Business LawD and Criminal

Liability in U.A.E.

DMCC Knowledge Series

HPL Yamalova & Plewka DMCC
 HPL Yamalova & Plewka DMCC
Legal Consultants
Business Law and Criminal Liability in  
U.A.E.
By: Ludmila Yamalova, Attorney/Managing Partner
DMCC – Dubai, U.A.E.
October 28, 2014

HPL Yamalova & Plewka DMCC

 Dubai Court of Cassation Decisions ‐ Examples

“…whenever the shareholder abuses [corporate] limitation and uses it as a tool or 
a cover to his actions which violate the company MOA resulting in losses to the 
other shareholders and the creditors as long as his actions included fraud and 
major mistakes.  In such situation the limitation of the liability does not apply and 
the shareholder will be personally liable (by his personal assets) for his actions.”
“An LLC shareholder is [personally] liable [when] he guarantees to the creditors the 
satisfaction of the obligations.”
“…a shareholder embezzling the companies’ monies is punishable whenever he 
transacts over such monies, as if he is the owner, despite knowing that he only has 
access to these monies although they are not within his ownership.” 
“…an LLC manager is liable to compensate loses, to shareholders and company and 
third parties, resulting from his mistakes and negligence and from his fraud and 
power abuse and every breach of law or the company’s rules.” 
“Importing, selling or marketing counterfeit products while knowing so is 
considered a criminal act.”

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Business Law and Criminal Liability in U.A.E. – Outline 

Core Principles of Criminal Liability in Corporate World
Relevant Laws and Regulations
Affected Corporate Roles and Positions 
Circumstances Giving Rise to Liability 
Court Process 
Settlement of Criminal Claims
Case Studies 

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 Core Principles of Criminal Liability in Corporate 
World in U.A.E.

Corporate actions or inactions can result in criminal liability

Limitation of company’s liability is not always applicable
Actions of employees could be imputed to the company
Actions of some shareholders could be imputed to other
shareholders/company
Claim of criminal liability limits freedom of movement
Claim of violation of certain laws may presume guilt
Civil liability may result in jail sentence if judgment unpaid
Criminal case judgment may not grant compensation

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Relevant Business and Criminal Liability Laws in the 
U.A.E. (as Amended) 

DIRECT CRIMINAL LIABILITY  INDIRECT CRIMINAL LIABILITY
Penal Code – Law No.3 of 1987 Commercial Companies – Law
Immigration – Law No. 6/1973 + No. 8/1984
Resolution No. 360/1997
Adulteration & Fraud in Commercial Dubai Rent – Law No. 26/2007
Transactions – Law No. 4/1979 + Law No. 33/2008
Money Laundering – Law No. 4/2002 Employment – Law No. 8/1980
Cyber Crimes – Decree No. 5/2012
Media Law – Law No. 15/1980 Civil Procedure – Law No.
Intellectual Property Law 11/1992
Patent, Law 17/2002
Trademark Law, 37 1992
Medical Practice – Law No. 7/1975
Counter Fictitious Commercial
Activities – Law No. 17/2004
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 Affected Corporate Roles and Positions 

General Manager/Managing Director
Shareholders
“Nominal” Shareholders
Silent Shareholder
Finance Manager
Accountant
Fiduciary
Manager
Human Resources

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Circumstances Potentially Giving Rise to or Triggering
Criminal Liability

Financial challenges Bankruptcy/liquidation
Sale of company Failure to perform obligations
Sale of assets Bounced cheque
Corporate restructuring Change of management
Accident Inspection
Breach of law Transfer of funds from 
Breach of contract company’s account 
Breach of trust Unsubstantiated monetary 
Claims against company or  transactions
employees

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 Court Process  and Penalties

Criminal Case Civil Case

Police

Prosecution

Criminal Court Civil Court

Judgment Judgment

Deportation Fine Other Jail Money Action

Jail

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 Settlement of Criminal Claims

Examples of matters that can be settled:

Bounced cheques
Unpaid debt
Private disputes
Examples of matters that cannot be settled:
Violating residency law
Crimes against the state
Theft

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CASE STUDIES 

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HPL Yamalova & Plewka DMCC
Legal Consultants
TO CONTACT US:

Jumeirah Lakes Towers
Reef Tower, Suite 1806
Cluster O 
Dubai, U.A.E.
O: +971 4 427 9812
info@lyhplaw.com
www.lyhplaw.com

HPL Yamalova & Plewka DMCC

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