I have been a partner in a limited liability company (LLC) for more than three years. There are four other partners. The company has not made a profit for three years because of the manager’s incompetence. My proposal that we change the manager was not accepted by the other partners. Therefore, I plan to sell my share and exit the company. Can I sell my share to someone who is not a partner in case the other partners do not want to buy my share?
Article 80 of the Company Commercial Federal Law No 2 for 2015 deals with procedures of assignment of a partner’s share in a company.
According to this article, a partner wishing to assign his share to a non-partner is required to notify the other partners about the terms of assignment, or sale. Any of the partners may choose to pre-empt the move within 30 days from being notified. In the event of a dispute, such a share transfer shall be assessed by one or more experts nominated by a competent authority on the request of the partner wanting to sell his share and at his expense. If the right of pre-emption is exercised by more than one partner, the share offered for sale shall be divided among such partners pro rata to their respective shareholdings subject to the provisions of Article 76 of this law. If the period as set forth in Clause 2 of this Article has lapsed without other partners exercising their pre-emption right, the relevant partner shall be free to dispose of his share.
Partner has a right to attend General Assembly meeting
I am a partner in an LLC and my share in the company is 5 per cent. The manager of the company is not allowing me to attend the General Assembly meeting as he contends that any partner who does not have 10 per cent share has no right to attend the meeting. Do I have the right to attend the meeting as per the UAE commercial law? Can I get any other party to represent me in such a meeting in case I am not in the UAE? How many partners are required to make the meeting of the General Assembly valid and what is the quorum required in case such a meeting is set for voting?
Articles 95 and 96 of the Company Commercial Federal Law No 2 state that irrespective of share, every partner has the right to attend the General Assembly in person and may delegate another partner, who is not a manager. or any other party that the Memorandum of Association permits to be appointed to represent a partner at the General Assembly, to represent him. Every partner shall have a number of votes equal to the number of the shares held or represented by such a partner.
The quorum at the General Assembly shall not be valid unless one or more partners holding at least 75 per cent of the capital of the company are present. If such quorum as set forth in Clause 1 of this Article is not present at the meeting, the partners shall be invited to another meeting, to be held within 14 days from the date of the first meeting, provided that at least 50 per cent of the capital is present at the meeting.
If quorum as set forth in clauses 1 and 2 of this Article is not present, the partners shall be invited to a third meeting to be held upon the expiry of 30 days from the date of the second meeting. Quorum at the third meeting shall be valid irrespective of the partners present at the meeting.
The decisions by the General Assembly shall not be valid unless passed by the majority of the partners present in person and those represented at the meeting, unless the Memorandum of Association provides for a higher majority.
Questions answered by advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.