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Read more informationFEDERAL CABINET RESOLUTION NO. 4 OF 2018 FORMING THE FINANCIAL RESTRUCTURING COMMITTEE
On issuance of Federal Bankruptcy Law under the Federal Decree No. 9 of 2016 for various bankruptcy cases. On 19 October 2017, the current Cabinet members have been reshuffle by H.H. Sheikh Mohammad bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai. Cabinet Resolution No.4 of 2018 forms Financial Restructuring Committee which was published in the Federal Official Gazette Issue 627 on 28 February 2018 and came into force on 1 March 2018. The Resolution sets out the terms of its membership and function. The Federal Restructuring Committee is responsible for:
Role of the Financial Resolution Committee
The Financial Resolution Committee (FRC) will have the following functions:
Who will sit on the Financial Resolution Committee?
The FRC is expected to comprise of nine members, which includes representatives of each of the Ministry of Finance, the Ministry of Economy, the Ministry of Justice, the Central Bank, the Securities and Commodities Authority, and the Governments of Abu Dhabi and Sharjah.
When can an institution apply for a financial restructuring?
A financial institution can apply to FRC if it:
The application process for restructuring entails that, a financial institution must submit specific information to the FRC, including assessment of institution’s funding needs for next 12 months. The institution may appoint an expert from the role of experts to oversee its financial restructuring.
Consequences of accepting FRC application
Once the FRC application is accepted then following are the consequences:
Role of the expert in a financial restructuring
When will the financial restructuring terminate?
On reaching upon the consensual agreement between the creditors and debtors, the financial settlement will terminate. Additionally, if the debtor fails to pay the requisite fees and expenses.
Who are the experts?
Experts can be natural or legal persons. Anyone can apply for the post of experts on submission of an application to the secretariat of the FRC. FRC is empowered to require experts to pass specialized courses in the field of restructuring and bankruptcy to be registered on the role of experts. A summary of the expert’s credential will be recorded in an electronic register. Last but not least, both the resolution and the UAE bankruptcy Law sets out circumstances when an expert cannot act in respect of a particular restructuring.
PROCEEDINGS OF THE FRC
Membership |
The FRC is expected to comprise of nine members, being representatives of each of the Ministry of Finance, the Ministry of Economy, the Ministry of Justice, the Central Bank, the Securities and Commodities Authority, and the Governments of Abu Dhabi, Dubai, and Sharjah. A minimum of seven members is mandatory at all times. The Chair of the FRC will be the Deputy Minister, and the Vice Chair will be appointed by the FRC’s members at its inaugural meeting. In a further resolution of the Cabinet membership of FRC will be approved. |
A term |
Each member, will be appointed for an initial term of three years or for long-term as is required to hire a replacement representative. The appointment is renewed by Cabinet Resolution. |
Meetings |
Once every four months. |
Quorum |
A majority of members including the Chair and Vice Chair. |
Voting |
One vote per member. Resolutions passed by a majority, subject to chair casting a ballot. |
Resolutions |
The minutes of the meetings will be recorded, and it may be circulated more widely at the FRC’s discretion. |
Administrators |
The FRC will have a secretariat function to manage it is administrative, financial and technical affairs. |
Advisors |
The FRC may invite advisors to attend meetings on a non-voting basis. |