A KT reader asks what are the legal protections as an investor
question: I invested in a company in Umm Al Quwain, but my name is not on the business license. What legal protections do I have as an investor?
reply: Based on your query, assume you are an expatriate investing in a Limited Liability Company (“LLC”) located in Umm Al Quwain. Accordingly, the provisions of Federal Law No. 5 of 1985 concerning the Civil Transactions Law of the United Arab Emirates (“UAE Civil Transactions Law”) apply.
Since your name is not listed as a shareholder of the LLC, it is recommended that you enter into an investment agreement with the company. The agreement should include details of your investment, including profits and repayments to which you are entitled. Additionally, you can obtain a security check against your investment from the LLC and include its details in the agreement.
If the LLC fails to pay you profits as you requested or fails to return the investment amount, you may consider filing a payment order case in Umm Al Quwain (as the LLC is based in Umm Al Quwain). Alternatively, you may consider filing a civil action against the LLC in the courts of Umm Al Quwain, which has jurisdiction to hear the case under Section 272 of the UAE Civil Transactions Law. In order to further protect your investment, you may consider becoming a shareholder of this limited liability company with the consent of the shareholders of this limited liability company.
To further clarify the matter, it is advisable to obtain detailed legal advice from a practitioner based in the UAE.