Category: Commercial Law

Liability of the shareholders and managers in LLC

 

 

  • what forms of the commercial companies shall be established in United Arab Emirates?
    Article no.  (5) of commercial company law

A company shall have one of the following forms 

    1. Partnership company
    2. Limited partnership company

 

  • Limited liability company 

 

  1. Public joint stock 
  2. Private joint stock 

 

 

  • If Any company established in other than those forms it will be valid?

 

Any company established in other than those set out in the above clause shall be invalid and the persons who enter into contracts in the name of such company shall be jointly and severally responsible for the obligations arising out of such contracts. 

 

 

  • What’s the most established company in United Arab Emirates and why?

 

             the Limited liability company is the most established in UAE 

Article no. (71) of commercial company law provides:

Company definition 

Limited liability company is an association of a maximum no. of fifty and minimum of two partners, each of them shall be liable only to the extent of his share in the capital 

this is the main reason that you will not be liable personally and jointly for the company’s obligations, just in you’re the extent of your share in the capital

 

  • What main liabilities of shareholders?

 

Each shareholder in a limited liability company liable only in to the extent of his  share in the company according to article no. 71 of commercial company law:

Liability of Shareholders in a Limited Liability Company:

liable only to the extent of his share in the capital 

However, The Dubai Court of Cassation in its rulings established some exceptions to reach the shareholders personal assets provided the satisfaction of certain extraordinary specific circumstances. 

 

  • What main liabilities of managers?

 

Each manager in limited liability company shall be liable towards the company, partner’s and others for his committed acts due to misuse of powers including any acts of fraud he commits, concealed or damage or change part of company’s books, embezzled company’s properties according to more than one legislation as follows:

Liabilities of managers according to commercial company law:

Article no. (84) commercial company law provides:

  • Each manager in limited liability company shall be liable towards the company, it’s partners and others for any acts of fraud he commits. He shall also indemnify the company for any losses or expenses incurred due to misuse of powers and for any act of default with regards to any applicable law, the company’s memorandum of association or maladministration by the manager. Any provision to the contrary in the company’s memorandum of association or the manager’s appointment contract shall be hereby revoked.

 

 

  •             Liabilities of managers according to DIFC Companies Law

 

The DIFC Law no. 8 of 2018 (“DIFC Companies Law”) has clarified provisions on manager’s liabilities. of the DIFC Companies Law provides that there’s no act of the manager shall be treated as a breach if all the shareholders of a company authorize.

 

  • What’s the duties of the managers to act within powers?

 

 

Duties of the managers within his power shall act in a good faith and in accordance with the articles of association of the company as follows:

 

Article no. 69 DIFC Laws Provides

A Director of a Company shall:                                                                                                      (a) act in accordance with the Articles of Association of the Company (b) only exercise his powers for the purposes for which those powers have been conferred.

Article no. 70 DIFC Laws Provides                                                                                                                           (1)     A Director of a Company shall act in the way he considers, in good faith, would be most likely to promote the success of the Company for the benefit of its Shareholders as a whole, and in doing so, have regard, amongst other matters, to:

  (a) the likely consequences of any decision in the long term.

  (b) the interests of the Company’s employees.

  (c) the need to foster the Company’s business relationships with suppliers, customers and others.

  (d) the impact of the Company’s operations on the community and the environment.

  (e) the desirability of the Company maintaining a reputation for high standards of business conduct.

  (f) the need to act fairly as between Shareholders of the Company.

(2) To the extent that the purposes of the Company consist of or include purposes other than the benefit of its Shareholders, the reference to the benefit of Shareholders in Article 70(1) has effect as if it included those other purposes.

 (3) The duty imposed under this Article has effect subject to any law applicable to the Company requiring Directors, in certain circumstances, to consider or act in the interests of a Company’s Creditors.

Article no.72 provides DIFC Laws Provides                                                                                                                           

Duty to exercise reasonable care, skill and diligence A Director of a Company shall exercise the care, skill and diligence that would be exercised by a reasonably diligent person with:

 (a) the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by the Director in relation to the Company. 

(b) the general knowledge, skill and experience that the Director has

Article no. 73 DIFC Laws Provides                                                                                                                           

 

  • Is the manager allowed to accept any benefits from the third party?

 

The main rule a manager of a company shall not accept a benefit due to his position because of a conflict of interest and he also obliged to avoid conflict of interest as we will discuss below.

Article no 73 DIFC Laws Provides                                                                                                                           

Duty not to accept benefits from third parties 

(1) A Director of a Company shall not accept a benefit from a third party where the benefit is conferred on him: (a) due to his position as a Director of the Company; 

(b) for him doing (or not doing) anything as a Director, unless the acceptance of such benefit cannot reasonably be regarded as likely to give rise to a conflict of interest.

 (2) A “third party” in Article 74(1) means a person other than the Company, an associate of the Company or a person acting on behalf of the Company or an associate of the Company. (3) In Article 74(2), an “associate” in relation to a Company means:

 (a) the Company’s Subsidiaries, and all the Subsidiaries in the chain of Subsidiaries in which the Company is the Ultimate Holding Company; 

(b) the Company’s Holding Company, and all the Holding Companies up to the Ultimate Holding Company of the Company, and the Subsidiaries of each of those Holding Companies. 

(4) Any reference in this Article to a conflict of interest includes a conflict of interest and duty a conflict of duties.

Duty to avoid conflicts of interest 

(1) A Director of a Company shall avoid a situation in which he has, or can have, a direct or indirect interest that conflicts, or may possibly conflict, with the interests of the Company.

 (2) The duty under Article 73(1) applies in particular to the exploitation of any property, information or opportunity.

 (3) The duty under Article 73(1) does not apply to a conflict of interest arising in relation to a transaction or arrangement where the requirements in Article 75 or Article 77 as applicable, are met. (4) A Director of a Company does not contravene the duty under Article 73(1) if: 

(a) the situation cannot reasonably be regarded as likely to give rise to a conflict of interest; 

 (b) the Directors of the Company have authorized the situation in accordance with the Articles of Association and any applicable provisions of the Law. 

(5) A Company’s Articles of Association may, subject to Article 73(4), include alternative procedures for avoiding conflicts of interests. A Director does not contravene the provisions of this Article by acting in accordance with such procedures.

 (6) Any reference in this Article to a conflict of interest includes a conflict of an interest and a duty and a conflict of duties.

 

intellectual-property-expert

Intellectual Property Law

Intellectual Property (IE) law covers the topic of ownership of materials and works by people and organizations. This area of law is highly-sought after, especially by businesses who wish to protect their unique developments and designs. Although intellectual property law is also applicable for the protection of works by individuals.

For businesses, the subject area is crucial for the protection of trademarks, product designs, patents, brand image, and other copyrighted material. For individuals, the topic can cover many aspects of personal works, such as written materials (e.g. books and articles), music scores, film productions, web designs, and more.

Effective intellectual property enforcement

At Abdulla Alsuwaidi Advocates, our specialist intellectual property lawyers have great experience in the industry. This enables us to provide effective protection for individuals and organizations of different sizes. We provide personalized legal advice and support within Dubai and the wider UAE. In cases where a dispute cannot be resolved, we are fully equipped to take enforcement measures to ensure compliance with the law. This can be achieved via the UAE courts and also the DIFC courts.

Our intellectual property services

The topic of Intellectual Property covers a broad spectrum and we are fortunate to specialize in all key areas. We are able to provide advice, support, and enforcement services in Dubai, the wider UAE, and across the MENA (Middle East and North Africa) region. The main IP services our lawyers cover include:

  • Anti-counterfeiting and the protection of goods – We can provide advice, support, and protection against counterfeit goods in circulation. This includes the enforcement of patents to ensure compliance with UAE and international law.
  • Brand protection – Companies who rely on recognizable branding require expert IP services. Our knowledgeable intellectual property lawyers have a positive track record of commercial trademark and patent protection.
  • Marketing and advertising – For commercial organizations, the protection of marketing collateral and advertising imagery, writing, and video production is crucial. We are on hand to provide expert knowledge and guidance for companies of all sizes.
  • Copyright protection – The enforcement of copyrighted works by individual persons or businesses is important to preserve the nature of the materials. We are able to enforce intellectual property law by issuing demands for compliance. Similarly, in cases of non-compliance, we can take further action to ensure enforcement.
  • Transferring intellectual property – Our IP lawyers are able to oversee the full transfer of intellectual property to other individuals and organizations. We provide initial advice and support, then prepare the necessary contracts of ownership.
  • Intellectual property portfolio management – For large organizations with multiple brands, full service IP portfolio management is often needed. This ensures protection and enforcement of intellectual property disputes against competing businesses.

Why choose Abdulla Alsuwaidi Advocates?

In our law firm, we know the importance of efficient, knowledgeable, and friendly service. We believe in providing a high-quality law practice to both individuals and companies across Dubai and the UAE. Our lawyers have vast experience in intellectual property law in both private and commercial settings. Please contact us on +971 55 9230221 to find out more about how we can help.

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Aws. M.Younis

Mr. Aws M. Younis is the Managing Director / Senior Legal Consultant, and has had a dynamic and successful career which was built on high motivation and dedication. Adv. Aws Younis is active in Dubai since 2004.

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Abdulla Al Suwaidi - Best Lawyers -and -advocates-In Dubai

Abdulla Al Suwaidi

Mr. Abdulla Al Suwaidi is the Local Partner / Senior Legal Consultant, and has had a successful career which was built on high motivation and commitment. He specializes in a full range of legal matters in the U.A.E

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