Questions & Answers
Are the partners of an FZLLC liable for the company debts from their own money?
My company is FZC - Free Zone Limited Liability Company (FZ-LLC). The company is incorporated in the Free Zone with 2 shareholders and has 2 licenses- Commercial & Industrial and has a warehouse for stocking the goods.
Every year when the license is renewed, the warehouse rental is also renewed. In the last 4 years, the licenses and warehouse are not renewed and the warehouse is not handed over to the Authorities.
The Authorities filed a legal case saying that the warehouse rental needs to be paid for 4 years, and only then the premises can be vacated. Then the judge issued the verdict saying that the owners are liable to pay.
Since the owners cannot pay the amount, the judge orders travel bans and arrest warrants for the owners. The company is LLC, which means in general, the owners of an LLC are not personally liable for the debts of the company.
This means that if the company is sued, the owners are not responsible for paying off any debts with their personal assets.
Am I right?
Liability of the partner in the Emirates Solidarity Company: The partner is personally and jointly liable for the debts and obligations of the company.
Liability of the partner in the UAE partnership company: The silent partner is liable within the limits of his share of the company’s shares only, but there is an order, the silent partner is jointly liable for the company’s debts in the following cases:
Mentioning the name of the partner in the name of the partnership company, with the knowledge of the recommended partner.
As according to Article 64 of the recent UAE Commercial Companies Law, this limited partner is considered jointly liable for the company's debts, before bona fide third parties.
If the partners omitted to specify the status of the partners in the partnership company’s incorporation contract, according to Article 65, paragraph two, of the aforementioned law, where the silent partner and the joint partner must be specified, otherwise, they are all considered joint partners.
Also, the matter differs according to the free zone in which he resides, so it is necessary to consult.
Firstly, the articles of incorporation concluded between you to determine the responsibility of each partner and whether it affects his private money or not.
Hello,
As per your question, it's true that the liability of the shareholder is up to the shareholding, as the company is not liquidated / or filed bankruptcy, and neither the shareholders are insolvent.
You have to prove to the court that the company is not working, and running at a loss, and the court will take the same into consideration.
However, the execution of the case will exist with the travel ban and the arrest warrant can be removed with the audited financials that the company will provide.
