Photo for illustrative purposes
Question:
A questioner asks: I am a partner in a 40 per cent limited liability company (LLC), and the company is currently experiencing significant losses due to the behaviour of the manager. I tried to remove him from management, but he refuses because the articles of incorporation stipulate the removal of the manager in the year 2025.
My question in this case is: Do I have the legal right to file a lawsuit to remove the manager for these reasons mentioned? What is the success rate of this lawsuit? Who bears the costs of the lawsuit? Please advise
Answer:
To answer such question, I would advise the questioner that:
As per Article 85 of the UAE Commercial Companies Law no. 32 of 2021, Unless the Memorandum of Association of the Company or the contract appointing the manager provides otherwise, the manager shall be dismissed by decision of the general assembly, whether the manager is a partner or not. Also, the court may dismiss the manager at the request made by one or more partners in the Company if the court deems that such dismissal is justified.
It is decided by Dubai Courts in its Civil Cassations No. 2016/162 and 2016/213 that if the manager of the limited liability company is appointed in the company’s Memorandum of Association for a specific period, he will remain in his position as manager until the expiration of this period, which means that you do not have the right to remove him and such case against him is weak, unless the company’s Memorandum of Association stipulates that the director may be removed; as such, you will be able to file the case, taking into consideration that the court has the authority to evaluate the reasons that warrant the removal of the director of the limited liability company or not. A move to remove the manager, however, is not an impossible matter if you can prove it.
Regarding the lawsuit costs, you will be the one to bear, them not the company. But in the event you win the case, the costs will be paid fully or partially by the losing party and the court will decide on the matter of costs.
