If I resign and remove myself from the trade license, am I still liable for a loan?

Hello dear questioner,

If the company’s articles of incorporation stipulate that financial matters are carried out with the signature of both partners together, and one of the partners alone takes a loan from any party in the name of the company without the permission of his other partner, then the borrowing partner bears responsibility for this loan.

If this loan is repaid from the company’s money, then the partner has the right to recourse. His co-borrower liability is as much as he bears from the loan.

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Dear Questioner,

According to UAE law, if you are a partner in a company, you are jointly and severally liable for all the obligations and liabilities of the company, including any loans taken out by your partner.

This means that even if you did not sign the loan documents, you can still be held responsible for the loan if your partner defaults on it.

If you resign and remove yourself from the trade license, you may still be liable for any loans taken out by the company during the time you were a partner.

However, you may be able to negotiate with the bank to have your name removed from the loan agreement and have your liability limited to the time you were a partner in the company.

It is important to carefully review and understand any documents you sign as a partner, and to have a clear understanding of your responsibilities and liabilities in the company.

It is also advisable to have a written partnership agreement in place that outlines the responsibilities and liabilities of each partner in the company.

This can help protect your interests and limit your liability in case of any disputes or issues with your partner.

Hi

I am Sakina, a partner at MBC Legal Consultants.

Dear Questioner,

Thank you for reaching out with your query regarding your business partnership and potential liability concerns. I appreciate the opportunity to provide clarity on this matter.

Based on the information you've provided, it's essential to understand that the legal implications of business partnerships and liabilities can vary depending on several factors, including the structure of the partnership and any agreements in place between the partners.

In a scenario where you share 50% ownership of a company with your partner, and your partner signs documents for a bank loan based on the operational instructions of the bank, there are a few key considerations:

- Legal Structure:

It's important to determine the legal structure of your business. While you mentioned that it's not an LLC, the specific legal form of the business (e.g., partnership, sole proprietorship, etc.) can impact the extent of individual partners' liability.

- Partnership Agreement:

If you have a partnership agreement in place, it should outline the rights, responsibilities, and liabilities of each partner. The agreement may specify whether partners share liability for loans and obligations incurred by the business.

- Agency Law:

Under agency law principles, when one partner acts on behalf of the partnership within the scope of their authority, their actions may bind the other partner(s) to those agreements.

However, the extent of your liability would depend on various factors, including the nature of the loan and any agreements between the partners.

Regarding your question about resigning and removing yourself from the trade license, it's essential to understand that merely resigning from the company or removing yourself from the trade license may not automatically absolve you of liability for obligations incurred during your tenure as a partner.

Liability issues can be complex and may require a thorough review of the circumstances and applicable laws.

To provide you with comprehensive guidance tailored to your specific situation, I recommend scheduling a consultation to discuss the details further.

During our discussion, we can delve into the specifics of your partnership agreement (if any), review relevant documents, and outline the best course of action moving forward.

Please feel free to reach out to me via WhatsApp or phone to schedule a consultation or if you have any additional questions.

I'm here to provide the legal assistance and guidance you need.