Is it legal to give loans to friends from the company by its owner?

Dear questioner,

Many thanks for your inquiry!

It is worth noting that private lending in the UAE is illegal and not allowed. Only banks and a selected number of financial institutions are allowed to lend to the public.

You should also check the terms of your company's Memorandum of Association, you are not allowed to lend, even to shareholders and directors of the company; it is also restricted.

The issue you will have is difficulty with the legal system if borrowers refuse to pay back. The fact that private lending is barred will be used against you and your company in litigation if debtors wish to be vindictive and not pay the debt back.

If you wish to advance money to friends to help them out, it is best to ensure that the sums involved are such that if they are not returned to you, it will not hurt you financially and can be treated as a gift.

Many thanks!

Jennifer Arkhurst