Difference in limited liability between UAE FZE and FZC companies

[rb91134]

Does anyone know if there's a difference (in terms of limited liability protections) between FZE (single shareholder) and FZC (multiple shareholder) companies incorporated in a UAE freezone? Do both types of companies benefit from limited liability, or is it the case that only FZC companies benefit from limited liability while the liabilities of the FZE company pass through to the shareholder?

 

[Gediminas]

Hey,

Both companies are a limited liability. I.e. only the company is responsible for any claims and losses but not members/shareholders (in order for this would be the case, the company must be managed appropriately and should be in good standing).

In UAE there are many rules when a shareholder / general manager might become responsible despite the fact that the company is limited liability.

For example, if the company cannot recover some debts general manager must fill out a special application to authorities within 30 days. If he fails to do so, he might become personally responsible for these debts, etc.

 

[JustAnotherNomad]

I know someone who closed their freezone company (FZC, I think), and they were only allowed to do it after signing a declaration that they would personally take on all the liabilities of the company.
I would tread very carefully when it comes to liability in the UAE. Might be better to incorporate somewhere else and use only a UAE branch or something similar.

 

[rb91134]

//I know someone who closed their freezone company (FZC, I think), and they were only allowed to do it after signing a declaration that they would personally take on all the liabilities of the company.//

Interesting. The main thing I am trying to protect myself from is any future lawsuit from a customer/partner (I am not actually expecting any such lawsuits, but trying to be safe just in case).

In the case of the person you referred to, do you know what the risks would have been had the person refused to sign such a declaration, left the UAE, and then simply stopped paying the annual company license renewal fee?

 

[JustAnotherNomad]

They just signed, they are staying in the UAE because they actually live there. But they have moved operations to an offshore entity (UK LLP or something like that, not sure what setup exactly they're using).