Can Majority Partners Remove a Partner in a UAE Free Zone Company?

Primary Reference: Memorandum of Association (MOA).

Shareholders Agreement: If there is no explicit clause, you cannot legally force him out based solely on the majority.

In principle, having a majority between the partners is not, by itself, sufficient to remove a partner from the company unless this is expressly provided for in the Memorandum of Association or the shareholders’/partnership agreement.

A partnership is based on personal consideration, and a partner cannot be expelled or forced to exit except in accordance with the agreed contractual mechanisms or the applicable regulations governing the relevant Free Zone. However, a partner’s involvement with or employment by a competing company may constitute a material breach of his obligations—particularly the duties of good faith and non-compete—which could justify taking legal action if a conflict of interest or actual damage is established.

Accordingly, the proper legal course is to review the company’s constitutional documents to determine whether there is a mechanism for removing or forcing the exit of a partner. If no such provision exists, you may resort to the competent authority in the Free Zone or the courts to seek his removal or compel his exit based on breach of obligations and harm to the company, along with a potential claim for damages. As for his demand for a payment in exchange for exiting, it is not binding on you unless it is supported by an agreement or reflects a fair valuation of his shares in accordance with the applicable legal procedures.

Initially, there is a conflict of interest due to his employment at a competing company, and your position is strong if you have concrete evidence of this, such as him receiving a salary from a competitor.

However, it is essential to carefully review the articles of incorporation and precisely define his role within the company, whether as an employee, administrator, or any other contribution for which he is receiving a salary, and to determine his share of the partnership.

You can contact us directly to discuss the details and receive accurate legal advice by phone or WhatsApp.

Dear Questioner,

With reference to your query regarding the possibility of removing a partner from your Free Zone company in the UAE, please be advised that this matter falls under corporate and company law rather than employment law, and is primarily governed by your company’s constitutional documents (Memorandum & Articles of Association) and any shareholders’ agreement in place, in addition to the applicable Free Zone regulations.

Under UAE Free Zone practice, the removal or expulsion of a partner is not automatic, even where one partner holds a majority shareholding. The legal process generally depends on the following key factors:

Contractual Basis

The first step is to review the MOA/AOA and any shareholders’ agreement to determine whether there are specific provisions allowing:

• Removal or expulsion of a partner
• Transfer of shares in case of breach
• Restrictions relating to conflict of interest or competing business activity

Breach / Conflict of Interest

If a partner is engaged with a competing business or acting in breach of fiduciary duties, this may constitute a valid legal ground for action under UAE corporate governance principles, subject to proof and proper procedure.

Shareholder Resolution / Free Zone Procedures

If the governing documents allow, the majority shareholders may pass a resolution to initiate removal or forced transfer of shares. However, this typically requires:

• Proper notice and procedure
• Compliance with Free Zone Authority requirements
• In some cases, valuation of shares for exit settlement

Dispute or Refusal Scenario

If the concerned partner refuses to exit voluntarily, the matter may escalate to:

• Free Zone Authority dispute mechanisms, and/or
• Judicial proceedings before the competent UAE courts

Practical Consideration

In practice, such matters can become procedurally complex and time-sensitive, particularly where there are allegations of competition, remuneration disputes, or demands for exit compensation. Proper legal structuring and documentation are essential to avoid procedural delays or invalid decisions.

Our Assistance

Should you wish, we can handle the entire process on your behalf, including:

• Reviewing corporate documents and legal exposure
• Assessing breach of duty and conflict of interest claims
• Issuing formal legal notices
• Structuring the shareholder resolution and exit mechanism
• Representing you before the Free Zone Authority or courts, if required

We recommend proceeding carefully and strategically to ensure compliance with UAE legal requirements and to safeguard the company’s position.

Please let us know how you would like to proceed.

Best regards,

Mohammad Salah, Senior Legal Advisor

Dear inquirer,

Removing a partner usually requires a court ruling. You can file a lawsuit before the competent court (or the dispute resolution committees in the free zone) to request the "removal of the partner" if you prove that their actions cause significant harm to the company.

You can contact us to discuss the details more precisely and assist you legally.

Shaikha Ghalib Almansoori Law Firm and Legal Consultancy

In UAE Free Zone companies, the removal of a partner is not always as simple as majority decision. It usually depends on the MOA/Shareholder Agreement, especially clauses related to conflict of interest, non-compete, and exit/transfer of shares. If there is evidence of working with a competitor, it may strengthen your position, but it still needs to be handled in line with the agreed structure and Free Zone rules.

Also, the demand for payment to exit may or may not be justified depending on his shareholding rights and valuation terms, so this needs careful review before taking any step. In situations like this, acting without proper structure can sometimes lead to disputes or claims against the company, so it’s important to approach it strategically.

This is something we can assist you with, and we can review your company documents and advise on whether removal is possible, or structure a proper exit to protect your interests. If required, we can also help with formal notices or coordination with the Free Zone authority. It would help to understand whether your MOA includes any non-compete or partner removal clauses, as that can significantly affect your options. You can share the details with us and we can guide you further.

Please do not hesitate to contact us to discuss the details.

ISN Legal Consultancy

Under UAE law and in Free Zones, "removing a manager" differs from "expelling a partner." Here are the legal details of your situation.

Removing a partner from management (not from the partnership)

As you hold the majority of shares, you have the right to remove them from any management or executive position they hold in the company.

Method: This is done through a decision by a majority of the partners (as stipulated in the Articles of Association or Shareholders Agreement).

Salary: If they are removed from their executive position, they forfeit their right to a monthly salary, as the salary is paid for work performed, not for being a partner.

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We are pleased to offer you expert legal support for your case.

At London Legal Consulting Centre, we are committed to the highest standards of professionalism in providing legal advice and look forward to offering you the best solutions.

Yes, but only if your company’s MOA/AOA or shareholders’ agreement allows it and there are valid legal grounds, such as a proven conflict of interest or breach of duty.

In UAE Free Zone companies, even majority partners cannot usually remove another partner unilaterally without following the proper legal process and obtaining Free Zone authority approval.

Dear questioner,

You can usually remove him from management immediately, but removing him from ownership (shares) requires a specific legal trigger or a court order.

We need to file a case for Judicial Removal in court based on a "gross breach of duty." Under UAE Law (and most Free Zone regulations), a partner is prohibited from competing with the partnership. His involvement with a competitor is a Breach of Fiduciary Duty.

For more details, kindly share your WhatsApp number.

Dear Inquirer,

Thank you for reaching out and sharing the details of your situation.

Based on what you have described, matters involving partnership rights, conflict of interest, and removal of a partner require a careful legal assessment to determine your position and the appropriate course of action under UAE law and the company’s governing documents.

We can arrange a 15-minute triage with counsel to review your partnership agreement and advise you on the available options and next steps. To proceed, we would first need 6 basic details to ensure the matter is directed to the appropriate lawyer.

NJA | Jasim Alhaddad Advocates & Legal Consultants

Hello,

Thank you for your message. Based on what you’ve described, this appears to involve a shareholder dispute with potential conflict of interest and competing business activity, which is a serious matter in Free Zone companies.

Whether a partner can be removed is not automatic and will depend on the shareholders agreement, company documents, and the specific conduct involved. However, there are structured legal options available, including addressing the competing activity, restricting involvement, and managing an exit or buyout in a controlled manner.

Given the complexity and potential financial impact, it is important to approach this strategically from the outset. I can assist you in reviewing your company structure and advising on the most effective course of action.

Please share your contact number and email, or you can reach me directly, and I will arrange a call to discuss this further.

Kind regards.

Greetings from Dr. Khalifa Bin Huwaiden Advocates & Legal Consultants.

• It depends on your Memorandum of Association / Shareholders Agreement—you can’t remove a partner just by majority unless the documents allow it.
• If there is a non-compete or conflict clause, his involvement with a competitor may be a valid ground for action.
• Usually, removal requires buyout, transfer of shares, or court/legal process via the Free Zone authority (e.g. Dubai Multi Commodities Centre if applicable).
• His demand for payment to exit may be treated as a negotiation (buyout), not a legal right unless agreed in documents.
• Best step: review your agreements urgently and proceed with formal notice, negotiation, or legal action if breach is proven.

For more information, please contact us during our official working hours from 8:00 AM to 5:00 PM, or reach us directly via WhatsApp.

Your situation depends mainly on your company documents, not just majority control.

In most UAE Free Zone companies, you cannot remove a partner simply by majority unless the MOA or Shareholders Agreement clearly allows this. However, your case has a strong angle.

If this partner is involved with a competing business, this may be considered a breach of fiduciary duty and conflict of interest, which can justify legal action and potentially force an exit under UAE Companies Law (Federal Decree Law No. 32 of 2021)

Also, demanding payment while working for a competitor strengthens your position.

What are your realistic options

• negotiate a structured buyout (if you want a fast solution)
• trigger any contractual clauses (non-compete / breach)
• legally challenge the partner for conflict of interest and seek removal or damages
• suspend his rights if there is a serious breach (depending on documents)

How I can help you

I can support you by:

• reviewing your MOA / shareholder agreement
• identifying if you can legally remove or pressure exit
• building a strong legal position based on conflict of interest
• structuring a clean exit strategy to avoid future disputes

I’ve handled similar partner disputes where we forced exits or protected majority partners. Currently, I have competitive offers for corporate disputes and restructuring.

Share your company documents, and I’ll give you a clear strategy on whether you can remove him or how to push him out safely without legal risk.