Doing business in the UAE is often built on partnerships. However, in practice, conflicts between shareholders can lead to financial losses, blocked operations and even the loss of actual control over the company.

Make Fortune supported a case where one partner, holding a 50% share and acting as the company’s manager, effectively took control of the business and brought the company close to bankruptcy.

Here is how the situation developed, what legal steps were taken and which tools helped restore control over the company in the UAE.

Initial Situation: Three Shareholders and an Internal Corporate Conflict

The company ownership structure was as follows:

• 25% — first shareholder;

• 25% — second shareholder;

• 50% — third shareholder.

At the same time, the shareholder holding 50% was also appointed as the company manager and gained practical control over the company’s day-to-day operations.

Over time, the other shareholders faced serious issues:

• lack of transparency in accounting and finances;

• no access to proper company reports;

• no shareholder meetings;

• the manager exceeded his authority;

• decisions were made unilaterally;

• the other owners were effectively excluded from controlling the business.

As a result, the shareholders began rapidly losing control over the company’s financial position, while the business was approaching a critical state.

What Make Fortune’s Legal Team Did

After the clients approached Make Fortune, our team, together with a licensed advocate, started comprehensive legal work to protect the shareholders’ interests.

1. Collecting Evidence and Documenting Violations

We analysed:

• corporate documents;

• the manager’s powers;

• internal correspondence;

• financial circumstances;

• evidence of breaches of directors’ duties.

The key objective was to document and prove:

• abuse of authority;

• lack of proper corporate governance;

• violation of the company’s interests and the interests of the other shareholders.

2. Preparing Powers of Attorney and Notarial Procedures

To represent the shareholders’ interests, the required powers of attorney were prepared and notarised.

Through notarial procedures, the process of revoking the existing manager’s authority was initiated.

3. Court Proceedings in the UAE

After preparing the evidence base, the case was brought before the court.

The team sought to achieve:

• removal of the director’s authority;

• restoration of corporate control;

• protection of the remaining shareholders’ interests.

Court Decision

The court satisfied the claims.

As a result, the court ordered:

• removal of the bad-faith director’s authority;

• appointment of the two remaining shareholders as company managers;

• an audit and assessment of the losses caused by the former manager’s actions.

This became a critical step in preserving the business and returning control over the company to its lawful owners.

What Is Happening Now

The process is still ongoing.

Make Fortune is currently supporting the clients with:

• renewal of the company licence;

• amendments to corporate documents and the company’s constitutional documents;

• restoration of control over bank access;

• preparation of an audit of financial losses;

• further legal actions against the former manager.

Why Such Cases Are Especially Dangerous in the UAE

In many UAE companies, the manager may have very broad powers, including:

• managing bank operations;

• signing documents;

• communicating with government authorities;

• controlling corporate documentation.

If the corporate structure and internal control mechanisms are not properly set up, one partner may effectively block the company’s operations and restrict the other owners’ access to management control.

That is why, when setting up a business in the UAE, it is important to:

• draft the company’s constitutional documents properly;

• limit managers’ powers where necessary;

• clearly define the procedure for meetings and decision-making;

• put shareholder agreements in place;

• implement financial control mechanisms.