MoF holds introductory workshop on ‘Secured Transactions by Movable Assets and Factoring’

ABU DHABI, 15th November, 2022 (WAM) — The Ministry of Finance (MoF), in cooperation with the International Finance Corporation (IFC), today held an introductory workshop for judges from federal and local state courts on “Secured Transactions by Movable Assets and Factoring”. The workshop was held in the presence of Younis Haji Al Khoori, Undersecretary of Ministry of Finance, as well as specialists and experts from MoF and the IFC.

Younis Haji Al Khoori noted that such awareness programmes and training workshops come within the ministry’s role to activate the federal laws that the ministry contributed to their legislation, including laws concerned with facilitating access to borrowing, especially for companies and SMEs. He mentioned that the modern federal laws made a qualitative leap in the field of facilitating business access to loans and the necessary financing for them at the lowest costs, through the use of the company’s movable assets (current or future), such as raw materials, inventory, machinery or receivables, while the debtor continues to have the right to use these assets in his production operations.

He stated that these laws regulate the issue of determining the assets that can be used to provide acceptable guarantees to creditors based on the assets transferred to those projects. Al Khoori said, “The new Federal laws, such as the law on Securing Interest with Movable Property, issued in 2020, and the law on Factoring and Assignment of Receivables, issued in 2021, have provided modern legal rules that make it easier for projects and individuals to provide guarantees for creditors from banks and financial service providers. These modern laws are based on international legislative models, which opens the door to attracting investments in the field of asset-based financing as a result of the state keeping pace with the legislations that investors are familiar with.”

He added that “the Ministry of Finance has set programmes to focus on the implementing and raising awareness of the new Federal laws that the Ministry contributed to preparing and issuing, and the planned programme will be implemented in the coming years. This will cover various topics, especially in the areas of raising public credit to facilitate obtaining financing, and areas of restructuring of companies facing financial difficulties and bankruptcy.”

Dr. Hussam Al Talhuni, legal advisor to the Minister of State for Financial Affairs, previewed the types of rights that can be used as guarantee in accordance with the laws in force to obtain financing for commercial and industrial projects in easy ways. These include current and future movable property, financial lease and sale of receivables by factoring. Dr. Hussam Al Talhuni also presented legal issues on how to create the right of guarantee and activate it through publicising it in the secured rights register, and the parties to the contractual relationship in terms of the debtor and creditor who fall within the scope of implementing the laws concerned with guaranteeing the right of financiers.

The awareness session also explained the methods of implementation in case the debtor fails to pay the dues by seizing the money and forcibly selling it in quick ways, especially for the implementation of these laws. It also deliberated the issue of extending the right of guarantee to the returns that result from the use or exploitation of funds on which a guarantee right has been arranged.