Question: Three years ago, I gave someone a sum of money to establish a limited liability company, but it has now become clear to me that my name is not in the Memorandum of Association, and the company is currently making profits and has a name in the market. I asked the partners to add my name to the Memorandum of Association, in addition to giving me my share of the profit for three years, but they refused and only offered to return the amount that I paid. What is the appropriate course of action for me to get my name added to the Memorandum of Association and getting a share of the profit?
Answer: You have to file a case against the partners to enforce and prove the partnership. Article 14 of the Federal Decree-Law No. 32 of 2021 on Commercial Companies may uphold the nullity arising from the failure to draft in writing the Memorandum of Association or the amendment thereto, or the failure to authenticate the same. However, the partners may not invoke such nullity against third parties.
The burden to prove such partnership lies on you and the court will take the decision as per its estimation. Usually, such matters are proven through the expert appointed by the court.
It is established in Cassation Commercial Court No. 249 & 302/2014 that the trial court has the right to deduce the establishment or non-establishment of a de facto company from the circumstances and the evidence of the case, as long as its conclusion is permissible and has an established basis in the papers. It is also established that the main condition for the setting up of the company is that the partners have the intention to participate in the activity. It has a responsibility, and each partner contributes to this dependency, sharing in the profit and loss, and not proving the partnership in a written contract - and not making it public - does not prevent proving its existence by other means of proof.
