The Abu Dhabi Global Market has introduced an enhanced legislative insolvency practitioner framework as part of efforts to align with international standards.
The enhancements came after a series of consultation rounds with industry experts earlier this year, the ADGM said on Tuesday.
The upgraded framework will permit an increased number of insolvency practitioners to be active within the financial free zone and also improve the role of the ADGM Registration Authority in monitoring and regulating their activities, it said.
It also aims to provide greater protection for insolvent parties and creditors.
“ADGM places great importance and efforts on maintaining a robust regulatory framework applicable to financial institutions and other individual practitioners,” Dhaher Al Muhairi, chief executive of the ADGM Registration Authority, said.
The new enhancements will help to foster and maintain “financial stability and momentum”, he said.
The ADGM Registration Authority monitors and enforces the regulatory framework for the more than 5,000 registered businesses and their advisers within the financial centre.
It governs the entire Al Maryah Island, which is designated as the financial free zone of Abu Dhabi.
The ADGM expanded its global footprint in the past year, resulting in a 17 per cent increase in the number of licences issued in 2021. It is also introducing a number of new initiatives to boost its growth, align with international regulatory standards and attract more companies to the capital’s financial centre.
Under its previous framework, insolvency practitioners were obligated to obtain a licence, which includes having a registered office address within the ADGM.
The new rules replace this requirement and allow eligible people to follow a registration mandate in the insolvency practitioners’ register, the financial free zone said.
There is also no annual renewal requirement, although a registered practitioner must provide the registrar with an annual confirmation statement, “confirming details of any appointments under the insolvency regulations 2022 and compliance with the insolvency practitioner rules”.
“This would significantly reduce the administrative burden on insolvency practitioners who want to be registered within ADGM and would encourage an increase in the number of registered practitioners,” the ADGM said.
Registration requirements under the new framework include being in continued employment with, or a member, director, or partner of a firm or body corporate registered within or outside the ADGM; holding a membership with a recognised professional body; and providing evidence of insolvency experience.
Practitioners are also required to obtain a security bond before any appointment under the insolvency regulations, with an exemption for those appointed as a liquidator.
“We continue to focus on bolstering ADGM’s position as a vibrant and sustainable business community with such enhancements and initiatives,” Mr Al Muhairi said.