Dubai Court of Cassation, Commercial Appeal No. 44 of 2025 (joined with Appeal No. 1476 of 2024), judgment of 25 March 2025
Any partner of a limited liability company, whatever the size of its holding, may ask the court to remove the manager if there are serious reasons, such as mismanagement, illness or inability to work, or disloyal acts against the company and the partners, whether the manager was appointed in the memorandum of association for a fixed or an indefinite term. A partner may seek annulment of a general assembly resolution only on three exhaustive grounds: breach of the law, breach of the memorandum, or adoption to benefit some partners or harm others without regard to the company's interest. A court may not award relief that was never requested.
A partner in a Dubai LLC sued the manager and the company. She asked for his removal and her own appointment as manager, and for annulment of a general assembly resolution of 17 July 2023 that increased his management fees, alleging that he had taken company money and set up a competing company. The first-instance court, on an expert report, removed him and ordered him to pay her AED 271,485 with interest as her share of profits. The appeal court reversed the removal and upheld the refusal to annul the resolution. Both sides appealed and the appeals were joined.
The partner's appeal (No. 44 of 2025) was dismissed. The Court stated the principles on removal and on challenging resolutions, and held that the appeal court had been entitled to find, on the expert evidence, that no unfair competition was proved: the manager had registered a company with the same activity in a Ras Al Khaimah free zone but had cancelled its registration, and no harm to the claimant was shown. The resolution had been passed in accordance with the Companies Law, and she had attended the meeting. These were findings of fact within the trial court's discretion.
In the manager's appeal (No. 1476 of 2024), the Court first rejected an objection that the money award was below the cassation threshold: the value of a claim is fixed by the final requests at filing, and requests for removal and annulment cannot be valued in money. On the merits, the partner had asked only for removal, annulment and, in the alternative, an accounting expert; the courts below had ordered payment of profits that she never claimed. A court may not decide beyond the final requests, even on a matter that follows from them. The Court quashed that part of the judgment and, deciding the appeal itself, set aside the order to pay AED 271,485.
Minority partners frequently seek a manager's removal. The judgment confirms that the claim is open to any partner and does not depend on how the manager was appointed, but it succeeds only on proof of serious cause: a briefly registered competing free-zone company that was deregistered without proven harm was not enough. Resolutions on management remuneration can be challenged only on the three statutory grounds, and courts cannot award a partner profits that she did not claim.
“يجوز لأي شريك كثرت أو قلت أسهمه في رأسمال الشركة أن يلجأ إلى القضاء لطلب عزل مدير الشركة إذا وُجدت أسباب جدية تبرر ذلك”Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.
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