Can two partners in a civil company make decisions without the approval of the third partner?

1. the managing director of a partnership company has the authority to authorize bank signatories, but this should be done with the consent of all partners. If Partner A authorizes only Partner C without the consent of Partner B, it could be considered a breach of trust and could lead to legal consequences.

2. The cost and time for evaluation of company assets and filing for legal action to withdraw a partnership may vary depending on the specific circumstances of the case.

It is recommended to consult with a legal professional for an accurate estimate.

1. The power of a Managing Director to appoint sole bank signatories without the consent of other partners in a civil company depends on the specific terms of the partnership agreement. The agreement should clearly outline the authorities and responsibilities of the Managing Director. If it explicitly grants the Managing Director the power to appoint bank signatories, then Partner A could potentially do so without the consent of Partner B.

2. The cost and time involved in evaluating company assets and initiating legal proceedings to withdraw from a partnership can vary significantly depending on certain factors like the size of the firm, the nature of the business, etc.

It would be better if we could discuss these in detail. Kindly share your WhatsApp number to discuss this further.

Welcome.

Regarding Partner A authorizing the sole bank signatory: It depends on the partnership agreement. If the agreement doesn't allow it, Partner A would need Partner B's consent. If the agreement grants this authority, then it may be possible.

Legal consultation is recommended to review the agreement.

Regarding the allocation of the 25% share for the quitting partner: It could take from weeks to months, depending on the valuation and negotiations.

We recommend booking a legal consultation to get detailed advice and proceed with the necessary steps.

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We are honored to provide you with specialized legal support for your case.

If you have any further inquiries regarding your matter, we would be happy to assist you.

First: It is necessary to review the articles of incorporation to understand the powers granted to the director

Second: With regard to registering a lawsuit for accounting, dissolving the partnership, and exiting the company, some specific procedures are taken in accordance with the law and are followed in accordance with the litigation system in the United Arab Emirates.

Judgments are made in a regular and rapid manner to achieve justice.

Dear questioner

Yes, it is possible to withdraw from the company after transferring the liabilities and allocating the company shares according to the percentage value, it will take approximately 1 month.

Kindly share your Whatsapp number to discuss the professional charges.

Hello,

In a partnership, unless otherwise stipulated in the partnership agreement, all partners typically have equal rights to manage the business, including decisions regarding financial matters such as bank signatories.

However, if Partner A is the Managing Director (MD), they may have greater day-to-day authority over the operations of the business.

However, this does not automatically grant the MD the right to make unilateral decisions that affect the entire partnership, especially in a matter like bank signatories.

The involvement of all partners in such decisions is usually required unless the partnership agreement allows otherwise.

If the partnership agreement specifies that the MD has such authority, then it might be possible for Partner A to authorize Partner C as the sole signatory.

But in the absence of a clear clause, it would typically require consent from Partner B or at least a majority vote (if such a process is outlined in the partnership agreement).

In most cases, unilateral decisions without the consent of all partners could be challenged by the non-consenting partners. for further assistance kindly share your Whatsapp number.

Partner A, as managing director, cannot authorize Partner C to be the sole bank signatory without the consent of Partner B.

In civil partnerships, key decisions relating to the management of the company, such as authorizing bank signatories, require the consent of all or a majority of partners as stipulated in the partnership agreement.

Therefore, the partnership agreement should be consulted to verify the procedures required for such decisions.

Thank you for your inquiry regarding partnership business law. I’d be happy to provide guidance on your concerns.

Bank Signatory Authorization: In a civilian partnership (not LLC), decisions like authorizing one partner as the sole bank signatory typically require the consent of all partners, as it directly affects the rights and responsibilities of the partnership. If such a decision was made without Partner B's consent, it could potentially be challenged legally.

Costs and Timelines for Evaluation and Legal Action:

The cost of evaluating company assets and initiating legal action to withdraw from the partnership depends on the complexity of the case, valuation requirements, and associated court fees.

We can provide an accurate estimate after understanding the details of the partnership agreement and asset structure.

Allocating the 25% share value depends on the cooperation between partners and the court's timeline. Typically, this process could take a few months to a year, depending on the jurisdiction and any disputes that arise.

Bank Fund Transfer and Court Disbursement:

Once the bank transfers funds to the court treasury, it generally takes a few weeks for the transfer to complete.

After that, the court reviews and disburses funds as per the judgment, which may take an additional few weeks to months depending on the case's specifics and procedural formalities.

To address your concerns more precisely and guide you through the process effectively, I recommend scheduling a detailed consultation.

You can reach me via WhatsApp or phone. I’d be happy to assist you further.

Best regards,

Suhail Rana

Dear Questioner,

Thanks for your inquiry.

Regarding the above, here’s a breakdown of your queries regarding partnership law in the UAE, specifically concerning a civil company (not an LLC):

1. Can Partner A Authorize Partner C as the Sole Bank Signatory Without Partner B's Consent?

In a Civil Company, the relationship and rights of partners are governed by the UAE Civil Transactions Law and the company’s Articles of Association (AoA) or partnership agreement.

Key Points:

Authority of the Managing Director (MD):

The Managing Director’s powers are typically defined in the partnership agreement or AoA. If the agreement explicitly grants Partner A (MD) the right to make such decisions, they may proceed. However:

Most partnership agreements require unanimous or majority consent for significant decisions, such as financial authority changes.

If the partnership agreement is silent, all partners must agree to authorize a sole bank signatory.

Consent Requirement:

Without Partner B's consent, assigning Partner C as the sole signatory could breach the partnership agreement and expose Partner A to potential legal challenges. Partner B can file a case to contest such a decision.

2. Cost and Duration of Evaluating Company Assets and Filing for Withdrawal of Partnership

Evaluation of Assets:

Process:

The court may appoint a neutral auditor or valuation expert to assess the company’s assets and liabilities.

Cost:

Fees for asset valuation depend on the complexity of the business and the court-appointed expert’s rates, which can range between AED 5,000 to AED 20,000 or more.

Legal Action for Withdrawal:

Filing a Case:

Partner B can file a case for withdrawal from the partnership and claim their 25% share. This includes filing fees (around AED 5,000 to AED 10,000) and lawyer fees, which vary based on the law firm (commonly AED 20,000 to AED 50,000 or more).

Timeline:

Valuation Period:

The valuation process typically takes 1 to 3 months, depending on the complexity of the business and the court’s schedule.

Case Resolution:

Resolving the case and allocating the 25% share may take 6 to 12 months, depending on court proceedings and whether there are disputes.

3. Steps to Withdraw from the Partnership

Request a Valuation:

Partners can agree to appoint an independent auditor to assess the company's assets outside of court.

File for Dissolution of Partnership:

If an amicable settlement fails, Partner B can file a case to exit the partnership and request their share.

Court-Ordered Sale:

If the company cannot continue operations without Partner B, the court may order the sale of the company’s assets to distribute shares.

Recommendations

Review the Partnership Agreement:

Check the AOA or any written agreements for clauses governing decision-making, valuation, and withdrawal.

Let me know if you’d like further clarification or assistance drafting legal notices or agreements!

Greetings

Thank you for reaching out. Based on your questions, here’s a detailed explanation of your rights and obligations under UAE law regarding partnership businesses:

1. Authorization of a Sole Bank Signatory

In a civil company (not LLC), the rights and responsibilities of partners, including matters related to bank signatories, are governed by:

The Partnership Agreement (Memorandum of Association or similar document).

The UAE Civil Transactions Law (Federal Law No. 5 of 1985).

Key Points:

Authority of the Managing Director:

The Managing Director (Partner A in this case) is generally empowered to manage the day-to-day affairs of the business.

However, significant decisions, such as authorizing a sole bank signatory, typically require the consent of all partners unless explicitly stated otherwise in the partnership agreement.

Consent of All Partners:

If the partnership agreement requires unanimous or majority consent for changes related to financial authority, Partner A cannot unilaterally appoint Partner C as the sole bank signatory without Partner B’s approval.

If there is no explicit clause in the agreement, Partner B may object to such a decision on the grounds of unfair exclusion.

Legal Action:

Objection to the Decision:

Partner B can formally object to the appointment of a sole bank signatory by filing a request with the Civil Court if this decision impacts their rights or violates the partnership agreement.

2. Withdrawing from the Partnership and Valuation of Assets

If Partner B wishes to withdraw from the partnership, the process typically involves:

Step 1: Asset Valuation

Engaging a Valuation Expert:

A court-appointed or independent auditor/valuer can be engaged to evaluate the company’s assets, including tangible and intangible assets (e.g., goodwill, contracts, liabilities).

Cost of Valuation:

The cost of valuation depends on the complexity and size of the business.

Estimated costs in the UAE typically range from AED 10,000 to AED 50,000, depending on the scope.

Timeline for Valuation:

The valuation process usually takes 2–3 months, depending on the volume of assets and business documentation.

Step 2: Filing for Legal Action to Withdraw

Filing a Withdrawal Request:

Partner B can file a legal request with the Civil Court to formally withdraw from the partnership and demand their share of the business.

The court will review the partnership agreement and the valuation report to determine Partner B’s entitlement.

Cost of Legal Action:

Filing fees for civil cases depend on the claim amount. For example:

Claims under AED 500,000: Fees are typically around AED 12,000–15,000.

Claims exceeding AED 500,000: Fees may increase proportionally.

Additional legal representation fees depend on the complexity of the case.

Timeline for Resolution:

The court process, including hearings and judgment, can take 6–12 months.

Step 3: Allocation of the 25% Share

Payment to Quitting Partner:

After valuation and court approval, the remaining partners must pay the 25% share value to Partner B.

If the remaining partners cannot pay, the court may order the liquidation of company assets to settle the amount.

Timeline for Payment:

Once the court issues a judgment, payment must be made within the timeline specified by the court (usually 30–60 days).

3. Key Legal Considerations

Partnership Agreement:

Review the terms of the agreement to confirm the process for withdrawing a partner and the conditions for financial decisions (e.g., appointing a bank signatory).

Equitable Distribution:

The law ensures that Partner B receives its fair share (25%) of the company’s value, reflecting both assets and liabilities.

4. Recommended Actions

Review the Partnership Agreement:

Check whether Partner A has the authority to appoint a sole bank signatory without consent and the process for a partner’s withdrawal.

Engage Legal Assistance:

Seek a lawyer to formally object to unilateral decisions affecting Partner B’s rights and to initiate the withdrawal process if necessary.

Proceed with Valuation:

Engage a valuation expert to determine the fair market value of the company’s assets before filing for withdrawal.

5. Conclusion

Bank Signatory Issue: Partner A cannot unilaterally appoint a sole signatory without Partner B’s consent unless explicitly authorized in the partnership agreement. Partner B can object through legal channels.

Withdrawal Process: The cost and timeline for withdrawing from the partnership depend on the complexity of the business and the valuation process.

Typically, the total process, including valuation and legal action, could take 6–12 months, with costs ranging from AED 25,000 to AED 70,000 (valuation + legal fees).

If you need assistance reviewing the partnership agreement, objecting to decisions, or initiating the withdrawal process, I would be glad to support you.

Best regards,

Omar Mosaad

Senior Legal Consultant

OS Legal