Public Interest Petitions for Winding Up, Comparing the DIFC, ADGM, and UK

Insolvency law has traditionally been viewed as a mechanism for resolving disputes between companies and their creditors. Increasingly, however, insolvency regimes recognise that winding up may also serve an important public interest function. Where a company’s continued existence threatens market integrity, investor confidence or the reputation of a financial centre, public authorities may be empowered to seek its liquidation, even where no creditor has initiated proceedings.

Both the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM) have adopted public interest winding-up mechanisms. While both draw inspiration from English insolvency law, they have implemented these powers in different ways. The DIFC has adopted a multi-agency model, whereas the ADGM has opted for a more streamlined framework. Both may be contrasted with the long-established public interest jurisdiction exercised by the UK’s Insolvency Service on behalf of the Secretary of State.

The DIFC approach

The DIFC distributes public interest winding-up powers across its principal regulatory institutions, reflecting the Centre’s broader constitutional and regulatory structure.

The DIFC Authority (DIFCA) may apply to the DIFC Court under section 84 of the Insolvency Law where it considers that winding up is in the interests of the DIFC. The Court may grant the application if it is satisfied that it is just and equitable to do so. This provides the DIFCA with a broad residual power to protect the interests and reputation of the DIFC as a financial centre.

The Registrar of Companies has a more focused jurisdiction under Article 41 of the Operating Law. The Registrar may petition for winding up where there has been a contravention of legislation it administers, or where winding up is in the interests of members or creditors, provided that it is also in the interests of the DIFC. This power is closely linked to the Registrar’s corporate supervisory role and serves as an important regulatory enforcement tool.

The Dubai Financial Services Authority (DFSA) has its own statutory power under Article 93 of the Regulatory Law to petition for the winding up of authorised firms, authorised market institutions and persons carrying on regulated financial services unlawfully. This reflects the DFSA’s role in safeguarding the integrity of the DIFC’s financial markets and regulatory system.

Taken together, these provisions create a layered framework in which different public authorities may seek winding-up orders depending on the nature of the public interest involved. Corporate governance, financial regulation and the wider interests of the DIFC are each protected by the authority best placed to identify and respond to the relevant risk.

The ADGM approach

The ADGM has adopted a simpler legislative model.

Rather than distributing powers among several authorities, section 203 of the ADGM Insolvency Regulations 2022 gives both the Registrar and the Financial Services Regulatory Authority (FSRA) the ability to petition the court for winding up.

The grounds include that:

1. the company is unable to pay its debts;
2. it is just and equitable that the Company should be wound up;
3. the company has committed a serious regulatory contravention of the ADGM ; or
4. it is expedient in the interests of the ADGM that the Company should be wound up.

This unified approach avoids the need for separate statutory regimes and enables either authority to invoke the Court’s jurisdiction where the circumstances justify intervention. The ADGM therefore combines corporate and regulatory public interest powers within a single legislative framework.

Comparison with the United Kingdom

The UK has long recognised the importance of public interest winding-up petitions.

Under section 124A of the Insolvency Act 1986, the Secretary of State may petition for the winding up of a company where it is expedient in the public interest. In practice, these petitions are brought by the Public Interest Unit (PIU) of the Insolvency Service, an executive agency of the UK government that carries out public interest investigation and enforcement functions on behalf of the Secretary of State. The PIU’s core mandate is to protect the public interest by investigation and taking action against companies and directors whose conduct warrants state intervention, even where the company is solvent or no private claimant is willing or able to act.

The PIU investigates and seeks the liquidation of companies involved in serious misconduct such as fraud, consumer scams, abusive trading practices and other conduct detrimental to the public.

The purpose of these petitions is not simply to protect creditors but to protect the public and preserve confidence in the marketplace. As in the DIFC and the ADGM, the ultimate decision remains with the Court.

A comparison of the three models

Although the underlying objective is common across all three jurisdictions, the mechanism through which the petitions may be brought differ significantly.

The UK adopts a centralised model, with public interest petitions brought through a single governmental authority. The ADGM adopts a shared regulatory model, under which the Registrar and the FSRA exercise equivalent statutory powers under a single legislative provision. The DIFC adopts a specialised multi-agency model, allocating petitioning powers between the DIFCA, the Registrar and the DFSA according to their respective statutory responsibilities.

From a comparative perspective, the ADGM framework is the closest to the UK approach. Its legislation consolidates public interest and regulatory winding-up powers into a single provision, making the jurisdiction relatively straightforward. All three approaches allow regulators to act independently of creditor or shareholder pressure.

The DIFC, by contrast, reflects its more sophisticated institutional framework. Rather than concentrating powers in a single authority, it allocates responsibility across separate regulators, each protecting a different aspect of the DIFC ecosystem. This allows public interest winding-up powers to be exercised in a manner that is closely aligned with the functions of the relevant authority.

Conclusion

Both the DIFC and the ADGM recognise that insolvency law performs an important public regulatory function in addition to resolving private disputes. Their respective public interest winding-up provisions enable regulators to intervene where necessary to protect the integrity of the financial centre, its markets and those who participate in them.

For practitioners, the key takeaway is that public interest winding-up petitions are now an established feature of the insolvency landscape in both jurisdictions. As these powers begin to be exercised and judicial guidance develops, they are likely to become an increasingly important component of regulatory enforcement alongside more traditional sanctions such as financial penalties, licence revocation and director disqualification.

Chris is a Chartered Accountant, member of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Emirates Association for Accountants and Auditors (EAAA), his details are on the list of approved Insolvency Practitioners in DIFC and ADGM. He is also a UK, Cyprus and Romania licensed Insolvency Practitioner.