Guide · updated 31.07.2026 · 12 min read · Lucent Legal team

Your Business Partner in the UAE Has Locked You Out: What to Do

Two or three people start a company on trust and a handshake, and a year or two later it turns out the partners see the business very differently: one won't approve payments, blocks the other from the bank account, drags his feet on the trade licence renewal, or quietly moves clients to a parallel company. This hits expat-run businesses in the UAE especially hard, because so many companies are set up between friends or acquaintances with no real Memorandum of Association (MOA) and no shareholders' agreement (SHA) — and once the trust runs out, the wronged side usually has far fewer legal levers than they assumed. The UAE does have a formal companies law and courts that hear exactly this kind of dispute, but the outcome depends heavily on what the MOA actually says and whether an SHA was ever signed. Short answer: pull up the MOA and SHA first, document every breach in writing and send a formal notice, ask the court for interim relief if assets are at risk of being moved, and treat a buyout of the stake — or, as a last resort, judicial liquidation — as the way out. Below are the common scenarios and how each tool works.

Common conflict scenarios

50/50 deadlock. The classic even-split partnership problem: neither side has a casting vote, and the constitution requires unanimity or a majority that simply doesn't exist. The company can't approve a budget, appoint or remove a manager, or sign off on annual accounts — not because it's out of money, but because the partners have stopped talking to each other.

A partner locks you out of the bank account or the licence. Often one partner ends up holding sole signatory rights at the bank, or the only login to the licensing authority's portal, while the other has neither. On paper you're a co-owner; in practice you're an outside observer who can't even pull a bank statement or renew the trade licence.

Asset stripping. The partner running day-to-day operations moves clients, contracts, or cash into a separate structure — his own, or one held through nominees. On the surface these can look like ordinary business dealings; in substance, it's value being pulled out of the company before there's anything left to split.

A local sponsor in an older structure. Companies set up before the 2020–2021 foreign-ownership reform sometimes still run on a local (Emirati) sponsor / nominee shareholder structure, where the sponsor formally holds the stake in a mainland company. If that relationship sours, the dispute gets more complicated: on paper the sponsor is the lawful co-owner, even if the money and the day-to-day running of the business always sat with the foreign partner.

What to check in the MOA and whether an SHA exists

The first move in any conflict is to pull the constitutional documents and answer a few questions honestly.

• What voting threshold is required for the decisions that matter: appointing or replacing the manager, approving accounts, raising capital, selling assets. Simple majority, or a supermajority?
• Does the MOA, or a separate shareholders' agreement (SHA), contain any deadlock-resolution mechanism — a right of first refusal on a sale of shares, a shotgun clause (one partner names a price, the other decides whether to buy or sell), put/call options, an independent valuation process?
• Who legally holds signatory rights at the bank and the authority to represent the company before government bodies — and does that match how roles actually work day to day?
• Is there a separate SHA at all. If the company was set up "on trust," it's common for no SHA to have ever been signed — which leaves both sides with only the MOA and the general provisions of Federal Decree-Law No. 32/2021, a noticeably thinner toolkit in a conflict.

If an SHA exists and spells out a clear exit mechanism, that shortens the path enormously — a court or arbitrator just has to apply the procedure the parties already agreed to, rather than invent one from scratch.

Your partner has locked you out: first steps

Once access to the accounts or the licence is already gone, time works against you — the partner running operations keeps managing company assets alone in the meantime.

1. Document the breach in writing. Send the partner — and, if relevant, the bank — a formal request to restore access. This isn't a formality: the written record is what a court will later rely on as evidence.
2. Send a formal legal notice (demand letter). How to draft one and what it achieves is covered in a separate guide — legal notice in the UAE.
3. At the same time, assess whether you need urgent interim/precautionary measures — freezing company accounts, blocking a transfer of shares, halting specific transactions. The general process for filing a claim, and which steps are mandatory before you can go to court, is in how to file a lawsuit in the UAE.
4. If the situation looks like serious misconduct — concealing information, unilaterally dealing with company assets behind the other partner's back — discuss with a lawyer whether to seek the appointment of a judicial supervisor to oversee operations for the duration of the dispute; this is an exceptional remedy, and courts don't grant it automatically.

Exit route: buying out the stake

The most common, least destructive way out of this kind of conflict is one partner buying out the other's stake (share buyout).

If the SHA already sets out a mechanism — a shotgun clause, a put/call option, a valuation formula (earnings multiple, discounted cash flow, or net asset value) — the parties simply run the agreed process, and an independent valuer sets the price. Without one, a buyout becomes a negotiation, and the threat of judicial liquidation is often exactly what pushes a reluctant partner into a real conversation about price: splitting up what's left after a forced liquidation almost always costs more, and takes longer, than a clean buyout.

Exiting a company with an Emirati sponsor in an older structure is its own category: the exit terms usually sit in a separate nominee agreement or side letter, and how solid that document is legally determines how realistic a clean exit actually is.

Judicial liquidation, if a buyout falls through

When a buyout can't be agreed and the company has effectively stopped functioning, a partner can ask the court for judicial dissolution/liquidation under Federal Decree-Law No. 32/2021. Legal reviews cite two grounds: the purpose the company was formed for has become impossible to achieve, or a partner has grossly breached his duties; the exact article number varies between sources (Article 302 and Article 303 both show up), so whether it applies to your case needs a lawyer's check.

In practice this route is rarely followed through to an actual liquidator and asset sale — more often it's the final argument in a buyout negotiation, since forced liquidation destroys value for both sides: assets get sold off rather than transferred as a going concern.

Arbitration vs. court

If the SHA has an arbitration clause, a UAE court will typically decline to hear the case on the merits — the parties are required to go to arbitration instead. The key change for Dubai: in 2021, Decree No. 34 abolished the DIFC-LCIA arbitration centre and moved its caseload to the Dubai International Arbitration Centre (DIAC) — if an older SHA still names DIFC-LCIA specifically, it's worth checking with a lawyer how that affects the current clause.

Arbitration's upside is confidentiality (versus an open court process) and the ability to pick an arbitrator with relevant expertise. The downside is that it's typically more expensive and slower to get urgent interim relief than going straight to a local court, although institutions like DIAC do offer an emergency arbitrator procedure for urgent cases. If there's no arbitration clause and you need fast interim measures, court is usually the shorter route.

Prevention: get a shareholders' agreement

Most of the scenarios above simply wouldn't arise with a proper shareholders' agreement (SHA) signed before there was money — or disagreement — in the company. Worth writing in at the start: voting thresholds for key decisions, a deadlock-resolution mechanism, a right of first refusal on any sale of shares to a third party, a valuation formula for an exit, each partner's right to see the financial accounts, and the chosen forum for disputes — arbitration (naming the actual institution and rules) or a specific court. It costs a fraction of litigating later without a single agreed document to point to.

This material is for information only and is not legal advice. UAE law changes — a lawyer will assess how it applies to your situation.