Questions & Answers
How to structure LLC company to protect your investment
I am in the process of setting up an LLC for tailoring shop. Is there a standard MoA in place or can I make amendments to it?
If tomorrow I have a conflict with my partner and want to change him, what is the recourse and what kind of timelines and cost am I looking at?
What are the things I should get included in the MoA to protect my investment and allow me the flexibility to change a partner with minimum damages?
Dear Sir,
I hope you are fine. Your concern is very deep as here in the United Arab Emirates, many people have the similar question as how to cover everything under a legal umbrella and at the same time which protects them if a dispute arises between expatriate and a local partner.
Therefore, pursuant to your query kindly be informed that in the UAE, the Memorandum of Association (MOA) cannot be changed much, it has to be as per Commercial Companies Law of 2015. If you change something in the MOA, there may be chances that the Notary will not accept it.
Here the question comes, how to protect Shareholders in case any dispute arises? My answer to this question is: there are a certain set of Agreements to be drafted by an experienced lawyer in addition to the MOA, this set of Agreements is very comprehensive and therefore, protect the shareholders in every possible way.
Furthermore, kindly be informed that our law firm is specialized in drafting these sets of agreements and to protect you in every way possible.
Should you require any further question/concern or assistance in drafting this set of documents, please feel free to contact us at info@awsuwaidi-advocates.com or you may contact us at 045547635 for discussing the scope of work.
Regards,
Aws M. Younis
(Managing Director)
If you have any issue with a partner on records (in the trade license), you cannot remove him by virtue of any private agreement. No partner can be removed without consent and presence (as ALL the partners have to be present for the transfer of shares before the notary public) or unless the court decides.
Private Agreement will help you for compensation. You can change or rightly explained execute a "transfer of shares" anytime as there is no lock-in period (provided he consents to transfer of shares). Any partner who wishes to transfer his shares must first offer to the existing partner(s) thereafter to the third party. The cost will be DED cost (changing partner) and for preparing Amendment to the MOA and Transfer of Shares agreement and notarizing the same.
Indeed, the MOA is standard and cannot be amended or changed but you can customize the management clauses and the profit sharing ratio (but not less than 20% in Dubai).
Protection of investment: Control of management, higher ownership percentage and being a partner and manager.
Flexibility to change partner with minimum damages: Not possible unilaterally.
