What is a shareholder or partner dispute?
A shareholder or partner dispute is a conflict between the owners of a company, or between the owners and its managers, about control, money or the future of the business. In the UAE most of these disputes arise in limited liability companies (LLCs), which have between 2 and 50 partners or a single owner (Article 71 of the Commercial Companies Law).
- Deadlock: partners cannot agree on decisions, budgets or the manager.
- Exclusion: a partner is cut off from information, meetings or profits.
- Manager misconduct: self-dealing, competing business or decisions against the company's interest.
- Exit and share transfer: one partner wants to sell, or the others want to block a sale to an outsider.
- Unpaid capital or loans: disputes over contributions, partner loans and dividends.
What rights does every partner have in a UAE LLC?
Every partner keeps the rights given by the law and the memorandum of association, and an agreement that strips a non-managing partner of these rights is void (Article 91). The most useful rights in a dispute are the right to call a general assembly, the right to buy a stake before an outsider, and the right to hold managers liable.
- Annual general assembly: the manager must convene it at least once a year, within four months of the end of the financial year (Article 92).
- Requesting a meeting: one or more partners holding at least 10% of the capital can require the manager to call a general assembly (Article 92).
- Quorum: partners holding at least 50% of the capital, unless the memorandum sets more. If there is no quorum, a second meeting held 5 to 15 days later is valid whatever the attendance (Article 96).
- Pre-emption: before a stake goes to an outsider, the other partners can buy it (Article 80; see below).
Can a partner sell their shares to an outsider?
Yes, but the other partners have a right of redemption first. The selling partner must notify the other partners through the manager of the buyer and the terms, and each partner can request to buy the stake within 30 days of the manager being notified of the agreed price (Article 80). If the price is disputed, it is valued by one or more experts nominated by the competent authority, at the expense of the partner asking to buy.
If several partners exercise the right, the stake is divided between them in proportion to their capital. If no partner exercises it within the 30 days, the seller can dispose of the stake freely. Any transfer must be made by a formally attested instrument and takes effect towards the company and third parties only once it is recorded in the commercial register (Article 79).
When is a company manager personally liable?
Under Article 84, an LLC manager is liable to the company, the partners and third parties for fraud, and for losses caused by misuse of powers, breach of the law, the memorandum or the appointment contract, or gross error. Any clause in the memorandum or the manager's contract that excludes this liability is void.
A manager may not run a competing company or do competing business for themselves or others without the general assembly's consent; otherwise they can be dismissed and ordered to pay compensation (Article 86).
How is a shareholder dispute resolved, step by step?
- 1. Secure the documentsMemorandum and articles of association, the commercial register extract, shareholder agreements, minutes, accounts and bank statements.
- 2. Check the dispute clauseIf the memorandum or a shareholder agreement contains a written arbitration clause, the dispute goes to arbitration and a court must dismiss a case filed in breach of it when the clause is raised in time (Articles 7 and 8 of the Arbitration Law).
- 3. Use the corporate route firstRequest information, require a general assembly (10% of capital), and put the issue to a vote. This often resolves the dispute or builds the evidence.
- 4. Negotiate an exitA share purchase at an agreed or expert-assessed value is usually the fastest and cheapest outcome.
- 5. Protect assets if neededWhere there is a real risk that assets are being removed or concealed, the court can order a precautionary (prejudgment) attachment (Article 247 of the Civil Procedure Code).
- 6. Court or arbitrationClaims for damages against a manager, for an expert examination of the accounts, to annul a resolution, or for dissolution of the company by court order (Article 302).
Which remedy fits your situation?
| Situation | Main remedy | Legal basis |
|---|---|---|
| Manager diverted money or acted in bad faith | Claim for compensation against the manager; removal | Articles 84 and 86 |
| Excluded from meetings or information | Require a general assembly; court-appointed accounting expert | Articles 91 and 92 |
| A partner is selling to an outsider | Exercise redemption within 30 days | Article 80 |
| Permanent deadlock | Negotiated buy-out, or dissolution by court order | Article 302 |
| Partner in a general or limited partnership breaches obligations | Court dissolution at a partner's request for good cause | Article 305 |
Key numbers and deadlines
| Rule | Figure | Article |
|---|---|---|
| Partners in an LLC | 2 to 50, or a single owner | 71 |
| Right of redemption on a sale to an outsider | 30 days from notice of the price | 80 |
| Annual general assembly | Within 4 months of the financial year-end | 92 |
| Partners who can require a general assembly | At least 10% of the capital | 92 |
| Quorum of the general assembly | 50% of the capital (or more if the memorandum says so) | 96 |
| Second meeting if no quorum | Within 5 to 15 days; valid whatever the attendance | 96 |
How much does a shareholder dispute cost?
Costs depend on the route: a negotiated exit costs least; a court claim adds court fees based on the claim value and usually an accounting expert; arbitration adds institution and arbitrator fees. We give a written fee quote by stage after reviewing the memorandum and the facts.
Do not rely solely on the information available on the website; you should consult a lawyer to clarify many matters.
Related guides: commercial and corporate litigation, debt recovery for companies, arbitration in Dubai, company liquidation.
Frequently asked questions
Can I force a general assembly meeting in my UAE LLC?
Yes, if you hold at least 10% of the capital, alone or with other partners. The manager must then call the general assembly (Article 92 of the Commercial Companies Law).
Can my partner sell his shares to a stranger without my consent?
He must first notify the other partners through the manager. Each partner can buy the stake within 30 days of notice of the price; only if nobody does can he sell freely (Article 80).
Is a company manager personally liable in the UAE?
Yes. Under Article 84 an LLC manager is liable for fraud and for losses caused by misuse of powers, breach of the law or the memorandum, or gross error. Clauses excluding this liability are void.
How can I exit a UAE company if my partners disagree?
Usually by selling your stake, to the partners or, after their 30-day redemption right, to a third party. If the company cannot continue, dissolution can be agreed or ordered by a court (Article 302).
Can a court dissolve an LLC in the UAE?
Yes. A court order is one of the legal grounds for dissolving a company (Article 302(6)). For general and limited partnerships, a partner can ask the court to dissolve the company for good cause (Article 305).
Do shareholder disputes go to court or arbitration?
To arbitration if the memorandum or a shareholder agreement contains a written arbitration clause; otherwise to the courts. A court must dismiss the case if the arbitration clause is raised before any other defence (Article 8 of the Arbitration Law).
Can I freeze a partner's assets during the dispute?
Where there is serious evidence that assets may be removed or concealed, the court can order a precautionary attachment (Article 247 of the Civil Procedure Code). The main claim must then be filed within 8 days.