How can I exit a partnership linked to an expired license and accumulating fines?

Hello,

If the business license has expired and is not renewed, continuing business activities under the company’s name is illegal.

Operating without a valid license in the UAE can result in severe penalties, including fines and potential criminal charges.

You have the right to withdraw from the partnership, but this process requires proper documentation, a legal agreement with the other partner(s), and approval from the Department of Economic Development (DED).

If the partnership agreement (if any) allows for a partner's withdrawal, this needs to be processed legally to prevent you from being held liable for ongoing business activities.

If the business is no longer viable or cannot be legally renewed, you can request the dissolution of the company.

This involves submitting a liquidation request to the relevant authorities (DED or courts), settling any debts, and distributing the assets (if any).

If there are outstanding debts, they need to be paid from the company’s assets.

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Good day!

I understand your situation, and I’ll provide you with guidance on how to address the legal issues you’re facing, as well as potential solutions for withdrawing from this partnership and resolving the outstanding issues.

1. Your Liability as a Partner:

Since you were a partner in a trading business, you likely hold some level of legal responsibility for the company’s debts, actions, and any outstanding financial matters—even if you were not actively involved in the business or did not have a direct role in managing the operations.

As per UAE law, unless you were specifically excluded from operational duties or limited in your scope of involvement (through formal agreements such as an amendment to the partnership contract), you could still be held liable for any business-related matters, including debts and fines, even if you were not actively involved.

2. Expired License & Unpaid Fines:

The expired license and inability to renew it, combined with the accumulation of fines, are significant concerns.

Your name is likely still associated with the business, especially since you were a partner; if the license cannot be renewed, you and the other partners may be jointly responsible for the fines.

If the deceased partner’s heirs are involved in a dispute with the other active partner regarding financial matters, this complicates things further, especially if the business assets are not properly accounted for.

3. The Active Partner Using the Business Name:

The situation where the remaining partner is still using the company name for business purposes after the license has expired is a legal issue.

If the company is still operating under the expired license and you're still listed as a partner, this can cause legal problems for you, especially if the remaining partner is continuing the business without formal authorization.

This could potentially lead to future legal claims, fines, or liabilities being attributed to you as a partner of the company, even though you're not involved in the day-to-day operations.

4. Options to Exit the Situation:

a. Legal Action to Dissolve the Partnership:

If the license is expired and the business is no longer operating legally, you should formally request the dissolution of the partnership and liquidation of the company.

To do so, you can file a case with the UAE courts or the relevant free zone authority (if applicable) to dissolve the company.

This will require evidence and cooperation from the deceased partner’s heirs or legal representatives. If the other partner is unwilling to cooperate, you can request that the court intervene to dissolve the company and resolve outstanding issues.

Court fees may be a concern, but there are also possibilities to get legal aid if you are unable to afford the costs. Some courts offer reduced fees or assistance for individuals with limited financial means.

b. Settlement with the Other Partner:

If the surviving partner is still operating the business, you might be able to negotiate a settlement with them, where you formally withdraw from the company and sign over your share in exchange for resolving the debts and fines. This could also help the business close down properly.

If the other partner is unwilling to cooperate, you may need to go through the court system to settle the matter and remove yourself legally from the partnership.

c. Seeking Legal Aid or Support:

Since you mentioned you are a small salaried individual, you can inquire about free legal assistance. Some UAE legal entities and public bodies offer pro bono (free) legal services or assistance to individuals in financial hardship.

You can visit the Dubai Courts or the Ministry of Justice to inquire about free legal support or government programs that may assist you in your situation.

You can also consult legal aid organizations or pro bono law firms in the UAE that offer free or reduced-cost services.

d. Dealing with the Heirs of the Deceased Partner:

If the parents of the deceased partner are claiming money from the surviving partner, you can request that the matter be handled through mediation or legal channels to ensure any debts or claims are properly settled.

This could also help clarify the distribution of any remaining company assets and prevent you from being held liable for any outstanding issues.

5. Steps You Can Take:

- Contact the Authorities:

Visit the Department of Economic Development (DED) or the relevant free zone authority where the license was issued, and inform them of the expired license and your desire to exit the business.

- Formal Request for Dissolution:

File a request to dissolve the partnership through legal channels, particularly if the other partner is continuing operations illegally. The authorities may require written consent from all partners, or a court ruling if there's a dispute.

- Seek Legal Advice:

If your lawyers are unresponsive, consider finding another law firm or legal representative who can guide you through the dissolution process and resolve any financial claims. If you cannot afford a lawyer, inquire about legal aid programs that may assist you.

- Cooperate with the Deceased Partner's Heirs:

If there is any possibility of settling the financial claims with the heirs of the deceased partner, try to reach an amicable resolution.

If the surviving partner is not cooperating, this will likely need to be handled legally.

While you may feel trapped in this situation, there are steps you can take to extricate yourself from the partnership.

The first priority is to ensure that the company is legally dissolved and that you are no longer held responsible for its operations, fines, or debts.

You can pursue this through formal channels, including courts or government bodies, and seek assistance if necessary. Legal aid options may help reduce the cost burden in your case.

I hope this provides clarity on your options. Feel free to reach out if you have further questions or need more specific assistance.

Best regards,

Mohammed Salah

Legal Consultant

Hello,

As per your query, please note that you can arrange for a new investor, and for the deceased partner's share, you can either buy it yourself or persuade the other partner to buy it.

However, if the deceased partner is non-Muslim, the shares must go through court for redemption or sale, and if Muslim, the shares will be vested by the court as per Sharia Law.

Please contact us by email at [---------] or call [---------] for more information.

Here’s a breakdown of your options and possible actions to protect yourself:

1. Key Issues at Hand

- Expired Trade License: The license cannot be renewed due to the absence of cooperation from the heirs of the deceased partner.

- Fines and Liabilities: Delays in renewal are accumulating fines, and your name remains on the license, making you partially liable.

- Ongoing Business Activity: The surviving partner is continuing the business under the expired license, which may expose you to further liability.

2. Options to Exit the Partnership or Dissolve the License

a. Request License Cancellation from DED (Dubai Economy and Tourism):

The Dubai Department of Economy and Tourism (DED) allows partners to request the cancellation of a license in specific circumstances.

Since the license cannot be renewed and the deceased partner's heirs are not cooperating, you can file a request to withdraw from the partnership or request forced liquidation of the company.

This may require a formal legal notice served to the heirs of the deceased partner and the remaining partner.

b. File a Request for Withdrawal from the License:

Article 55 of UAE Commercial Companies Law (Federal Decree-Law No. 32 of 2021) allows partners to withdraw from a partnership under certain conditions.

You can notify DED that you wish to withdraw your name from the license due to non-cooperation and inability to operate the business.

DED may request supporting documents such as correspondence or records indicating the issue.

c. Engage DED for Mediation and Resolution:

DED often assists in partnership disputes through their Commercial Control and Consumer Protection Department.

d. File a complaint with DED explaining:

- The partner’s death and the heirs' non-cooperation.

- The ongoing business activity under the expired license without your consent.

- Request to either dissolve the company or remove your name from the license.

3. Potential Legal Actions (If Required)

- Petition for License Dissolution:

If the heirs refuse to cooperate, you can petition the civil court to dissolve the partnership based on Article 673 of UAE Civil Transactions Law, which allows dissolution due to the death of a partner or the inability to continue operations.

- Pro Bono Legal Assistance:

Some legal aid services in the UAE offer assistance for individuals with limited financial capacity. Consider approaching:

• The DIFC Pro Bono Program
• Dubai Courts Legal Clinic
• Dubai Police or Tasheel – for advice on filing complaints.

4. Recommended Actions for You

- File a Complaint with DED: Request mediation or intervention to dissolve the license or remove your name.

- Issue a Legal Notice: If possible, I recommend sending a legal notice to the surviving partner and the heirs, urging cooperation to avoid further fines and legal action.

- Stop Unauthorized Use of License: Notify DED that your partner continues to use the company name unlawfully under an expired license. DED may intervene to stop this activity.

- Seek Free Legal Support: If court action is necessary, explore free legal aid options to minimize costs.

5. Conclusion

You are not without options, and there are mechanisms to protect yourself from financial liability and exit the partnership, even if the heirs are uncooperative. I recommend starting with DED mediation and escalating to legal action only if necessary.

If you need assistance drafting a legal notice or engaging with DED, feel free to reach out. I’d be happy to guide you through the process.

Best regards,

Omar Mosaad

Under UAE law, if a partner has passed away and the business license has expired, you may need to take legal steps to either dissolve the partnership, resolve financial issues, or address unpaid fines.

If you are unable to afford court fees, you may seek legal aid or consult a specialized lawyer for assistance.

For a more detailed and accurate solution to your case, please contact us via WhatsApp. We specialize in partnership and business-related legal issues and can guide you on the best course of action.