How can a company partner be removed in the UAE?
A look at the conditions under Article 677 of the Civil Transactions Law
Question: I am a partner and director in a limited liability company. According to the Companies Law, when do partners have the right to remove a partner from the company? Is the company director and partner legally entitled to claim salary allowance for a period of two years?
Answer: According to Article 677 of the Civil Transactions Law, the majority of the partners may apply to the court for the exclusion of any partner is their request is based on serious grounds, justifying such exclusion. The partner himself may also, if the duration of the partnership is fixed, apply to the court to authorise his retirement from the partnership if he gives adequate reasons for his request.
But as a fact, it is not easy to remove a partner because it needs serious reasons and as per law, his relationship with the partners is not based on personal considerations.
This is established in the jurisdiction of the Higher Court of Dubai in its decision No. 260/2011 of Civil Cassation 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 maintains his shares in it, because his relationship with it and the partners is not based on personal considerations. The company is not harmed by the partner because he owns shares in it as long as he has no connection with its management, otherwise he will be liable as a manager of the company for these damages and not as a partner.
That is why the decision to dismiss or remove one partner from the company is subject to the absolute discretion of the trial court.
Regarding the salaries, if they are mentioned in the Memorandum of Association, then the manager partner has the right to claim these salaries for two years in front of the civil courts. In case the salaries are agreed upon in a separate labour contract, he has the right to claim theses salaries for the last year only and in front of the labour courts.