Director liability in insolvency in the UAE

Article 246 of Law 51/2023 provides a court-ordered liability route tied to specified proven conduct and an amount proportionate to the person’s fault, rather than automatic transfer of all corporate debt. Identify the act, management role and timing before assessing exposure. Preserve contemporaneous board and financial records. Other guarantees, company-law duties and free-zone insolvency rules need separate assessment.

• Financial Reorganisation and Bankruptcy Law, Article 246

The provision identifies poorly assessed transactions used to avoid or delay bankruptcy, transfers for no or inadequate value without proportionate benefit, paying creditors with intent to harm others, and proven mismanagement causing deterioration where assets cannot cover at least 20% of debts. The conduct must fall within the two years before cessation of payment. The 20% figure alone is not proof of fault.

• Law 51/2023, Article 246(1)

Following company bankruptcy, Article 246 permits a trustee, creditor or the Unit for a regulated debtor to request proportionate liability from the Bankruptcy Court. The liability action must be brought within two years of the bankruptcy judgment. Proven written reservation against the relevant acts provides an express exemption. Preserve contemporaneous reservations, minutes and loss-reduction measures; do not confuse the filing limit with the earlier conduct lookback.

• Law 51/2023, Article 246(1), (3) and (4)

Article 246(2) requires proof of all precautions a reasonable person could take to reduce potential losses to company assets and creditors. Contemporaneous cash-flow reviews, board minutes, valuations and mitigation records can support that evidence. Paragraph 4 expressly exempts a person who proves a written reservation against the acts. A general assertion of good intentions does not establish either evidential requirement; the paragraph 2 wording must not be converted into a blanket promise of personal immunity.

• Law 51/2023, Article 246(2) and (4)

Preserve appointment and authority records, board minutes, contemporaneous accounts, disputed transactions and insolvency papers, prepare a dated chronology and identify any notice or deadline. Send those materials to CounselO for an initial assessment of the facts, forum and options in the UAE.

For this problem, start with appointment and authority records, board minutes, contemporaneous accounts, disputed transactions and insolvency papers. Add a short dated summary and identify any notice or deadline. The final list depends on the facts.

Yes. The initial assessment and document review can begin through WhatsApp, email or the consultation form in Arabic or English. Formal filing, attendance and reserved representation work are scoped separately where required in the UAE.

The review addresses this question: Which decisions or transactions are alleged to create personal responsibility? CounselO examines appointment and authority records, board minutes, contemporaneous accounts, disputed transactions and insolvency papers, checks the applicable framework and authority, and explains the supported options and remaining uncertainties within the agreed scope.

CounselO targets a professional response within 24 hours, subject to the matter’s scope, urgency, intake completeness and service availability. The target is not a guaranteed legal outcome or filing deadline.