Common Causes of Shareholder Disputes

Nowadays, it is common for businesses to be owned by multiple individuals or organizations through investments. Suppose you or your business partners have agreed to sell some shares to private individuals/organizations who may wish to invest in your business. In that case, it is crucial to have a shareholders’ agreement in place to make both parties aware of their rights and responsibilities. The agreement must also state how disputes will be handled, including how these disputes may be resolved. Legal consultants in Dubai can help you write or review a shareholders’ agreement to ensure that everything is clear for the parties involved before the contracts are signed.

What are the common causes of shareholder disputes?

When you have more people making decisions for a business, the decision-makers will inevitably have disagreements on how they must proceed. Here are some of the most common causes of shareholder disputes you need to know:

 

1. Breach of the shareholders’ agreement

Since the Shareholder Agreements is a contract for all parties involved in the business, any action that violates any of its terms is considered as a breach and may result in a contract dispute and sometimes litigation. Whether it’s a violation of the sale of restricted shares or failure to fulfill one’s responsibility as a shareholder, you may need to consult with a shareholder dispute lawyer to come up with a resolution that is fair for all parties.

 

2. Majority vs. Minority

Since they have more shares in the company, many shareholders get to vote on the big changes that will happen to the business. Minority shareholders are mostly at a disadvantage as they are often not included in decision-making or voting, even when they are mostly affected by the changes that will occur. Whether you’re a majority or minority shareholder, you may consult with the best lawyer in Dubai to help you have a better understanding of the terms in the agreement before signing it.

 

 

3. Managerial Issues

Managerial decisions are often one of the major causes of disagreement among shareholders, mostly because these decisions often affect the company’s direction. Any decision that may increase or decrease the value of the shareholders’ investments may lead to major disputes among the parties involved, especially when there is a conflict of interest. To avoid any negative impact due to these disagreements, companies should have a shareholder’s dispute resolution procedure. This way, it is easier to address everyone’s issues and differences.

If you need assistance in resolving shareholders’ disputes, Motei and Associates can provide you with the legal services you may need.

Difference Between Contract and Commercial Law

 The process of establishing a business can be stressful and time-consuming, especially when you're new to it or you're starting an international business. There is plenty of paperwork and procedures you need to accomplish before you can start operating. For this reason, several business owners choose to go to international law firms in Dubai to help them get started.

 

What is the difference between contract and commercial law?

Defining commercial law first will help in understanding contract law and how it can affect the way you do your business.

Commercial law is the general law that refers to any legislation which pertains to merchants who are exchanging goods and/or services, dealing with any transaction between a seller and a buyer. While this law has a wide scope, it mainly focuses on providing support for businesses, especially to protect all parties from unlawful trades.

Contract law on the other hand is a specific law that refers to rules or principles which regulates the enforcement or fulfilment of contracts/agreements between two or more parties who have entered a commercial relationship. It is one of the many laws that are under the umbrella of commercial law.

Under commercial law, contract law is any contract or agreement (formal/informal) entered upon by two parties during a business transaction. It may be applicable to businesses or entities that are buying or selling products and/or services. As you start your business, it would be helpful to have commercial law advisors to guide you in establishing different agreements or contracts between yourself and other parties you wish to do business with. It is beneficial in making sure that both parties are doing business that is compliant with the country's laws.

 

What impact do these laws have on your business?

Contract law has more impact on businesses since its focuses on business relationships between two or more parties that are formalized through contracts. It also increases the level of certainty in business relationships as it assures that both parties will be responsible for doing what was agreed upon in the contract.

Creating contracts between business partners is not an easy task. The ones making the contract should be familiar with not just existing laws, but also how your business model should work. Everything must be made clear in the contract to avoid any issues that may hurt the business in the future. Before signing or presenting a contract from/to another party, it’s best to seek the help of contract law attorneys to review the terms and make sure they are fair for both parties.

 

If you need help in making contracts or have further inquiries about commercial and contract law, Motei and Associates can provide you with the legal services you need.

Which legal services do entrepreneurs need the most?

 When you're thinking about establishing a business, you also need to consider the legal matters you will need to start your business operations. Whether you're planning to start a big company or a small business, you need to make sure that you have the right paperwork and documentation to operate the business. If you're new to this, you may visit business setup consultants in Dubai to better understand what needs to be done. 

 

 

Which legal services do entrepreneurs need the most?

 

Businesses, especially new ones, require different kinds of legal services to start your operations legally. You can reach out to your lawyer or seek the following services from law firms in UAE:

 

Business incorporation

The first step is to register your business to Dubai's Department of Economic Development (DED). This will make it easier for you to raise finances, own or rent a property for the business, employ or hire people, and other legalities that the operations may require.

 

Shareholders Agreement

With the increase in offshore company formation, it has become common for businesses to be owned by multiple individuals. If you have business partners or plan to sell shares to private individuals who wish to invest in your business, you will need a Shareholders Agreement. This is different from a partnership agreement since shareholders and partners have different business operations and management roles.

 

Terms and Conditions

Terms and Conditions create certainty to the agreement between your business/company and your customers. While some customers don't thoroughly read the forms, they are the legal basis that shows both parties' willingness to do business. These forms are usually aimed to protect your business and set rules on how your potential customers may use your products or services.

 

Service Agreements

As your business continues to grow, you may need to hire employees, contractors, or part-time workers to achieve your business goals. Hence, you need to develop a contract for each individual stating their specific duties for their role. These agreements also include the responsibilities and obligations of the employer and employee toward each other. Suppose you are not yet familiar with what must be included in this agreement. In that case, you may consult with a lawyer in Dubai to learn about the agreement's particulars and how they can affect your business if one of the parties committed a breach.

 

If you need help acquiring the legal documents to register your business or assistance in creating the documents or services mentioned above. Motei & Associates can provide you with the legal services you need. 

When and why do startups require lawyers?

While it is not required, hiring a lawyer is highly recommended and beneficial for startups. Having an experienced lawyer on your team will make the incorporation or registration process easier for you as they can advise on what needs to be done to acquire the legal documents you need to start your business setup in Dubai.

 

When do startups require lawyers?

Not many startups are set to hire legal services as soon as early as they start. However, if you have the resources, getting a lawyer for your startup is ideal. Your company's lawyer can help you get started with the legalities for your operations, as well as provide legal advice on taxes, investments, company policies, employee contracts, and partner/shareholder agreements.

 

You may also get help from lawyers who specialise in business setup services in Dubai to provide you with specific services only when you need them. This can help you maximize and distribute your available resources for other important aspects of the business.

 

Why do startups need lawyers?

 

They can help establish the business structure

As your startup grows, you will need to make some changes in the structure of your business. This is especially true when you are operating as an international business. Your company lawyer can provide valuable insight on how the changes in your company will affect your business structure, your day-to-day operations, as well as the roles and responsibilities of your staff. 

 

Help prepare legal documents and paperwork

As mentioned above, having a lawyer can be highly beneficial when securing legal documents and working on the legalities to start your operations. If you own an international startup, many lawyers can share valuable advice on the free zone business setup in Dubai, as the procedure may be slightly different.

 

Represent you in negotiations and handle employment issues

When you are too busy dealing with more important aspects of the business, you may send a legal representative to handle negotiations on your behalf. You may also work with a law firm in Dubai to help you handle complicated employment issues, as well as keep you up to date with labor laws.

 

If you need help with the requirements and acquiring legal documents for your startup, Motei & Associates can provide you with the services you require.

What Not to Put in Your Will?

Making a Will is highly encouraged by international law firms in Dubai. Under the Law of Inheritance, if a deceased expat does not have a Will, the UAE courts will decide the distribution of your assets. A Will is a legal document that secures and distributes your assets according to your wishes. It makes the process of arranging everything on a person’s death more convenient for the surviving loved ones. However, specific provisions don’t belong in your Will, as they cannot be enforced under the law. 

 

1. Properties in joint tenancy or a living trust

 

Some types of properties should not be included in a Will because they carry independent rules that govern what happens after death. For example, with a joint tenancy property, the law automatically grants the right of survivorship to the joint tenant. It means when you die, your share of the property will be passed on to the surviving joint tenant, regardless of what’s stated in the Will. It would also be inconsistent to include an already delegated property to someone by a living trust. Such property automatically goes to the beneficiaries and will be managed by the trustee. 

 

2. Proceeds that have a beneficiary

 

Legal consultants in Dubai would discourage including life insurance and retirement plan proceeds in your Will. In life insurance plans, proceeds automatically go to the beneficiary, often the spouse or minor children. The same procedure applies to retirement plan proceeds or money from pension, stocks, and bonds held in beneficiary and payable-on-death bank accounts. These plans already contain a section for you to list your beneficiary. 

 

3. Burial or funeral plans and instructions 

 

Your Will isn’t the best place for you to list your funeral or burial preferences. These arrangements are among the first matters of business after someone dies. In most cases, settling the estate doesn’t happen until after the funeral. Thus, family members may not even notice your funeral wishes and may not be carried out. A good alternative is to talk with your loved ones ahead of time regarding these matters. So, when the time comes, they can arrange for services according to your plan. 

 

4. Care for a special needs’ person or pets

 

While it is possible to arrange care instructions for a person with special needs, a Will may not be the best place to do it. Lawyers in Dubai would suggest setting up certain types of trusts (i. e. special needs trust) to address the management of a loved one’s special needs. This also applies to pets, as they don’t have the legal capacity to own a property. You can either set up a pet trust fund or give your pet to someone you trust. You can also leave that person money or property for care expenses.    

 

Understanding the correct information to put into a Will can be confusing. Motei & Associates can make the experience of setting up your will hassle-free. They can help you register a Will that anticipates different circumstances, no matter which nationality and religion you belong to. When it comes to expat Wills Dubai is the right place to be! Call +971 4 435 5959 to book an appointment with Motei & Associates today. 

ARE YOU IN A LEGAL DISPUTE? OR WONDERING IF YOU HAVE GROUNDS TO FILE A LAWSUIT? 

Check out some informative articles that may help you:

• Renewing Tenancy Contract in Dubai
• Resolve Property Disputes in Dubai
• Real Estate Agent vs Real Estate Lawyer
• Is it advisable to engage your lawyer when selling a property?
• Thinking of buying an off-plan property? Get a lawyer

Motei and Associates has the finest real estate lawyers Dubai has seen, offering disputes resolution and general corporate, commercial transactional services. Give them a call today at +971 4 435 5959. 

Who Owns Lost Property?

A property is considered to be “lost” if the rightful owner has parted with it involuntarily or is ignorant of its location. It is a current issue that any attorney in Dubai is familiar with. The good news is, if you have lost property in the UAE, then there’s a great chance you’ll get it back. His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, in his capacity as Ruler of Dubai, has issued Law No (5) of 2015 governing lost and abandoned property in Dubai. 

Article (2) of Law No (5) of 2015 defines lost property as the monies and properties that are “acquired by law, has a value, was lost by its lawful owner without deliberate intention, and found within the emirate of Dubai.” The law stipulates that the finder of lost property must surrender it to the authorities within 48 hours. More so, the finder may not claim ownership and may not dispose of such property. This means keeping the property to yourself is subject to criminal liability and punishment. 

 

The law also prescribes the duties and powers of Dubai Police when it comes to implementing the provisions, including receiving reports on lost properties, keeping lost-and-found properties in proper places, and maintaining records of the property. They must document the finder’s information, a detailed description and condition of the property, and other relevant data. Legal firms in Dubai support the issuance of Law No (5) of 2015 as it is aimed to regulate the procedures applied on lost properties and encourage people to return lost properties to their owners.     

 

According to the law, the finder of lost property is entitled to receive 10% of the lost property’s total value up to a maximum of AED 50,000 as a form of reward. It is payable whether the original owner claims the property or not. The finder may also claim the entire property if it is not reunited to its original owner within one year of handing it over to the Police. BUT there are certain conditions to claiming it. The finder still has to “maintain it in good condition and return it to the original owner upon his request”. 

 

A lost property continues to be owned by the person who lost it. When another person finds lost property, he is entitled to possession against everyone, with the exception of the original owner. However, rules and conditions may be different for mislaid (when an owner forgets where the property has been placed) or abandoned (when an owner relinquishes all rights) properties. It is important to consult a property attorney for these types of cases. 

 

You can rely on the experts of Motei & Associates to help you with any legal concerns. They have over a decade of local and regional experience in several practices, from commercial transactions and corporate advisory to dispute resolution and wills. If you need a real estate lawyer, Dubai has the best! Book an appointment with Motei & Associates today by calling +971 4 435 5959. 

ARE YOU IN A LEGAL DISPUTE? OR WONDERING IF YOU HAVE GROUNDS TO FILE A LAWSUIT? 

Check out some informative articles that may help you:

• Renewing Tenancy Contract in Dubai
• Resolve Property Disputes in Dubai
• Real Estate Agent vs Real Estate Lawyer
• Is it advisable to engage your lawyer when selling a property?
• Thinking of buying an off-plan property? Get a lawyer

Motei and Associates has the finest real estate lawyers Dubai has seen, offering disputes resolution and general corporate, commercial transactional services. Give them a call today at +971 4 435 5959. 

Can a special power of attorney sell a property?

Whether you’re working full time or managing your own business, it can be difficult to find time to sell and manage your properties. If you’re having a hard time managing your properties, there are plenty of Dubai law firms that specialize in handling the paperwork for real estate properties.

What is a special power of attorney?

Unlike the general power of attorney, a document that authorizes lawyers in Dubai to act on behalf of the principal to process different transactions such as buying, selling, or managing real estate properties, a special power of attorney only grants the lawyers specific power to act on a certain situation. SPOA is often used for limited transactions or and other dealings that must be completed urgently.

Can you use SPOA to sell a property?

Usually, a property attorney will utilize an SPOA for administering properties, trademarks, granted lands, and tenancy disputes. However, an SPOA can be used to sell the principal’s or grantor’s property, as long as it meets the specific requirements set by the law.

What are the requirements or grounds for allowing the use of SPOA when selling properties?

For a POA to be valid, it must meet the following specifications:

• The document must be prepared in Arabic or English, or both. If the document's contents are written in English or another language, a legal translation in Arabic must be provided and legalized at the Notary Public in the UAE. If there are any inconsistencies in the translation of the document, the Arabic translation will be followed.
• The Notary Public must notarize the document in the UAE.
• When the SPOA is entered in or from another country, it must be authenticated by the UAE Embassy and attested in the ministry.
• The specific purpose of the SPOA must be stated clearly in the document, including the details about the property you are selling.

When selling properties, especially using special power of attorney, it is important to note that real estate agents can’t fulfil these transactions, instead, it’s better to get help from a real estate lawyer in Dubai to avoid any legal issues in selling your properties.

If you need a special power of attorney in selling your properties, Motei & Associates can help. For more details, you may also visit their office website at https://motei.com/