Limited Liability Company

Establishing Limited Liability Companies (LLCs) in Dubai is a straightforward and easy process. The registration process is efficient and streamlined, and entrepreneurs can set up their businesses with minimal bureaucracy and red tape. Companies, especially small and medium businesses, benefit from the business-friendly policies of the government, a stable economy, and a highly competitive market. An LLC is a popular legal structure for foreign investors in Dubai as it limits their personal liability and allows for greater control over their business, where the owners enjoy many advantages regarding their liability for the company's debts and the right to an actual contribution in managing the company. Overall, Dubai's favorable business environment ensures that starting an LLC is a hassle-free and profitable venture.

One of the top features added to the UAE Companies Law in its most recent amendments per the Federal decree law No. (32) for the year 2021 to the limited liability companies, was limiting the shareholder's responsibility as per their contribution to the capital, Moreover, the owner of the company's capital is not responsible for its obligations except to the extent of the capital mentioned in the Memorandum of Association, according to the text of Article (71) of the Companies Law in the United Arab Emirates.

The manager of the limited liability company is the sole responsible for controlling the company's businesses because, like any other company, the limited liability company needs a manager to conduct business, activities and required tasks, which he should not neglect nor fail to perform in terms of his permanent and continuous presence to carry out the work entrusted to him in managing the company internally and organizing the work. According to the UAE Companies Law, the company can have one or more managers depending on the shareholders' decisions in the Memorandum of Association, the manager can be one of the shareholders or an outsider, and in the event that the memorandum of association did not appoint a manager for the company, then he is appointed based on the decision of the general assembly, and the powers of the manager are mentioned in the memorandum of association or in the manager's appointing contract, in addition, he is authorized to exercise his powers in the management of the company, and his actions are considered binding on it, provided that they are accompanied by a statement of the capacity in which he deals.

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The UAE companies Law increased the manager’s responsibilities towards others and towards the partners, in order to avoid harming the financial positions of the creditors of the limited liability company and to avoid weakening the company’s credit as a legal person, and because the only guarantee for the creditors of the limited liability company is the company’s financial liabilities, without any financial liabilities on the partners' side.

Article (84) of the UAE Companies Law indicated that the liability of the manager in the limited liability company towards the partners and towards third parties is for any fraudulent acts he performs, he is also obligated to compensate the company for any losses or expenses incurred because of a misuse of powers, or any violation of the provisions of any applicable law, the company’s Memorandum of Association, his appointment contract, or a gross mistake on the part of the manager.

Not only that but also Article (2) of the same paragraph indicated that the laws relating to members of the board of directors in joint-stock companies apply to managers of limited liability companies.

The law defining the responsibility of the partners and increasing the manager’s responsibilities towards the partners and others for the mistakes committed by him and in case of any acts of fraud made the limited liability company an important and attractive legal type for investors to establish their business in the Emirate of Dubai - in the United Arab Emirates.