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How to get signing authority if UAE firm partner is abroad

Filed on December 6, 2020
Photo: AFP

Know your legal rights about transferring signing authority in a limited liability company

Question: I have been a UAE resident for the last 14 years. My elder son had invested in a business in partnership with an Arab national. The said partner is stuck in another country and is unable to travel back to the UAE. However, he is the signing authority for the company and many payments are pending. What is the legal process for my son to transfer the signing authority to his name while the partner is away? Can it be done in the partner’s absence?

Pursuant to your queries, we assume that your son and his Arab business partner are shareholders in the share capital of a limited liability company (LLC) incorporated in the UAE. Further, we assume that your son’s Arab business partner is the manager in the LLC. Therefore, the provisions of Federal Law No. (2) of 2015 on Commercial Companies (the Companies Law) are applicable.

It should be noted that in the UAE, an LLC’s day-to-day affairs are run by the manager. This is in accordance with Article 83 of the Companies Law, which states: “1- The management of a limited liability company shall be undertaken by one or more Managers as determined by the partners in the Memorandum of Association. Such Managers shall be elected from the partners or third parties.

“If the Managers are not appointed in the Memorandum of Association of the company or an independent contract, the general assembly of the partners shall appoint such Managers. If there is more than one Manager, the partners may appoint a Board of Directors. Such board shall have such powers and functions as set out in the Memorandum of Association.

“2- Unless the contract appointing the Manager of the company or its Memorandum of Association or Articles of Association provides for the powers granted to the Manager, such Manager shall be authorised to exercise full powers to manage the company and his acts shall be binding to the company, provided that the capacity of Manager is stated upon doing such acts.”

Your son as a partner in the LLC may not be able to manage the company’s affairs as his name may not be mentioned as the manager in the memorandum of association of the LLC.

However, as your son’s Arab business partner is outside the UAE, your son may request the partner to issue a power of attorney, authorising your son to represent him before any government authority; to sign any documents and forms of whatsoever nature and description; change the signatory for the bank account of the LLC; manage day to day affairs of the LLC; and amend the memorandum of association of the LLC in order to replace your son as the manager.

This power of attorney should be notarised and legalised by the Ministry of Foreign Affairs and the UAE embassy in the country where your son’s Arab business partner is currently located. Thereafter, it must be attested by the Ministry of Foreign Affairs and International Cooperation in the UAE. Upon the completion of these attestations, the power of attorney must be legally translated to Arabic by an authorised translator in the UAE. It also has to be attested by the Ministry of Justice.

Simultaneously, your son’s Arab business partner needs to send his resignation as the manager of the LLC to the partners and the copy of this may be submitted to the relevant authority in the UAE. This is in accordance with Article 85 (2) of the Companies Law, which states: “The manager may file a written resignation to the General Assembly, with a copy to the competent authority. The General Assembly shall decide in such resignation within 30 days from the date of submission, otherwise his resignation shall be effective upon the expiry of this period, unless the memorandum of association of the company or the contract appointing the manager provides otherwise.”

This resignation should also be notarised and legalised by the Ministry of Foreign Affairs and the UAE embassy in the country where the current manager resides.

However, in the event your son’s Arab business partner does not cooperate in granting the power of attorney to your son, then you may approach the relevant court in the UAE which has jurisdiction and file a case, wherein you may request the court to change the authorised signatory or manager of the LLC to manage its day to day affairs.

This is in accordance with Article 85 (1) of the Companies Law, which states, “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. 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 recommended that you approach a legal counsel in the UAE for further advice.

KNOW THE LAW

The manager may file a written resignation to the General Assembly, with a copy to the competent authority. The General Assembly shall decide in such resignation within 30 days from the date of submission.

Ashish Mehta is the founder and Managing Partner of Ashish Mehta & Associates. He is qualified to practise law in Dubai, the United Kingdom and India. Full details of his firm on: www.amalawyers.com. Readers may e-mail their questions to: news@khaleejtimes.com or send them to Legal View, Khaleej Times, PO Box 11243, Dubai.





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