UAE Companies - Director and Manager Liability

Shareholders, Directors, and Managers of a limited liability company (LLC) are generally not liable for its debts under UAE law. However, Article 84 of the UAE Commercial Companies Law provides an exception, allowing liability to extend to directors and managers of onshore LLC's for fraudulent acts stemming from abuse of power, gross negligence, legal violations, or breaches of the company's Memorandum of Association or the General Manager’s contract. UAE courts have upheld this principle in several decisions.

While it's rare for UAE courts to hold managers personally liable under Article 84 due to the high burden of proof required, this recent judgment underscores the possibility when sufficient evidence of misconduct is presented. Such evidence is often challenging to obtain, as key documents are typically not publicly accessible.

The court ruling also reaffirms that the UAE courts will not allow the corporate veil to shield fraudulent actions, signaling a positive trend toward enhancing creditor protections and holding responsible parties accountable.

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