Remove a Company Partner in the United Arab Emirates

Removing a partner in UAE

Removing a partner in UAE, to know about the process, and requirements is mandatory to learn from professionals only. There are some particular legal steps that need to be followed while removing the partner or partners. This process is made simpler, by the law, but this is still a little complicated. We will throw light on the process and requirements to remove a partner in the United Arab Emirates.

Civil Transcation Law’s Article 677 explains the process of partner removal from a company. It has to be initiated by the majority of the partners. They Have the right to knock the court to remove a partner or partners based on their request to the court. The request or legal petition must be based on very serious grounds. The exclusion or removal of partners has to be justified in court. Only a valid reason can make it happen. It’s not possible to remove the partner otherwise.

The law also provides the right to partners to ask for retirement from the partnership. Such a partner or partners have to provide adequate reasons to the court to leave the partnership. The court has the right to allow one partner to leave the partnership. Further to this, if people need better clarification then contact the lawyers who are experts in company formations, and the company dissolution process through court procedures.

High Court decision 260/2011 from Civil Cassation, is the set judicial precedent and the decision to remove a partner from a partnership. Dubai High Court ruled in this verdict that if the partner is maintaining its shares and the company has its existence then, it is not allowed to remove the partner, due to personal issues and reasons. There must be justified reasons to exclude a partner. If the partner just owns the shares and not the part of management then he cant be removed. The partner who is taking an active part, and managing the company, is responsible if he harms the company. But eventually, the ultimate authority is with judge to decide.

We will discuss the salary of partners here. Salary or any kind of financial entitlement for the partner who is a director, all the salary or financial entitlements depend on MOA. Another contract which is also applicable is the Labour and Employment Contrac of that partner cum director of the company. So two documents determine the financial entitlements of the partner director.

1. MOA
2. Labour and Employment Contract

As per labour and employment contract. partner director can claim the last one year’s salary, if the salaries are not paid, by filling a “Labour Case”. But based on MOA agreement, the partner director can claim the last two years salaries if not paid but through a Civil Case.

Now the process has been made quite faster but it is still a little complicated. First of all, good business lawyers must be consulted and grab the procedure with pros and cons. Then, the services of good lawyers should be hired. A good Lawyer is a professional attorney with experience who can only be hired from a good Law Company. It’s better to sign the engagement letter with a good Law Company. Al Shaiba Advocates and Legal Consultants owned by Advocate Mr Mohamamd Ibrahim Hassan Al Shaiba, is one of the top Law Companies in Dubai.