My wife is currently under my sponsorship. She has found a temporary job as an IT engineer for one year in a company in Dubai for a temporary project. In her visa, it is mentioned that she is not allowed to work. Can she work under this status or does she have to get a work permit from the Ministry of Labour? What are the penalties that she might be facing in case she is caught?
I would like to clarify to the questioner that if a person is caught working without work permit, penalties might be applied and the fine can go up to Dh50,000. The worker might also be jailed and deported. Therefore, the questioner’s wife should get a temporary work permit from the ministry to avoid legal action in this regard.
Liability of partners in LLC
As per the company law, are partners of an LLC company liable to pay off the company’s debt from their personal accounts? What is the minimum and maximum number of partners allowed by law in an LLC company? Do the shareholders have the right to interfere in the operations of the company?
A Limited Liability Company as defined by Article 71 of UAE Federal Law No 2 of 2015 concerning the commercial companies (“New CCL”) came into force on July 1, 2015, replacing Federal Law No 8 of 1984 and its amendments. An LLC is a company where the number of partners is at least two but shall not exceed 50. A partner shall be liable only to the extent of his/her share in the capital. A single natural or corporate person may incorporate and hold a Limited Liability Company. The holder of the capital of the company shall not be liable for the obligations of the company other than to the extent of the capital as set out in its Memorandum of Association.
The Dubai Court of Cassation in its rulings established an exception to this general rule laid by law. The court in one of its judgements extended the liability of the partners in an LLC to reach their personal assets provided the satisfaction of certain specific and extraordinary circumstances. Furthermore, according to the UAE Commercial Companies Law, the Second Respondent, being the manager of the LLC, is liable fully from his personal assets for the company’s liabilities and for claims of indemnity. Additionally, the respondents are personally liable for their fault in not complying with the said law. The Cassation Court established its reasoning on three bases: 1) The effect of the provisions of the UAE Commercial Companies Law in relation to limited liability companies provides: The shareholders who are not directors shall also have the right to inspect the operations of the company, examine its books and documents in addition to providing advice and guidance to the manager; the company shall have a general assembly consisting of all shareholders, which shall meet at least once a year during the four months following the end of the financial year; the agenda of such meeting must include hearing the manager’s report concerning the activities and the financial status of the company during the year, the auditor’s report, and a discussion of the balance sheet and profit and loss account in addition to ratifying them; any of the shareholders, whether in person or by his agent, has the right to examine minutes of the general assembly meeting and resolutions and he shall also have the right to examine the balance sheet, profit and loss account and the annual report; the company must have an auditor of accounts elected by the general assembly to audit accounts of the company and to observe whether the law and the constitutive documentation of the company have been observed and he must submit his report stating the result of the examination to the general assembly; the company must set aside 10 per cent of its net profits to form a statutory reserve, and the shareholders may decide to stop setting aside such monies if the reserve reaches one-half of the capital; and the court construed from the above that shareholders of a limited liability company are required by the law to be aware and informed of its profit and loss accounts.
2) The general rule is that a shareholder in a limited liability company is responsible only to the extent of his share/shares in the capital of the company. The exception to this general rule, as the court reasoned, is that such shareholder will be held personally liable if he exploited the principle of the independent liability of the company as a means to conceal his fraudulent acts or misappropriation of the funds of the company in order to cause harm to his partners or creditors. In such case, the protection bestowed by law on the shareholder in a limited liability company will not apply. He will be held liable in his personal capacity for such dispositions in a way that such liability will extent to his personal assets.
3) It is also construed from provisions of the CCL that the manager of a limited liability company is liable towards the company, the shareholders and third parties for indemnifying loss arising out of his fault and neglect in management, all acts of fraud and abuse of power and any breach of the law or the company’s constitutive documents.
— Questions answered by lawyer Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants
