Table of Contents
All blogs

Corporate Disputes in the UAE

Table of Contents

Starting a company together feels exciting at the beginning. Everyone is aligned. Everyone is optimistic. But later, when the business grows or money is lost, those same relationships can become difficult. Many entrepreneurs in the UAE find themselves unsure how the law protects them when a partner stops contributing, misuses authority, or simply disappears. This guide explains how UAE company law approaches real corporate disputes that founders and investors have asked us to resolve. The goal is to help you protect your stake, your reputation, and the business itself.

How the Law Supports Business Partners in the UAE

UAE company law is built around fairness and transparency. Every shareholder has rights. Those rights do not disappear simply because:

  • Someone holds a bigger percentage
  • A partner stops participating
  • A director abuses their position

Contracts matter. Proper company resolutions matter even more. And when things fall apart, legal remedies are available to safeguard your investment.

Why This Matters for Every Shareholder

A partnership is a legal relationship, not a handshake. Strong corporate protections ensure that:

  • Capital investments remain enforceable
  • Directors are accountable for their decisions
  • Minority shareholders cannot be pushed aside
  • Fraud or bribery by one partner does not implicate the others
  • Inactive partners cannot hold the company hostage indefinitely

The moment something feels off in your partnership, it probably is. And the earlier you act, the stronger your legal position.

Your Questions About Partner Disputes, Answered

These are real concerns founders and investors have brought to us. Here is how the law deals with each of them.

1. I invested AED 300,000 and the cheque bounced. How do I recover my money?

If you contributed capital and received a cheque that later bounced, the first step is usually a payment order case. These are handled quickly when documentation is clear. You can claim:

  • The principal investment amount
  • Damages and statutory interest (where applicable)
  • Legal fees depending on the circumstances

If the issuer refuses to comply, the next step may include enforcement measures against their assets.

2. I’m a minority shareholder. Can the majority dilute my shares without my consent?

Shareholding percentages cannot be changed without following formal corporate procedures, including:

  • Board or shareholder resolutions
  • Amendments to company documents
  • Proper approvals and notarization

If the majority attempts dilution improperly, you can challenge the action and block or reverse it. Shareholders, regardless of size, have enforceable rights.

3. One of our co-founders is inactive but still owns equity. Can we dilute their shares?

Maybe. It depends entirely on the company documents. If your Memorandum of Association or shareholders’ agreement ties equity to performance, contribution, or KPIs, you have leverage. If not, the inactive partner is still legally entitled to their shares. In such cases, solutions often include:

  • Buyout negotiations
  • Legal restructuring based on breach of duties
  • Amending agreements for future protection

4. My business partner bribed officials. How do I protect myself?

The law takes bribery extremely seriously, and all partners can be at risk if the company becomes involved in corruption. Protecting yourself requires urgency and documentation; immediate steps often include:

  • Recording your dissociation from the misconduct
  • Notifying appropriate company authorities or compliance bodies
  • Seeking legal advice to shield your liability
  • Removing the partner from management powers (where possible)

Penalties and Consequences

Consequences depend on the severity of the breach. Potential outcomes include:

  • Removal of partners from management roles
  • Financial restitution to shareholders
  • Civil judgments for breach of duty
  • Criminal charges for fraud or bribery
  • Freezing or transfer of shares by court order
  • Liquidation of the company in severe deadlock situations

How Corporate Disputes are Handled in the UAE

Business disputes are resolved through:

  • Dubai Courts (or local courts depending on jurisdiction)
  • Arbitration when agreements require it
  • Notary amendments and urgent injunctions
  • Asset attachment when enforcement is necessary

Well-prepared evidence makes the process significantly faster:

  • Shareholder agreements
  • Correspondence showing misconduct
  • Capital transfer documentation
  • Board minutes and resolutions

How LYLAW Can Help

We work directly with founders, investors, directors, and minority shareholders who need to:

  • Recover investments
  • Challenge illegal share dilution
  • Remove inactive or harmful partners
  • Protect themselves from another’s criminal acts
  • Prevent the company from collapsing during a dispute

Corporate conflicts require steadiness. One wrong step can shift leverage to the other side. LYLAW helps you act strategically and protects you through every procedural step. If you are facing a partnership conflict, the smartest move is not to wait until the damage becomes irreversible.

Other articles