50 leading UAE cassation judgments on company law, summarised in English with the articles they apply and a link to the judgment on the court’s official service.
The legislation on this topic: Company law — UAE legislation.
Entities wholly owned by the federal government are outside the Companies Law and litigate only before federal courts
Under Article 4(1)(b) of the Commercial Companies Law, companies wholly owned by the federal or a local government or their institutions, bodies or subsidiaries are excluded from the law, apart from registration, in matters for which their founding…
A dissolved company keeps its legal personality until liquidation ends, and a custodian's appearance cures a standing defect
A company dissolved by judgment is treated as continuing, with its legal personality, for the needs of liquidation until liquidation is complete, so that its claims can be collected, its debts paid and the balance divided among the partners, and to protect…
A nominee Emirati partner's stake is sham, and courts must apply the 2021 Companies Law allowing full foreign ownership
Simulation (a sham arrangement) is established where parties conceal their real dealings and legal positions behind an outward contract made as a front to the public, while a separate writing or agreement governs between them; once proved, the hidden…
Signing a company's security documents as authorised signatory does not make the signatory a guarantor of its debts
Joint liability between debtors arises only by agreement or by law, although the agreement may be implied from the circumstances (Article 450 of the Civil Transactions Law and Article 72 of the Commercial Transactions Law). A guarantee (kafala) is formed…
Where final judgments of the Dubai and Sharjah courts contradict, the Federal Supreme Court decides which one is enforced
A conflict of jurisdiction under Articles 33(9)-(10) and 60 of the 1973 law on the Federal Supreme Court includes contradictory final judgments given by courts of different judicial systems; the aim is to settle disputes over enforcing such judgments. A…
Partners in a bankrupt free-zone company are not traders and cannot be declared bankrupt with it
Under Articles 4(2) and 142 of the Bankruptcy Law (Federal Decree-Law No. 9 of 2016), bankruptcy applies only to traders in the legal sense, persons who carry on commercial business in their own name as a profession, and to partners who are jointly and…
Those who act in the UAE for an unlicensed foreign company are personally and jointly liable for its dealings
Under Articles 313 to 316 of the Commercial Companies Law then applicable (Federal Law No. 8 of 1984), a company incorporated abroad could carry on business in the UAE, or open an office or branch, only after obtaining a licence from the Ministry with the…
A manager whose company took off-plan payments before it was licensed as a developer is jointly liable with it
A company that has been dissolved keeps its legal personality for the needs of its liquidation until the liquidation ends, so claims over its past dealings can still be brought, and its manager can be sued personally for acts before the liquidation. A…
A court may expel a partner at the majority's request for serious reasons, valuing his share at the filing date
Where the special law is silent, the general law applies. The Commercial Companies Law (Federal Law No. 2 of 2015) said nothing about a majority of partners asking the court to expel a partner, so the Court applied Article 677 of the Civil Transactions…
An LLC cannot be annulled because its Emirati partner was nominal; it converts into a company of the real partners
Some Dubai judgments had held that proof that the real partners differed from those in the memorandum of association meant an LLC lacked its essential elements and was absolutely void, leading to dissolution and liquidation. The General Assembly held…
Between LLC partners, a sham shareholding must be proved in writing, and profits are due only once distributed
Between partners, none may prove anything contradicting or going beyond the memorandum of association except in writing, so a partner cannot prove without written evidence that another partner's recorded holding is sham; this rule is of public policy and…
A claim that the Emirati partner was nominal fails where the memorandum and audited accounts show its capital was paid
Sham (صورية) means that the parties agreed on an apparent transaction that is not real and conceals their true relationship; the sham act has no existence in their intention, and the hidden agreement is the one in force between them. Whether a transaction…
A partner's work cannot pay for a share in an LLC, so a share transfer made for services alone is void
Under Article 17 of the Commercial Companies Law (Federal Decree-Law No. 32 of 2021, corresponding to Article 17 of Federal Law No. 2 of 2015), the capital of a limited liability company consists of cash or in-kind contributions of appraised value; a…
Group companies behind one property project are jointly liable, and VAT charged on an undelivered hotel unit is refundable
In real estate investment several companies with separate legal personality and assets may share a single project and so be jointly liable for its obligations; whether they do is a question of fact. Money paid for a debt whose cause never arose, or later…
Once bankruptcy proceedings open, the bankruptcy court alone decides disputes over the debtor company's debts
Under Federal Decree-Law No. 51 of 2023 on Financial Reorganisation and Bankruptcy, the specialised bankruptcy court has exclusive jurisdiction over all requests and proceedings in bankruptcy cases, including disputes over a company's debts, from the…
Any LLC partner may seek the manager's removal for serious cause, but resolutions can be annulled only on three grounds
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,…
An owner who signs facility terms for his free-zone company is not a guarantor unless he expressly guarantees its debts
A limited liability company formed in a Dubai free zone has, from its formation and registration, a legal personality and assets separate from those of its partners, who are liable for its debts only up to their shares. A person who signs a contract as the…
Directors of a bankrupt company are liable for its debts only on proof of fault under the law applicable then
Where a bankrupt company's assets do not cover at least 20 per cent of its debts, the court may order its directors and managers, jointly or not, to pay all or part of the debts, but only if their liability for the company's losses is proved under the…
Opening bankruptcy of an LLC does not extend to its partners, and the bankruptcy court cannot rule on managers' personal liability
A creditor of a limited liability company may seek its bankruptcy if it has stopped paying a due commercial debt because its finances are disturbed. Refusal to pay without a legitimate reason is evidence against the debtor, but there is no cessation if the…
A claim that an Emirati partner's 51 per cent holding was nominal cannot be sent to arbitration
Arbitration may not be agreed on matters that cannot be the subject of compromise (Article 4(2) of the Federal Arbitration Law). A claim that a UAE national's 51 per cent holding in a company was nominal, brought on the footing of the former rule requiring…
Accepting a right-of-first-refusal offer at a different price is a counter-offer, not an acceptance
A contract is formed only when an acceptance matches the offer (Article 125 of the Civil Transactions Law). An offer is a definite expression of the will to conclude a particular contract; an acceptance that modifies, adds to or reduces it is a rejection…
Removing an LLC manager from office does not dispose of a separate claim to expel him as a partner
The Court distinguished two remedies against the managing partner of a limited liability company. Removal (عزل) only relieves the manager of management, and he remains a partner. Expulsion (فصل وإخراج) ends his membership of the company and requires…
Courts must examine evidence that an LLC manager acted fraudulently and that two companies operated as one
A managing partner of a limited liability company is not liable in his own assets for the company's debts unless he commits a fault. If he breaches a management duty, the law or the company's constitution, he is liable for his personal faults and for acts…
A debtor company's trade licences and other intangible business assets can be attached by its creditors
All of a debtor's assets secure its debts (Article 391 of the Civil Transactions Law), and a creditor may attach the debtor's movable and immovable property except what the law exempts (Articles 242 and 247 of the Civil Procedure Code). Attachable property…
An LLC may increase its capital by a three-quarters vote; dissenting partners can challenge only on specific grounds
Under Articles 96 and 101 of the Commercial Companies Law (Federal Decree-Law No. 32 of 2021), an LLC may increase its capital with the approval of partners holding at least three quarters of the shares represented at a validly convened general meeting;…
Limitation for damages arising from a crime is suspended while criminal proceedings remain possible or pending
Under Article 298 of the Civil Transactions Law a claim for damages for a harmful act is barred three years after the victim actually learned of the harm and of the person responsible, and in any case after fifteen years. Where the act is also a crime, the…
Dubai's 2020 off-plan termination rules apply to earlier contracts, and courts may set the developer's retention below the maximum
Dubai Law No. 19 of 2020, which replaced Article 11 of Law No. 13 of 2008 on the Interim Real Property Register, applies retroactively to off-plan contracts governed by the 2008 Law, including terminations already made (except those annulled by a final…
A company's manager can be detained or banned from travel if his abnormal conduct frustrates execution
Under Article 322 of the Civil Procedure Law, where the judgment debtor is a private legal person the execution judge may order the detention of, or a travel ban against, its legal representative or another person, even without an execution title against…
An LLC partner may sue for his share of profits when the manager or general assembly fails to act
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…
Losing a lawsuit or complaint does not make the claimant liable for abuse of the right to litigate
A person who uses a right lawfully is not liable for resulting harm to others (Articles 104 to 106 of the Civil Transactions Law). Abuse exists only in the cases listed exhaustively in Article 106, all marked by an intent to harm or a reckless disregard of…
A company that arbitrates without objecting cannot later deny its CEO's authority to agree to arbitration
An arbitration agreement is valid only if made by a person with capacity to dispose of the right in dispute, and an agent may include an arbitration clause only with special authority. But a principal may ratify an act exceeding the agent's authority,…
A sole establishment cannot sue on a contract made by the LLC whose shares its owner bought
A sole proprietorship (مؤسسة فردية) has no legal personality separate from its owner. The conversion rules in the Commercial Companies Law apply only between forms of company and do not cover turning a company into a sole establishment or the reverse.…
A partner in a limited liability company cannot be expelled by court order at the majority's request
Commercial companies are governed by the Commercial Companies Law, not the civil-law rules on partnerships, except where that law is silent. Article 677 of the Civil Transactions Law, which lets a majority of partners ask the court to expel a partner for…
A claim filed against a deceased person can be cured by joining the heirs; rescinded partnership refunds net of sums received
A claim or appeal brought against a person who had already died is not void beyond repair: it may be corrected by joining the heirs at the same level of court, by a memorandum or new statement filed with the case management office within the time limit,…
The registered licence holder owns a sole establishment unless ownership was transferred by the statutory procedure
A sole establishment is a commercial business (محل تجاري) belonging to its owner or licence holder, with no separate legal personality; its rights and obligations are his. Ownership passes to another person only by a disposition notarised and entered in…
An LLC manager is not personally liable for company debts without fraud, misuse of authority or gross fault
A limited liability company has legal personality and assets separate from its partners from formation; a partner is liable only up to his capital contribution (Article 71 of the 2015 Companies Law), and a manager is personally liable only for fraud,…
A court may remove an LLC manager at a partner's request where serious management failures justify it
A partner in a limited liability company may ask the court to remove the manager, and the court may do so whenever it finds a legitimate reason, whether or not the manager is a partner; whether the reasons are serious is for the trial court. The manager…
A trader's computer-generated statements and invoices can prove a commercial debt between traders
Regular commercial books are evidence in commercial disputes between traders (Article 15 of the Evidence Law). A trader who runs his business with modern technology may keep electronic records in place of paper books (Article 38 of the Commercial…
An LLC partner who manages the company negligently can be pursued personally for its debts
A partner in a limited liability company is liable for its debts only up to his share in the capital, and the company's own assets are normally the creditors' only security. That limit cannot be used as a shield for fraud, gross error, or appropriation of…
A transfer of LLC shares passes ownership only when entered in the company register and commercial register
A limited liability company's memorandum and every amendment must be published by entry in the commercial register; until then they cannot be relied on against third parties. A partner may assign his shares, but ownership passes, even between the parties,…
A transfer of a debt binds the creditor bank only with its consent; a sole proprietorship has no separate personality
An assignment of debt moves the debt from the original debtor to another person and takes effect against the creditor only if the creditor consents (Articles 1106, 1109 and 1110 of the Civil Transactions Law). A sole proprietorship has no legal personality…
An LLC manager may agree to arbitration for the company, and silence during the arbitration waives objections
A party that continues with an arbitration knowing of a breach of the arbitration agreement or of a non-mandatory rule, without objecting in time, waives its objection. Choosing an arbitral institution brings in its procedural rules, and the tribunal rules…
LLC partners who sign a company loan as its representatives are not liable beyond their capital
A loan term falls due early if the borrower becomes insolvent, can no longer pay, or the security is lost, and generally whenever the creditor risks losing its security (Article 431(3) of the Civil Transactions Law). A partner in a limited liability…
Service on a sole proprietorship must reach its owner; affixing notices is lawful only in narrow cases
Service on legal persons follows the Civil Procedure Law, and the Companies Law did not exempt one-person establishments from it. A sole proprietorship has no personality separate from its owner, so the claim must be served on the owner; leaving it with an…
A court cannot label a worker a partner and the licence holder a mere sponsor while ignoring contrary evidence
An employment contract is identified by subordination and wage, which distinguish a worker from a partner. A written contract can as a rule be shown to be sham only by writing, but where the sham conceals a fraud on the law it may be proved by any means.…
Anyone with a direct interest may ask the court to appoint a liquidator, but the interest must be proved
Any person with an interest, even one who is not a partner, may apply to the court to appoint a liquidator for a company in liquidation when the partners cannot do so. The applicant's interest must be established, legitimate, positive and direct; a claim…
Where an offshore company never started business, partners recover their contributions without a liquidation
A criminal judgment binds the civil court only on what it necessarily decided about the act forming the common basis of both actions; an acquittal does not bar a civil claim founded on contractual fault. The court may dissolve a company at a partner's…
Partner arrangements that keep UAE nationals at 51% of an LLC do not breach the share-transfer restriction
The rule in the Companies Law that a transfer of shares must not reduce the UAE national partners' holding below 51% of the capital prohibits only a reduction of the nationals' share. It does not invalidate partners' dealings designed to bring their…
Agreeing to arbitrate needs special authority, but a company that relies on the contract ratifies the clause
Only someone with capacity to dispose of the disputed right may agree to arbitration; a company must act through a person with power to dispose of its assets. A general power of attorney is not enough, because an arbitration agreement is an act of disposal…
A managing partner is accountable as a trustee and is always liable for fraud in managing the business
A partner who manages a partnership acts as agent of the company and the other partners and holds the company's funds as a trustee. If paid, he is liable for loss caused to the company, the partners or third parties by his fault or breach of the…
Whether you are establishing a new venture, restructuring an existing enterprise, or exploring residency pathways — we are here to advise.
Arrange a Consultation →