Limited liability companies allocate the liability of partners according to their share in the capital of the company. This means that partners are only liable to the extent of their shareholding. The finances of the company are of course separate from the finances of its partners, and because of this company creditors can only make claims against the company as an entity and not its partners individually or as partners of the company in their own merits.
Under article 218 of the UAE Commercial Companies Law, partners in limited liability companies cannot be held personally accountable for the company's debts above the extent of their share in its capital. This is also upheld in the courts. As an exception to this rule, where the partner is found to have acted fraudulently or negligently to the detriment of the company or its creditors the liability is not divided as per the above rule.
Rather, the partner can be held liable in their personal capacity, meaning that creditors can pursue the individual partner for the company's debts and their liability is not limited to their share in the company. Creditors in this instance can attempt to secure the partner's personal finances, separate from the company.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
