Help, partner in UAE not paying share for company's losses

Question 1: We are three partners in a limited liability company. Two years ago, the second partner and I paid sums to the company from our own accounts as support for the company and to save it from bankruptcy.

The third partner refused to pitch in and he also did not pay the rest of his share in the capital. Do we have the right to file a lawsuit against him to remove him from the company for this reason, and can we ask him to pay his share for the losses incurred by the company?

Answer 1: According to Article 677 of the Civil Transactions Law, it shall be permissible for the majority of the partners to apply for a judicial order dismissing any partner, but the requirement for removing a partner from the company - in accordance with Article (677) - is that there should be serious reasons that justify his dismissal. The decision to dismiss or expel one of the partners from the company is subject to the absolute discretion of the trial court.

It is decided by the Higher Court in its Commercial Cassation No. 175/2009 issued on April 12, 2010 that it is not permissible to remove a partner in a limited liability company from it as long as the company remains in existence, and he retains his shares in it, because his relationship with it and the partners is not based on personal considerations between the partners, and the company is not harmed by the partner because he owns shares in it, as long as he has no connection to its management.

Otherwise, he will be held accountable as a manager of the company for these damages and not as a partner.

As for the shares, you have the right to ask him to pay their value alongside with any compensation due according to his wrong deeds, as per what is stipulated in Article 670 of the same law, which says that a partner is not permitted to withhold for himself any of the company’s money. If he does so, he is liable of any damage sustained by the company by virtue of such retention.