Help: We want to shut our firm, but partner is missing
File a lawsuit to liquidate company, says legal expert
Question: We are three partners in a limited liability company. For two years, the third partner has been outside the emirates, and we do not know his whereabouts. We tried to communicate with him, but in vain. This absent partner owns 60 per cent of the company’s shares. The company is suffering losses and we cannot close the company due to the absence of one partner. What is the course of action for us?
Answer: The appropriate procedure to be taken is to file a lawsuit to liquidate the company even in the absence of the 60 per cent shareholder. This might be done in case of the loss of all or most of the assets of the company, in such a manner that renders the investment, or the remainder thereof, not profitable. According to Article 308 of the Federal Decree-Law No. (32) Of 2021 on Commercial Companies, if the losses reach three quarters of the capital, the partners holding one quarter of the capital may request to dissolve the company.
Moreover, according to Article 678 of the Civil Transaction Law, any interested party may apply to the court to appoint one or more liquidators to carry out the liquidation and partition the company. There are also decisions taken by the Dubai Higher Court of Rights Cassation No. 271/2002. The liquidation of the company shall be based on its request, or the request of one of its partners. It shall be liquidated by taking an inventory of its assets, stating its rights and obligations, and dividing the money resulting from the liquidation among the partners in proportion to the share he paid in the capital, so he gets his share of the profit and bears his share of the loss.
The court may also, according to Article 676 of the Civil Transaction Law , on the demand of any one of the partners, order the dissolution of a partnership for non-performance by a partner of his obligation, or for having caused a serious damage to the partnership as a result of his management.