An amendment to the commercial companies law to ease liquidation of companies is under study at the Dubai Courts, Emirates Business has learnt.

Speaking on the sidelines of the Doing Business Forum, Business Environment in the Arab World being held in Abu Dhabi, Dr Ahmed Sulaiman, Head of the Courts' Presidents Offices Affairs Department, said: "Dubai Courts will soon be ready with new amendments of the commercial companies law leading to easier liquidation procedures for companies.

"The World Bank's latest report on doing business placed the UAE 15th among 20 Arab states in the field of the liquidation of companies, which is a very low position." The forum is organised by the World Bank and the Abu Dhabi Department of Economic Development.

"The current corporate law has legal gaps. It provides two ways for the liquidation of companies. The first is through the mutual consent of the partners and the second through an order from the courts. Unfortunately, many founder partners of companies don't prefer to resort to the courts because of liquidation charges of more than Dh20,000. In addition, the charges for the judicial liquidators reach Dh10,000. So, the total charges top Dh30,000, which is a sum that bankrupt and troubled companies cannot pay. Therefore, the liquidation is not done officially and the partners often do not cancel the company licence," said Sulaiman.

"The current liquidation charges are very high and a solution must be found for this. The solution might be the cancellation or a very big reduction in these charges.

"Abu Dhabi's Judicial Department dealt with similar problems through an administrative decision exempting the companies from the charges. Dubai Courts is holding discussions with the Judicial Department to know whether its administrative decisions related to company liquidation are contradicting with the corporate law.

"At present we are looking into a new legislation reducing or cancelling the liquidation charges so that the UAE's position among Arab states in the field of company liquidation improves," he said.

Suliaman said the Dubai Courts have taken many steps for the quick settlement of cases. It was decided that cases would be adjourned in their first session and there is often a one-week period between the first and second sessions. The remote registration project was also applied via the internet. Legal offices can register cases over the net and the courts inform them of the sentences over the web, too, speeding up the judicial process.

"In Q3 2009, Dubai Courts looked into more than 10,000 cases and settled most of them. There has been an increase in commercial cases," he added.

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