Validity of the side agreement of an LLC in the court

Good Day,

First of all, it depends on the text of the side agreement as there are many restrictions and exclusions as to partners' corporate capability.

Particularly, you shall keep in mind that according to article10(3) of the Federal Law No. 2 of 2015 on Commercial Companies, any transfer of the title to any share of a partner that may affect the percentage as set out for national partners in this article shall be invalid.

Basically, most of the LLC companies in the UAE have a side agreement among the shareholders and the local sponsor and that might create a legal risk to the principals in terms of their shares, profits, and inheritance cases.

Nevertheless, the most efficient legal way is to have a trust agreement with the local sponsor which shall be subject to DIFC laws and that would make your rights very protective from the legal perspective.