Questions & Answers
Revocation of share transfer agreement by one of the shareholders
I hold a 25% stake in a Free Zone company in Dubai, with my business partner holding a 75% share and therefore being the majority shareholder.
In April 2017, there was an agreement between myself and my partner, in which he agreed to transfer all of his shares to me. Upon this agreement, we both signed and stamped a request for transfer of shares document as well as a shareholders resolution. These documents were then submitted to the Free Zone Authority but then were subsequently withdrawn without my knowledge. As far as I was aware the documents were still being processed and I only found out about the withdrawal of the documents when I followed up with the Free Zone Authority.
The Free Zone Authority has since acknowledged that they should not have returned the documents and are trying to mediate between myself and my business partner to submit the documents again but he is refusing to do so.
I want to know what legal action I can take against my partner for his actions.
Dear Sir/Madam,
Please note that my response to your question will be purely from an academic point of view based on the limited preliminary information that has been provided. Therefore, it should not be treated as a legal opinion for the want of adequate knowledge and review of relevant documents when read with the applicable laws.
Firstly, we would require information regarding the free zone and the Emirate in which this company was established to know which laws are applicable in this situation. Nevertheless, generally speaking, as you have stated that there was an agreement between you and your business partner that he would transfer all his shares to you, there is a possibility that there was a valid contract in existence. However, the enforceability of this contract will depend on whether it is verbal or written.
For proper advice on this matter, we would recommend that you provide us with more information regarding the structure of your company, which free zone and Emirate the company was established in, the Memorandum of Association/Article of Association, any existing shareholder agreements, board resolutions relating to the transfer of shares, written correspondence with your business partner, and an overview of the chronology of events occurred during this time.
We would be happy to hear from you.
