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.

(If you found this helpful, please rate our service positively to help us improve the quality of our services.)

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.

Hello,

We need to review the company's articles of incorporation so we can advise you on the correct course of action.

Please note that the partner's actions are illegal and subject to legal consequences. He is not entitled to a salary, as salaries are paid for work, not shares.

For more information, please contact us.

Yes, this may be possible, but it is not automatic. In a UAE Free Zone company, the ability to remove a partner or force an exit usually depends on the company’s constitutional documents, the shareholding structure, the relevant Free Zone regulations, and whether there has been a clear breach of fiduciary duties, conflict of interest, competition restrictions, or other misconduct.

If this partner is actively working with a competing business, taking remuneration from your company, and at the same time demanding payment to exit, this raises serious legal and commercial issues that should be reviewed properly. In many cases, the majority partners may have legal options, but the correct route may involve examining the Memorandum/Articles, shareholders’ agreement if any, board powers, removal provisions, transfer restrictions, and possible claims relating to conflict of interest and damages.

A detailed review of your company documents is required before confirming the strongest course of action, but based on what you described, there may be a valid basis to take legal steps to protect the company and the interests of the remaining partners.

You may reach out to me directly on WhatsApp or phone to book a consultation or appointment so I can review the company documents and advise you on the proper legal action.

Suhail Rana

Greetings,

Based on the information provided, we clarify the following:

1. The relationship between the partners in the company is primarily governed by the Memorandum of Association (MOA), which serves as the main reference for regulating the rights and obligations of the partners, including withdrawal or exclusion scenarios.
2. No partner may have their rights affected or be removed from the company except in accordance with the provisions of the MOA or pursuant to a judgment issued by the competent court.
3. All partners are bound by duties of good faith and loyalty toward the company. Accordingly, if a partner engages in a competing activity or becomes involved with a competitor without the knowledge or consent of the other partners, this may constitute a material breach of their legal obligations.
4. Regarding the possibility of removing a partner, this depends on the following:
   • If the MOA expressly provides for exclusion or removal by majority vote, then the partners may proceed in accordance with the MOA, subject to compliance with the applicable regulations of the relevant Free Zone authority.
   • If the MOA does not contain such a provision, judicial proceedings would generally be required to request the exclusion of the partner based on breach of obligations, such as unlawful competition or harm to the company.
5. Legally, a partner is not automatically entitled to demand a lump-sum payment in exchange for exit. Instead, the value of their share is determined based on:
   • The valuation of their equity in the company,
   • Any mutual agreement between the parties,
   • Or a court ruling in the event of a dispute.
6. It should also be noted that Free Zone companies are subject to the regulations of the relevant Free Zone authority, which may include specific procedures that differ from one Free Zone to another regarding the entry and exit of partners.

In all cases, the affected partners may claim compensation for any damages arising from the breach of contractual or legal obligations by the partner.

This statement is considered an initial non-binding legal consultation based on the information and data available. Should you have any further inquiries, please do not hesitate to share them with us. You may also reach us at Ahmed Harb Law Firm – AS

You can remove a partner only if your MOA/Shareholders Agreement allows it or if you can prove breach of duty/conflict of interest (like working for a competitor without disclosure).

In a UAE Free Zone setup, such as Dubai Multi Commodities Centre (DMCC), majority shareholding alone is not enough unless the governing documents support removal. Otherwise, you will need either a mutual buyout agreement or a formal Free Zone/legal process.

There may be more than one legal route here, and the strongest answer is that majority ownership alone does not automatically allow you to remove a partner from a UAE Free Zone company.

Free zone entities are governed primarily by the rules of their own free zone authority, and those rules usually work together with the company’s constitutional documents, so the real answer turns on the Memorandum, Articles, Shareholders’ Agreement, and the manager or director appointment structure. Official UAE sources state that free zone companies are subject to the laws and regulations of the relevant free zone, and free zone regulations commonly require constitutional amendments or key corporate actions to follow the voting thresholds set in those documents.

The hidden risk is conflict of interest. If he is actively working with a competitor while still drawing remuneration from your company, that can become a breach of duty, misuse of opportunity, or bad-faith conduct, especially where he is also a director or manager. The expected defence will be that he is merely a passive investor elsewhere, or that your documents do not prohibit competing activity.

Our office has handled a partially similar matter and secured a favourable outcome for our client by relying on conflict, governance breach, and forced-exit strategy rather than a simple majority argument. The precise route requires reviewing your Free Zone licence, share register, constitutional documents, side agreements, and evidence of competing involvement before deciding whether removal, suspension of authority, buyout pressure, or a damages claim is the better path. RASHID ALKAITOOB ADVOCATES & LEGAL CONSULTANTS can identify the most effective solution for this type of dispute.

This response is provided by RASHID ALKAITOOB ADVOCATES & LEGAL CONSULTANTS based solely on the information you’ve provided and does not constitute a final legal opinion. A binding legal assessment can only be given after reviewing the full documents of the case.

Important Notice: We confirm that the above response may be subject to change after review by the legal consultant specialized in this type of cases, upon assessing your position and/or reviewing your documents.

You must file a formal legal notice due to:

• Conflict of interest
• Working with a competitor

For assistance, please contact us by phone or WhatsApp.

In this type of dispute involving companies registered in a UAE Free Zone, the answer does not depend solely on “majority” among partners, but rather on the type of company, the provisions of the Memorandum of Association (MOA/AOA), and the specific regulations of the Free Zone authority.

First: Can a partner be removed by majority vote alone?

The general legal principle in the UAE is:

A partnership is not purely a voting-based relationship like internal management decisions; It is a contractual relationship governed by the MOA/AOA and Free Zone regulations.

Therefore:

A partner cannot be unilaterally removed simply because the other partners form a majority, unless there is a clear clause in the MOA/AOA allowing expulsion or compulsory exit

Second: Conflict of Interest (Partner working for a competitor)

If a partner is:

• Working for a competing company
• Or receiving benefits from a competitor

This may raise a significant legal issue known as:

• Conflict of Interest
• And/or breach of fiduciary duty (loyalty and good faith obligations)

This may legally result in:

• Claims for compensation for any damages caused
• Possible disciplinary or removal procedures under the company’s constitutional documents

However, this is not automatic and requires proper legal proof and procedures

Third: Salary claim + “exit fee” demand

A key legal distinction must be made between:

• A company partner (shareholder)
• And an employee or contractor

If there is no:

• Separate employment contract
• Or explicit agreement for a monthly salary

Then the claim for a monthly salary is generally not legally enforceable, unless there is clear documentation or consistent practice proving such entitlement.

As for an “exit payment”:

• It is not an automatic legal right
• It must be clearly stated in the MOA or a formal Exit Agreement

Fourth: Practical legal solutions

Such disputes are typically resolved through one of the following approaches:

• Reviewing the MOA and Free Zone regulations in detail
• Establishing conflict of interest and any resulting damage to the company
• Negotiating a structured exit agreement with financial settlement
• Or proceeding with formal legal/arbitration proceedings if no agreement is reached

How our office can assist you:

• Analyzing the Memorandum of Association and Free Zone regulations to determine the legal possibility of partner removal
• Assessing the existence of a conflict of interest and preparing a formal legal case file
• Drafting an official legal notice to the partner to protect the company’s rights
• Negotiating a structured exit arrangement that safeguards the interests of the remaining partners
• Representing you in arbitration proceedings or disputes before the competent Free Zone authority

As a general rule, a partner cannot be excluded from the company solely by the will of the other partners, and a majority vote alone is not sufficient to remove them. However, a partner may be removed in certain specific situations.

To assess this properly, it is necessary to review:

• The Memorandum of Association (MOA)
• The shareholders’ agreement
• The type of free zone
• The nature of the partner’s involvement with the competing company

For further action:

We can review the full file and determine whether removal is possible directly or advise on the best legal approach to compel their exit.

Please contact us, specify your preferred language (Arabic / English), and schedule a consultation.

Hello,

As per your query, please note that a notarized board resolution must be taken as per the MOA, which should be legally served to the partner for his exit by court email, and his signature should be there in such board resolution that he accepted and wants to exit. Also, you should amend the MOA as per the laws, and he should sign to exit and sell his share to any of the partners or to any third party.

Please contact us by email or call/ WhatsApp.

Hello,

Hope you are doing well.

For a free zone company, the first thing that controls this is your MOA / Articles / Shareholders’ Agreement / free zone regulations, not general majority instinct.

So, in practical terms:

You may be able to remove him from management / salary / active role if your company documents allow majority partners to do that.

But removing him as an owner/partner is usually different and often cannot be done unilaterally unless your documents contain a clear mechanism for expulsion, compulsory transfer, breach, conflict of interest, non-compete, or deadlock exit.

His work with a competitor may be a serious breach of duty / conflict of interest, and that can strengthen your position for:

• suspension from management,
• stopping any remuneration he is claiming,
• demanding disclosure,
• forcing a buyout/transfer if your documents allow it,
• or filing a court / free zone action if needed.

His demand for money to exit is not automatically a legal right unless your agreements provide for a valuation, buyout, or exit payment.

If he is taking monthly money while working for a competitor, stop treating this as informal and issue a formal notice.

Please contact us so we can review your company documents and advise whether you can remove him from management immediately, force an exit, or need to proceed through the free zone / court route.

Rihan Raheem,

Senior Legal Consultant

Dear Client,

Thanks for your query. I am happy to assist you with your legal issue.

Whether you can remove the partner depends on your Shareholders/Partnership Agreement and the Free Zone regulations; majority alone is not always sufficient unless the documents allow forced exit or removal for breach.

If he is working with a competitor, this may constitute a conflict of interest or breach of non-compete/fiduciary duties, which can justify legal action, suspension, or a buyout mechanism if provided in your agreement.

You should review the agreement urgently and consider issuing a formal notice of breach before taking steps to remove or dilute his interest.

Our team of legal professionals is available to assist you with your legal matters—please contact us.

Thanks and Regards