Insolvency and Bankruptcy Fraud in the UAE: Offences by Debtors and Directors

What are the offences for company directors and managers?

Article 269 of the Federal Decree-Law No. 51 of 2023 (Financial Restructuring and Bankruptcy Law) punishes the chairman and members of a company's board, managers, auditors and liquidation officers with imprisonment of up to five years and/or a fine of up to AED 1,000,000 if, after a final decision to initiate proceedings against the company, they conceal, destroy or alter its books, embezzle or conceal assets, acknowledge debts not owed, obtain approval of a settlement proposal or plan by fraud, or declare false capital, distribute fictitious profits or embezzle assets as bonuses.

Article 271 punishes directors, managers and liquidators with imprisonment and/or a fine of up to AED 500,000 where a final judgment declares the company bankrupt and they commit listed acts: exorbitant remuneration in the three years before the cessation of payment that contributed to it, failing to keep adequate books, withholding or giving false data, disposing of assets after cessation of payment to hide them, preferring some creditors, selling assets far below value, or fictitious speculation.

What about an individual debtor?

Article 270 describes bankruptcy by default: a debtor declared insolvent by final judgment who commits listed acts, such as excessive personal spending that contributed to cessation of payment, inadequate commercial books, refusing to give the trustee or the court the data requested, paying debts contrary to a settlement or plan, preferring creditors after cessation of payment, selling assets at a significantly lower price to delay bankruptcy, or fictitious speculation. The penalty is imprisonment and/or a fine of up to AED 100,000.

Article 277 punishes a debtor who intentionally conceals assets to win the required majority for a settlement, lets a fictitious or ineligible creditor take part in voting, or omits a creditor from the list, with imprisonment and/or a fine of up to AED 500,000.

Does the criminal case stop the insolvency process?

No. Article 272 says that if criminal actions are filed for bankruptcy fraud or default, the settlement, bankruptcy and composition proceedings remain independent of the criminal actions and are not referred to the criminal court, unless the law says otherwise.

For bounced cheques, Articles 281 and 282 stay the criminal proceedings when the bankruptcy court initiates preventive settlement or proceedings, and the creditor holding the cheque is treated as a creditor. If the debtor completes the plan, the prosecution closes the investigation and the court terminates the criminal action.

What does a defence examine?

Dates, especially the date of cessation of payment and of the decision to initiate proceedings, because most offences depend on what happened before or after them. It also examines the books, valuations and the reasons for payments.

Keep complete records and speak to a lawyer before talking to the trustee about anything outside the ordinary reporting duty.

What should I do first?

1. Preserve all books and records

   Do not alter, destroy or back-date.

2. Map the key dates

   Cessation of payment, decision to initiate.

3. Do not prefer one creditor over others

   Seek advice first.

4. Cooperate with the trustee through your lawyer

   Refusing data is an offence.

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Sources

Source: Federal Decree-Law No. 51 of 2023 (Financial Restructuring and Bankruptcy Law), official English text on the UAE Legislation portal, checked 9 October 2026. The portal lists the law as active, in force from 1 May 2024. The Arabic text prevails over translations.

This page is general information, not legal advice.