Questions & Answers
Winding down an LLC company and the liability of the manager after absconding
Hi there Michael,
I am a 24% shareholder in an LLC wherein the other shareholders are our local partner with 51% shares and the partner who is listed as manager on the trade license with 25% shares.
The manager has absconded leaving behind unpaid VAT and other debts that are well over 30 days due (up to a year). No proceedings by creditors have been filed against the company and the MOA contains a general POA in favor of the Manager.
I would like to wind down the company without going through bankruptcy procedures. My understanding is that the listed manager of an LLC is personally liable for the Company's debts.
I need advice about the procedures required to wind down the company. I do not wish to go through bankruptcy procedures as the finances and management of the company were being handled by the manager. I am just the creative director of the LLC.
Please advise as soon as possible.
Dear questioner,
In a Limited Liability Company, liabilities of the shareholders are limited to the extent of their shares in the company.
The manager is usually the signatory on the bank account, checkbook and loans if any, which impose more liabilities on his side in case of making actions in bad faith.
Keep in mind that to liquidate a company, debts of the company have to be settled, the bank account has to be closed and any issues in the immigration department have also to be settled.
Once the liquidation has been approved, a notice will be published in two newspapers which would give a grace period for debtors to claim their rights. The grace period length is 45 days.
The UAE government portal has a good summary of the liquidation process.
Good Luck!
