Questions & Answers
What you need to understand about civil company
Dear Khubaib,
Ramadan Kareem. Hope all is well.
We are registered as a mainland civil company in Dubai. The legal type of civil company comes with unlimited liability and that is stated clearly in the MOA.
However, we are marketing research and consulting firm and we can take huge risks especially when we apply for large government tenders.
- How can we mitigate this risk?
- Is it possible to amend the clause in the MOA?
- Can we take any measures to mitigate the risk such as an insurance policy?
- What kind of insurance do you recommend?
Thanks,
A.
Dear A.
Ramadan Kareem,
I am very well thanks. I hope you are well too.
My sincere apologies for the delayed response.
From the information, I have assessed that you have registered as a civil company knowing the fact that it comes with unlimited Liability on your end.
And yes, you do take huge risk while taking part in any tender as in case of default you may get into serious trouble.
Unfortunately, it is not possible to make amendments in the MOA. However, you may have a few other options such as:
You may change the entity type but will have to take a few serious steps.
Draft internal company profit-loss sharing policies.
Create/design a holding company structure in a way that liability is shared.
As far as Insurance is concerned, you may have to opt for multiple types of insurance.
There are few other options but that totally depends on how and what you want to achieve in your business.
If you want to discuss in detail, you may contact me on my phone.
Best regards,
Khubaib Naeem
