Abu Dhabi Court of Cassation (General Assembly), Request No. 3 of 2025 (Commercial), decision of 19 March 2025
The general assembly of a limited liability company normally decides what profit is distributed, and a partner's entitlement only crystallises once the manager has prepared the annual accounts and the assembly has approved them. But the manager may not withhold the accounts beyond the three-month deadline, and the assembly's failure to meet within four months of the year end does not bar a claim. In either case a partner may, after exhausting any procedure the law requires, sue for his share of net profits and ask the court to appoint an expert to quantify it.
The Third Commercial Chamber asked the General Assembly to resolve two conflicting lines of authority on whether a partner in a limited liability company can go to court for his share of profits when the manager or the general assembly does nothing. One line (appeals 1246 and 1248 of 2021, 1040 and 1095 of 2023, 1150 and 1197 of 2023, 641 of 2024) held such claims inadmissible because only the general assembly may distribute profits. The other (appeals 31 and 32 of 2020, 1001 and 297 of 2022, 57 of 2023, 687 of 2024) allowed them where the manager or the assembly defaulted.
The General Assembly started from Article 8 of the Commercial Companies Law, under which a company is a contract to share in the profit or loss of an economic project, and read Articles 27, 29, 87, 92 and 94 together: the company must prepare annual accounts; absent a contractual ratio, profits follow capital shares; the manager must prepare the balance sheet, profit and loss account, annual report and distribution proposal within three months of the year end; and the assembly must meet within the following four months to approve them and decide the dividend. Although the assembly is, in principle, the competent body and the partner's right becomes final only after that process, the manager may not refuse to prepare the accounts, and the assembly's failure to convene does not prevent a court claim. Where either default is shown, the partner may, after exhausting any procedure the law requires, sue for his share of net profits and seek an expert report, and the claim is admissible because the right to profits is a fundamental right of a partner.
The General Assembly adopted the second line of authority and set aside the contrary principle.
Minority partners in mainland LLCs often face managers who never produce accounts or call meetings, leaving profits locked in the company. This decision, binding on the Abu Dhabi courts, confirms that such a partner can bring a claim for his share of net profits and have it quantified by a court expert, rather than having the claim dismissed because no general assembly resolution exists. It applies Articles 87, 92 and 94 of the current Commercial Companies Law.
| Articles 8, 27, 29, 87, 92 and 94 of Federal Decree-Law No. 32 of 2021 (Commercial Companies Law) — text of articles 8, 27, 29, 87, 92, 94 |
| Article 9 of Abu Dhabi Law No. 6 of 2024 on the Abu Dhabi Judicial Department |
“حق الشريك في الحصول على حصته من الأرباح هو من الحقوق الأساسية التي متى ثبت حقه فيها لا يجوز المساس به”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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