment of remuneration to domestic workers in accordance with the employment contract, this Decree-Law and the Ministry's decisions.

 

  1. Incur the costs of the domestic worker's medical care in accordance with the health system in effect in the state, or, alternatively, provide the domestic worker with appropriate health insurance in accordance with the laws and regulations governing the state's health system.

 

  1. Be respectful of the domestic worker, treat him/her with courtesy, and maintain his/her dignity and safety.

 

  1. In no case may the domestic worker be employed by any other person except in accordance with the Implementing Regulation of this Decree- Law and the decisions issued by the Ministry.

  2. Refrain from hiring any domestic worker unless he/she has a valid license to work, as outlined in this Decree-Law and in the decisions issued by the Ministry.

  3. Providing the prescribed compensation for work injuries and occupational diseases as provided for in Decree-Law No. 33 of 2021 regarding the regulation of labor relations referred to, and decisions issued in implementation thereof. Employers may not be relieved of this obligation unless the insurance company pays the compensation outlined herein.

 

  1. The domestic worker may not be assigned a duty that is different from the nature of his/her work, except with his/her explicit consent,

 

 

provided that the occupation is listed in the Implementing Regulation of this Decree-Law.

 

  1. The domestic worker should be allowed to retain all official documents.

 

  1. In the event of the death of a domestic worker during service, his/her heirs will be entitled to the wages for the month in which he/she died, in addition to any other entitlements due this worker.

 

  1. Employers may not charge domestic workers any costs or charges whatsoever, whether directly or indirectly, unless otherwise specified in this Decree-Law and its Implementing Regulation, in decisions issued by the Ministry, or in the contract form approved by the Ministry.

 

  1. Any violation of the applicable legislation by a domestic worker should be reported to the Ministry, and the employer must abide by any decision made by the Ministry.

 

  1. The employer shall incur the costs associated with repatriating the domestic worker to his / her country of origin in accordance with the provisions of this Decree-Law and its Implementing Regulation.

 

  1. In addition to other obligations prescribed by this Decree-Law, its Implementing Regulation and decisions made by the Ministry.

 

Article 12

Obligations of the Domestic Worker

 

Domestic workers are required to follow the obligations outlined in employment contracts in addition to the following:

  1. The domestic worker must perform his/her duties under the supervision of the Employer and in compliance with the provisions of the

 

 

Employment Contract, maintain a high standard of care and diligence while performing his/her duties, and refrain from absenteeism without valid reason.

 

  1. Observe and adhere to the customs and traditions of society.

 

 

  1. The domestic worker shall comply with the employer's instructions regarding the completion of the agreed work, unless these instructions violate the employment contract, the law, public order, public morals, or expose him/her to danger or legal repercussions.

 

  1. Provide care and maintenance for the items in his/her possession or at his/her disposal by following the necessary safekeeping procedures.

 

 

  1. A domestic worker must respect the privacy of the workplace and shall not divulge any information or secrets that may have come to his / her knowledge during the course of the employment.

 

  1. Work tools/items must not be taken outside the workplace except with the permission of the employer, and should be kept in their designated locations at all times.

 

 

  1. Provide necessary aid and assistance in the event of disasters and hazards that threaten the workplace and its occupants.

  2. In addition to other obligations prescribed by this Decree-Law, its Implementing Regulation and decisions made by the Ministry.

 

Article 13 Occupational Health and Safety

Both the employer and the domestic worker shall adhere to the approved occupational health and safety requirements and preventative health

 

 

measures, in accordance with the Implementing Regulation of this Decree-Law, in addition to any other applicable state laws.

 

Article 14 Temporary Employment

  1. The domestic workers recruitment office functions as the employer for temporary employment without affecting the obligations of the domestic worker to the person who benefits from the service or his family. Temporary employment terms are governed by the Implementing Regulation of this Decree-Law.

 

  1. Workers employed under temporary employment for beneficiaries will be subject to the provisions of this Decree-Law, which regulates the relationship between the workers and beneficiaries.

 

Article 15 Remuneration

  1. Monthly salaries are to be paid in UAE dirhams within a period not exceeding 10 days from its maturity date. The Ministry may establish the method it deems most appropriate in order to ensure the timely payment of wages.

 

  1. Domestic workers are entitled to their wages as soon as they enter the state or change their status, and the payment of the wage must be confirmed by a written receipt, or any other means determined by the Ministry.

 

Article 16 Deductions

  1. Deductions of not more than a quarter of the domestic worker's pay shall be made for debts payable in execution of a court judgment.

 

 

  1. If the domestic worker caused any loss, damage or destruction to any tools, machines, equipment or products owned by the employer, kept in the custody of the worker or under his/her disposal, then the employer has the option to deduct from the worker's pay the amount required for rectifying error or restoring the item to its original condition, this arrangement is subject to the consent of the domestic worker or approval of the Ministry if the worker declines. In such a case, the deduction cannot exceed one quarter of the domestic worker's salary.

 

 

Article 17 Suspension of Remuneration

  1. In the event that a domestic worker is imprisoned in provisional detention, his/her wages will be suspended for the duration of his confinement.

 

  1. In the event that a criminal case is filed in response to the notification from the employer against the domestic worker, if the court issues a judgment releasing the worker from standing a trial or acquits him/her, his/her remuneration for the suspension period must be paid in full, however, if the domestic worker is indicted, such pay will be forfeited.

 

  1. In the event that a criminal case is filed in response to the notification from a third party, and if a domestic worker is found guilty, his/her suspended wages will be forfeited, however, if the investigation is terminated, or if the worker is acquitted, the complainant shall be required to pay the worker his/her suspended wages, unless the domestic worker agrees with complainant otherwise.

 

Article 18

Job Abandonment

 

 

  1. A domestic worker may leave work in specified circumstances under the Implementing Regulation of this Decree-Law and in accordance with the decisions issued by the Ministry.

  2. Employers must notify the Ministry within five days if a domestic worker abandons work.

  3. A domestic worker must inform the Ministry within two days of leaving work without the employer's knowledge.

 

Article 19

Non-Default Termination

Following are the circumstances in which the employment contract terminates:

  1. Expiry of the period specified in the employment contract unless the contract is extended in accordance with the provisions of this Decree- Law and its Implementing Regulation.

 

  1. Death or total disability of the domestic worker as determined by a medical report approved by the competent State Medical Authority. Employers are responsible for the costs of repatriating a deceased or ill worker to their homeland.

 

  1. Death of the employer, however, the contract may remain valid until its expiration date provided that an agreement exists between the family and the domestic worker.

 

  1. Conviction or imprisonment of the domestic worker on a felony or misdemeanor charges.

 

  1. Mutual consent of both parties to terminate the contract.

 

  1. If the domestic worker exhausts all his / her sick leave or if the domestic worker is medically un-fit to work.

 

 

  1. In the course of a year, if the domestic worker is absent more than (10) ten consecutive days or (15) fifteen intermittent days without a valid reason.

 

  1. A breach of the contractual obligations by either party to the contract may lead to the application of the provisions of Article 20 of this Decree- Law.

 

  1. Upon the expiration of the employment contract, the employer shall pay the domestic worker's compensation within (10) ten days from the contract expiry date, depending on the circumstances and as specified in the Implementing Regulation.

 

Article 20

Termination of the Employment Contract

  1. A contract may be unilaterally terminated by either party if the other party fails to fulfill its obligations outlined in Articles 11 and 12 herein.

 

  1. If the termination of the employment contract was made for reasons not attributed to the domestic worker, the employer will be liable to pay the worker's due compensation in addition to the expenses for repatriating the worker to his/her home country.

 

  1. If the domestic worker opts to terminate the employment contract after the probation period for reasons attributed to him/her, there will be specific obligations under the following circumstances:

 

 

    1. If a domestic worker is recruited by name / direct recruitment: The worker will be liable to bear the costs of his/her repatriation to his/her home country and to any amounts due to the employer acknowledged by the domestic worker. It is the employer's responsibility to compensate domestic workers who are unable to cover the cost of their repatriation.

 

 

    1. Domestic workers recruited through recruitment agencies are subject to the provisions of Article 5 of this Decree-Law.

 

Article 21 Transfer to a New Employer

  1. Domestic workers are permitted to transfer to new employers provided that all contractual requirements are met, while observing the rights of the original employer, and in accordance with the conditions and procedures prescribed by a Ministerial decision.

 

  1. If the domestic worker joins another employer, the original employer will not be liable to pay the costs of repatriating the domestic worker to his/her home country, in accordance with Decree-Law, its Implementing Regulation and decisions issued by the Ministry.

 

 

Article 22

End of Service Gratuity

On the Minister's recommendation, the UAE Cabinet shall adopt the rules and regulations for calculation and payment of end of service gratuity for domestic workers.

 

Article 23

Resolving Disputes and Complaints

  1. In the event that a dispute arises between the employer and the domestic worker, and both parties fail to reach an amicable agreement, the dispute must be referred to the Ministry, which has the authority to take the following actions:

 

    1. The Ministry shall take all measures necessary to resolve the dispute amicably. This will be done in accordance with the procedures stipulated in this Decree-Law and decisions issued by the Ministry.

 

 

 

 

    1. The dispute shall be referred to the competent court if attempts to reach an amicable settlement within the time limit prescribed in the implementing regulation of this Decree-Law do not succeed. This should be accompanied by a memorandum which summarizes the dispute, the parties' arguments, as well as the Ministry's recommendations.

 

  1. As part of its responsibility to examine and study complaints received from employers and domestic workers recruitment agencies, the Ministry may take the following measures:

 

  1. Take all measures necessary to resolve the dispute amicably. This will be done in accordance with the procedures stipulated in this Decree-Law and decisions issued by the Ministry.

 

  1. In the event that an amicable settlement cannot be reached within two weeks of receiving the complaint, the dispute will be referred to the competent court.

 

  1. The provisions of Clause (1) of this Decree-Law and its Implementing Regulation govern disputes arising between domestic workers and domestic workers recruitment agencies.

 

  1. Litigation between the parties to a contract before the competent court will not be considered unless the procedures stipulated in this Decree- Law and its Implementing Regulation is followed.

 

  1. Following the examination of the aforementioned disputes and complaints contained herein, if the Ministry identifies any violations of this Decree-Law or its Implementing Regulation , it will take the necessary steps to control and enforce the penalties stipulated in this Decree-Law and its Implementing Regulation in accordance with the procedures established by a Ministerial decision.

 

 

  1. As a matter of principle, without prejudice to the provisions of this Article, the Ministry has the right, during the consideration of a dispute or complaint in accordance with the procedures it sets forth, obligate the Domestic Workers Agency to pay any obligations incurred under the provisions of this Decree-Law, its Implementing Regulation , or the Contract, in relation to a domestic worker, employer, or beneficiary as the case may be.

 

Article 24 Inspection

  1. Employees of the Ministry, appointed by the Minister of Justice in agreement with the Minister, for the purposes of proving violations of this Decree-Law, its Implementing Regulation, and the decisions issued in implementation thereto, enjoy the prerogatives of judicial officers. Ministry Inspectors shall have the following powers:

 

    1. Monitor the proper implementation of this Decree-Law, its implementing regulations, and the decisions issued in implementation thereto.

    2. Report violations of this Decree-Law, its implementing regulations, and the decisions issued in implementation thereto.

    3. Inspection of domestic workers recruitment agencies.

    4. Inspection of domestic workers' places of work and residence, including accommodations provided by the recruitment agency for domestic workers.

  1. Inspectors may not enter the employer's family residence without the consent of its owner, or with the permission of the Public Prosecutor in the following two circumstances:

    1. A complaint is submitted by the employer or the domestic worker

    2. Existence of reasonable evidence of violation of the provisions of the Decree-Law, its implementing regulations, and the decisions issued in implementation thereto.

  2. In accordance with Clause (2) of this Article, the places of residence and work of domestic workers are excluded, including farms, manors and similar places which are not considered a residence of the employer and his family.

 

 

 

 

Article 25

Violations and Administrative Penalties

  1. The Executive Regulation of this Decree-Law sets forth the administrative penalties applicable to violation of the provisions of this Decree-Law, its Implementing Regulation, and the decisions issued in implementation thereto.

 

  1. This Decree-Law specifies the cases where some administrative measures may be taken on the file of an employer, a domestic worker, or a recruitment agency, requiring those parties to comply with the provisions of this Decree-Law, as outlined in the Implementing Regulation and the Ministry's decisions.

 

Article 26 Legal Proceedings

  1. The state courts have jurisdiction over disputes and litigation filed under this Decree-Law, its implementing regulations, and the decisions issued in implementation thereto.

 

  1. 2

    A lawsuit concerning any of the entitlements referred to under the provisions of this Decree-Law shall not be heard after the lapse of three months from the date of termination of the employment relationship.

     

 

  1. Actions and applications filed by domestic workers shall be exempted from judicial fees throughout the entire litigation process. Such actions will be expedited.

 

Article 17 Penalties

  1. Penalties imposed under this Decree-Law shall not preclude the imposition of harsher penalties under any other law.

 

 

  1. Those who commit the following acts are subject to imprisonment for up to (6) six months, a fine of at least 20,000 dirhams (Twenty Thousand Dirhams) and up to 100,000 dirhams (One Hundred Thousand Dirhams), or one of these penalties:

 

 

    1. The submission of false information or documents with the intention of recruiting a domestic worker to work in the state.

 

    1. The act of obstructing or preventing a judicial officer from implementing this Decree-Law, it’s Implementing Regulation, and the decisions issued in implementation thereto, or attempting to prevent such officer from performing his duties, whether through force, violence, or threats of inflicting harm or violence.

 

    1. Disclosure of any secrets of the organization where he is employed (confidential information) he had access to while serving in the capacity of a public officer responsible for implementing the provisions of this Decree-Law, it’s Implementing Regulation , and the decisions issued in implementation thereto, even if such disclosure occurs after the individual leaves the organization.

 

  1. A fine of at least AED 50,000 (Fifty Thousand Dirhams) and up to AED 200,000 (Two Hundred Thousand Dirhams) shall be imposed on those who commit the following:

 

    1. Provides employment to a domestic worker without obtaining a work permit for the latter.

 

    1. Employs or recruits a domestic worker and fails to provide him/her with employment.

 

    1. Make use of work permits for domestic workers for purposes other than those for which they were issued.

 

 

    1. Closure or cessation of the recruitment agency operations without following the necessary procedures for the settlement of domestic workers' dues in violation of the provisions of this Decree-Law, its Implementing Regulation, and the decisions issued in implementation thereto.

 

    1. Recruits or employs a juvenile under the age of (18) eighteen years, in violation of this Decree-Law.

 

    1. Assisting a domestic worker to abandon employment or providing them with shelter or housing in order to exploit or employ them in an illegal manner.

 

  1. Those who commit the following acts are subject to imprisonment for up to (1) one year, a fine of at least 200,000 dirhams (Two Hundred Thousand Dirhams) and up to 1,000,000 dirhams (One Million Dirhams), or one of the two penalties:

 

    1. Engaged in any form of mediation or temporary employment of domestic workers without obtaining a license pursuant to the provisions of this Decree-Law, it’s Implementing Regulation, and the decisions issued in implementation thereto.

 

    1. Those who misuse the authorization/login credentials granted to them to access the Ministry's systems, or allowing others to access such systems in a manner that disrupts labor relations or procedures.

 

  1. Domestic Workers Recruitment Agencies who violate this Decree-law, it’s Implementing Regulation , and the decisions issued in implementation thereto shall be subject to a fine of not less than (50,000) fifty thousand dirhams, and not more than (200,000) two hundred thousand dirhams.

 

  1. A fine of no less than AED 5,000 (Five Thousand Dirhams) and no more than AED 1,000,000 (One Million Dirhams) shall be imposed on those who violate any provisions of this Decree-Law, the Implementing Regulation and the Resolutions issued in implementation thereof.

 

 

 

 

  1. According to the provisions of this Decree-Law, its Implementing Regulation , or the decisions implementing them, the fines imposed shall be multiplied in respect of the number of workers involved in the violation, up to a maximum fine of 10,000,000 (Ten Million Dirhams).

 

  1. Before the lapse of (1) one year from being convicted of a similar violation, if the offender repeats any of the violations referred to in this Decree-Law, its Implementing Regulation, and the decisions issued in implementation thereto, the penalty will be doubled.

 

 

Article 28 Final Provisions

  1. The rights stipulated herein represent a minimum set of rights for domestic workers. It is understood that the provisions of this Decree-Law shall not preclude any of the rights that may be granted to domestic workers under any other law, agreement, declaration, regulation or Employment Contract, providing greater benefits to workers than the ones specified in this Decree-Law.

 

  1. Based on a proposal of the Minister, the UAE Cabinet may amend the periods specified in this Decree-Law in a manner that is consistent with the public interest to achieve a balance in the relationship between the concerned parties.

 

  1. The UAE Cabinet or its authorized representatives shall establish a minimum salary or monthly income for expatriates wishing to recruit or employ domestic workers, as well as set other controls on this regard.

 

  1. Provisions contrary to the provisions of this Decree-Law, even if it predates its effective date, it shall be declared null and void, unless it is more beneficial to the domestic worker.

 

 

  1. The Arabic Language is the language used in all records, registers, data, contracts, forms, agreements and other documents as may be provided for in this Decree-Law or in any orders or regulations issued in implementation of the provisions hereof. The Arabic text shall be accompanied by a foreign language understood by the non-Arabic- speaking domestic worker, provided that a consistency between the two languages is maintained. If a foreign language besides the Arabic language is used. The Arabic text shall prevail in the event of a discrepancy.

 

 

Article 29 Fee Structure

Upon the recommendation of the Minister and the presentation of the Minister of Finance, the UAE Cabinet shall determine the fee structure necessary for the implementation of this Decree-Law and its Implementing Regulation.

 

Article 30 Implementing Regulation

The UAE Cabinet shall issue the Implementing Regulation of this Decree-Law in accordance with the proposal of the Minister.

 

Article 31 Repeals

  1. This Decree-Law repeals Law No. (10) of 2017 concerning domestic workers, and any provision inconsistent with the provisions of this Decree-Law shall be repealed.

 

  1. Decisions, rules, regulations and legislations in force prior to the issuance of this Decree-Law shall remain in effect and shall not conflict with its provisions until substitute laws are promulgated in accordance with its provisions.

 

 

 

 

Article 32 Publication and Commencement

This Decree Law shall be published in the Official Gazette and shall take effect

(3) three months after the date of its publication.

Federal Decree-Law No. 13 of 2022 Concerning Unemployment Insurance Scheme

Location: United Arab Emirates

Labour And Immigration

Issued On: 2022-09-15
Type: Federal Law

Article 1 Definitions

For the purposes of implementing the provisions of this Decree-law, the following terms and expressions shall have the meanings opposite thereto unless the context requires otherwise:

 

State

:

United Arab Emirates

Ministry

:

Ministry of Human Resources and Emiratisation

 

 

 

Minister

:

Minister of Human Resources and Emiratisation

Central Bank

:

Central Bank of United Arab Emirates

Unemployment Insurance Scheme

:

A form of insurance that provides a financial support for a limited period of time in the event of unemployment in exchange for a portion of the worker's/employee's contributions in accordance with this Decree-Law and pursuant to the decisions of the UAE Cabinet in this regard.

Insured

:

Workers / employees of the private sector, state government, or federal government who participate in the scheme in accordance with this Decree-Law and pursuant to the decisions of the UAE Cabinet in this regard

Worker / employee

:

A natural person working in the private sector or federal government sector.

Unemployment

:

A situation of unemployment resulting from the termination of employment by the insured's employer in accordance with the provisions of this Decree-Law and the decisions of the UAE Cabinet in this regard.

Compensation

:

Amount payable to the insured in the event of his unemployment in accordance with the provisions of this decree and the decisions of the UAE Cabinet in this regard.

Private Sector

:

Institutions, companies, establishments, and other entities wholly owned by individuals or owned jointly with the federal or local

government. Institutions and corporations wholly owned by the federal or local

 

 

 

 

 

governments, unless otherwise provided by their incorporation laws

Federal Government Sector

:

Any ministry established in accordance with Federal Law No. 1 of 1972 regarding the competencies of ministries and powers of the Ministers and amendments thereof, also included any federal authorities, institutions or regulatory bodies affiliated with the federal government.

Service Providers

:

Insurers licensed by the Central Bank that comply with the requirements for the provision of unemployment insurance, released by the UAE Cabinet following consultation with the Central Bank or any other government entity assigned to

provide unemployment insurance services.

 

 

Article 2 Objectives of the Decree-Law

 

The following objectives are intended to be achieved by this Decree-Law:

  • Providing the insured with income for a limited period of time during the period of his unemployment until an alternative employment opportunity becomes available in accordance with the provisions of this decree-law.

  • Enhancement of Emirati cadres' competitiveness on the labor market and the provision of social protection to ensure their continued decent living until an alternative employment opportunity become available.

  • Achieving a competitive knowledge economy by attracting and retaining the best international talent from skilled workers.

 

 

Article 3 Scope of Application

 

 

 

 

  1. All workers, with the exception of the following categories, are covered by this Decree-Law:

    1. Investors (Business owners who own the entire business and manage it themselves)

    2. Domestic Workers

    3. Contractual workers/employees on a temporary basis

    4. Juveniles under the age of 18

    5. Pension-receiving retirees who have joined a new employer

  2. Upon the Minister's proposal, the UAE Cabinet may amend the scope of application of this Decree-Law.

 

 

Article 4

Introduction of Unemployment Insurance Scheme

 

Under the provisions of this Decree-Law, unemployment insurance scheme shall be instituted in the State, which provides a limited cash benefit to the insured in the event of his/her unemployment. Upon the proposal of the Minister, the UAE Cabinet shall layout the process, function, and application of the scheme, as well as the value of the monthly subscription payable by the insured, in addition to setting any requirements, procedures or imposing penalties if necessary.

 

Article 5

Eligibility Requirements and Suspension of Compensation

 

In order to be eligible for compensation, the insured must meet the following conditions:

  1. There must be a minimum subscription period of (12) twelve consecutive months for the insured in the scheme.

 

 

  1. The insured may not be dismissed for disciplinary reasons under the Labor Relations Law and the Human Resources Law of the federal government in addition to any applicable legislation.

  2. The insured shall not be entitled to compensation if there has been fraud or deceit involved in his/her claim or if the establishment where he/she works is fictitious. If such a situation arises, the establishment and the insured shall be subject to the penalties and fines stipulated in the Labor Relations Regulation Law and any applicable legislation.

  3. During the period of compensation entitlement, the payment of compensation shall cease if a worker/employee is hired by another employer.

  4. Upon the Minister's proposal, the UAE Cabinet may amend the conditions for compensation eligibility.

 

 

Article 6 Compensation Amount and Duration

 

  1. A monthly compensation of 60 percent of the contribution salary is provided for a period of three months from the date of unemployment up to a maximum of Dhs.20,000 (twenty thousand dirhams).

  2. An compensation period of 3 months is available for each claim; provided that the coverage period does not exceed (12) twelve months during the insured's employment in the UAE labor market.

  3. Additional benefits may be negotiated between the insured and the service provider.

  4. Without prejudice to the provisions of Clauses 1 and 2 of this Article, upon the proposal of the Minister and in consultation with the relevant authorities, the UAE Cabinet may amend the rates, values, and periods specified in this article in order to maximize the benefits to the insured.

 

 

  1. Compensation payments made under this Decree-Law shall not prejudice any other statutory compensation or entitlements available to the insured.

 

 

Article 7 Executive Decisions

 

For the purposes of implementing the provisions of this decree-law, the UAE Cabinet shall issue the necessary decisions.

 

Article 8

Publication and Application of the Decree-Law

 

This Decree-Law shall be published in the Official Gazette and shall come into force on the date following its publication.

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