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.

 

dominica-citizenship

Dominica Citizenship

Dominica Citizenship programme was introduced in 1993 by the Government of the commonwealth of Dominica and their citizenship by investment programme is one of the longest-running economic citizenship programmes in the world.

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The commonwealth of Dominica has carved its own niche among the countries that offer their economic citizenship allowing passport holders visa-free entry to the UK, EU and Schengen Area countries (as well as Singapore & Hong Kong) while enjoying the benefits of the Dominica tax system.

Other Benefits

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cyprus-citizenship

Cyprus Citizenship

Cyprus citizenship is one of the few European countries citizenhip programme that anyone would want to have because of the many sided benefits of the country itself. Cyprus offer citizenship by investment programme that is both highly respected and expedient. The programme was designed for individuals wishing to obtain full rights of citizenship in an European Union country.

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CYPRUS CITIZENSHIP BENEFITS

Acquiring Cyprus citizenship comes with several benefits and the path to this is quite straightforward, amongst which is investing in the real estate or donating to a government fund which offers passports in exchange for foreign investment.

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Antigua & Barbuda Citizenship

Antigua & Barbuda citizenship is one that anyone who seek to have a second citizenship must seek after for varying reasons as shall be discussed later in this post. Antigua & Barbuda is a twin-island state, consisting of two major inhabited islands, Antigua & Barbuda, along with several small islands.

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OTHER BENEFITS OF ANTIGUA & BARBUDA CITIZENSHIP

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Our team of Immigration experts are waiting to assist individuals and their families, who are looking for better tax optimisation opportunities and ways to expand their travel freedom.  Contact us today let’s discuss your options.

 

offshore-company-formation

Offshore Company Formation in UAE

Offshore Company formation UAE has evolved to being the dream of all and sundry for varying reasons and benefits, it’s not hard to find why many choose the option of starting small and growing big in the land as their is all that’s needed to emerge a giant company within the shortest possible time.

The continent evolved as a leading business hub in the Middle East with advantage of  business connectivity by all major forms of connectivity to all the major cities of the world. Investors from all parts of the world makes it a second home.

 

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extradition-what-you-should-know

Extradition – What You Should Know

EXTRADITION – THE MYTH OF THE TRUTH, WHAT YOU SHOULD KNOW.

Extradition, in international law, is the process by which one state (requesting State), upon the request of another state (requested State), effects the return of a person for trial for a crime punishable by the laws of the requesting State and committed outside the State of refuge or final convictions.

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UAE-labour-contracts-unlimited-contracts

UAE Labour Contracts – Unlimited Contracts

Limited vs Unlimited Contracts

As mentioned in our last article, whilst Dubai lawyers might be familiar with UAE Labour Law, many residents and companies remain confused until they must defend their rights in court. A basic premise of UAE Labour Law we must all understand is the difference between a limited contract and an unlimited contract. In the article below we will look at the key points of an unlimited contract.

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UAE-labour-contracts-unlimited-&-limited

UAE Labour Contracts – Unlimited & Limited

LIMITED & UNLIMITED CONTRACTS

In Part I and Part II, we discussed limited and unlimited contracts individually. Although many Dubai lawyers are familiar with UAE Labour Law, residents and companies can be unsure of their rights until they are forced to defend those rights in court. Though fundamental differences exist between a limited contract and an unlimited contract, there are important core similarities.

Continue reading “UAE Labour Contracts – Unlimited & Limited”