It is not uncommon for a partner to wish to exclude another partner from the company.

Repeated conflicts, disagreements over the company’s direction, differing priorities, personal or professional commitments, a loss of trust are just a few of the reasons that may lead to such considerations.

The question that remains is: can I exclude my partner from my company?

When the partner contemplating this question holds more than 50 percent of the company’s shares, the answer may seem obvious.

As the majority partner, he might believe that exclusion is within his rights. However, this question, although common, is actually complex, and the answer is often not well received by those who pose it.

Under UAE law, it is not legally possible for a partner to eject another partner who still holds shares in the company.

The only possibility is outlined in Article 677 of Federal Law No. 5/1985 on Civil Transactions.

This article states:

The majority of the partners may apply to the court for the exclusion of any partner, whenever their request is based on serious grounds justifying such exclusion.
A partner may also, if the duration of the partnership is fixed, apply to the court to authorize their retirement from the partnership if they provide adequate reasons for their request.

In both instances mentioned above, the discharged or retired partner’s share shall be governed by the provisions of Article 675, paragraph 2, and such share shall be estimated according to its value as of the date the case is introduced in court.

From this reading, it we understand that the only possibility for excluding a partner is to submit such a request to the court.
Importantly, this request can only be made following a decision agreed upon by the majority of partners.

This point is noteworthy.

The text specifies the majority of partners, rather than the partner holding the majority of the shares in the company. Consequently, it does not matter if you hold 51 % or more of the company’s shares.

Moreover, the text emphasizes that you must justify your request to the court with serious grounds. Therefore, you cannot simply submit such a request based on personal disputes.

In conclusion, while it is theoretically not impossible to exclude a partner, in practice, such a scenario is nearly impossible to achieve.

More often than not, negotiations and amicable exits are preferred to resolve critical situations.

This approach preserves relationships and minimizes potential legal complications and risk of paralysis of the organizational structure, allowing all parties to move forward in a constructive manner.

If you are experiencing difficulties with your co-partners and wish to take measures to exclude one of them from your company, it is strongly advisable to consult a lawyer and seek assistance with such a request.

For further information, do not hesitate to contact our consultation department.