A reader from Dubai asks: I have worked in a LLC company in Dubai for more than 10 years. Last month, I submitted my resignation as I wanted to start my own company in partnership with a friend. My resignation was approved, but the company’s owner offered me a partnership in my company if I would invest my end-of-service gratuity to cover my share of the capital, which worked to around 20 per cent of the company’s capital. I agreed as the company had a good reputation and was doing well. I signed an agreement in which the owner mentioned that I am a partner in his company, but added that my name cannot be included in the Memorandum of Association for a year. He promised to do so when renewing the company’s trade licence. He also said that he had amended the Memorandum of Association last year need and needed to wait a minimum of six months as per Dubai Economic Department rules. Is this true? Will my signature on the agreement made by the owner ensure that I am an actual partner?
What has been stated by the company’s owner regarding the Memorandum of Association is not true. The memorandum can be amended at any time and more than once in a year if a company so desires. Therefore, I advise the questioner not to go ahead with the partnership unless his name is included as partner in the Memorandum of Association as well as the trade licence. The memorandum must be attested before the notary public.
Partnership on investor’s visa
A reader from Dubai asks: I am both an employee and partner in a LLC company in Dubai. I have an investor’s visa. Now, I have a problem with one of the partners. I want to know if a partner with the majority share-holding in the company can force me out as a partner under the law. Secondly, am I eligible to become a partner with another firm without changing my visa?
In a LLC company, no partner has the right to force any other partner out of the company, especially since his name is included in the company’s Memorandum of Association, which is certified by law. If other partners want to remove a partner from the company, they must refer to the conditions and clauses mentioned in the memorandum, and then call a board of directors meeting to resolve the issue amicably, especially if they want to remove a partner who has committed financial violations or subjected the company to loss due to misconduct. If the allegations are proved, the partner will be requested to sell all his shares in the company to the residual partners and withdraw from the company, or to purchase the partners’ shares and remain in the company with other partners selected later. In case of failure to reach a solution to satisfy all parties, the case may be referred to the concerned court. The court will then appoint an accounting expert to study the company’s conditions, find out who caused the company’ problems and review the company’s financial status. Based on the report, the concerned court will issue a judgement. As for the question about the possibility of joining as a partner in another company, the questioner may be a partner in another company provided he does not work in it.
Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.
— Compiled by Bassam Za’za’, Legal and Court Correspondent
