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Limited Liability Company Agreement for United Arab Emirates

Limited Liability Company Agreement Template for United Arab Emirates

A comprehensive legal agreement governed by UAE Federal Decree-Law No. 32 of 2021 that establishes and regulates the relationship between shareholders in a UAE Limited Liability Company. This document outlines the company's governance structure, capital requirements, management framework, profit distribution mechanisms, and shareholder rights and obligations. It ensures compliance with UAE commercial laws while providing a clear framework for business operations and dispute resolution. The agreement is particularly important in the UAE context where specific local ownership requirements and commercial regulations must be carefully addressed.

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Limited Liability Company Agreement

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What is a Limited Liability Company Agreement?

The Limited Liability Company Agreement is essential for establishing and operating a UAE LLC under Federal Decree-Law No. 32 of 2021. This document is required when two or more parties wish to form a limited liability company in the UAE, whether in mainland UAE or certain free zones. It sets out the fundamental structure of the company, including capital contributions, profit sharing, management responsibilities, and decision-making processes. The agreement must comply with UAE commercial laws, including specific provisions regarding minimum capital requirements, local ownership (where applicable), and corporate governance. It serves as the primary reference document for shareholders' rights and obligations, dispute resolution mechanisms, and exit procedures. This agreement is particularly crucial given the UAE's unique business environment and regulatory requirements, including considerations for foreign investment and local partnership arrangements.

What sections should be included in a Limited Liability Company Agreement?

1. Parties: Identification of the shareholders/members entering into the LLC agreement

2. Background: Context of the agreement and purpose of forming the LLC

3. Definitions and Interpretation: Defined terms used throughout the agreement and rules of interpretation

4. Formation and Registration: Details of company formation, trade name, and registration requirements

5. Business of the Company: Description of permitted business activities and scope

6. Capital and Shares: Share capital structure, value of shares, and allocation among shareholders

7. Shareholders' Rights and Obligations: Rights, responsibilities and obligations of shareholders

8. Management and Administration: Management structure, appointment of managers, and decision-making processes

9. Shareholders' Meetings: Procedures for general assemblies and shareholders' meetings

10. Financial Matters: Financial year, accounts, auditing, and distribution of profits

11. Transfer of Shares: Rules and restrictions regarding share transfers and pre-emptive rights

12. Termination and Liquidation: Circumstances and procedures for company dissolution and liquidation

13. Confidentiality: Obligations regarding company and business information

14. Notices: Communication procedures between parties and the company

15. Governing Law and Jurisdiction: UAE law as governing law and jurisdiction for disputes

What sections are optional to include in a Limited Liability Company Agreement?

1. Tag-Along and Drag-Along Rights: Rights of minority shareholders to join in sale of shares or be forced to sell - used in companies with significant minority shareholders

2. Non-Competition and Non-Solicitation: Restrictions on competitive activities - relevant when shareholders are active in similar businesses

3. Intellectual Property Rights: IP ownership and licensing provisions - important for technology or brand-focused businesses

4. Deadlock Resolution: Procedures for resolving management deadlocks - crucial for 50/50 ownership structures

5. Key Person Insurance: Requirements for insurance on key personnel - relevant when business depends on specific individuals

6. Additional Funding: Procedures for additional capital contributions or external financing - useful for growing businesses

7. Exit Strategy: Planned exit mechanisms or IPO provisions - important for investment-backed companies

8. Employee Share Scheme: Framework for employee share ownership - relevant if company plans to offer shares to employees

What schedules should be included in a Limited Liability Company Agreement?

1. Schedule 1: Details of Shareholders: Complete information about each shareholder including contact details and share allocation

2. Schedule 2: Business Plan: Initial business plan and strategic objectives of the company

3. Schedule 3: Initial Directors/Managers: Details of initial management team and their authorities

4. Schedule 4: Reserved Matters: List of decisions requiring special approval or unanimous consent

5. Schedule 5: Share Valuation Methodology: Agreed method for valuing shares for transfers or exits

6. Appendix A: Form of Share Transfer Notice: Standard form for notifying intent to transfer shares

7. Appendix B: Power of Attorney: Standard form of power of attorney for company matters

8. Appendix C: Initial Budget: First-year operational budget and financial projections

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Publisher

Ƶ

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions













































Clauses






































Relevant Industries

Retail

Manufacturing

Technology

Professional Services

Trading

Construction

Real Estate

Healthcare

Education

Hospitality

Logistics

Financial Services

Consulting

Media and Entertainment

Relevant Teams

Legal

Corporate Governance

Executive Leadership

Finance

Compliance

Business Development

Operations

Risk Management

Corporate Affairs

Investment

Relevant Roles

Chief Executive Officer

Managing Director

Company Director

Legal Counsel

Corporate Lawyer

Chief Financial Officer

Business Development Manager

Investment Manager

Compliance Officer

Company Secretary

Board Member

Shareholder Representative

General Manager

Operations Director

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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