#Tips: Safeguarding Your Investments in Mainland Companies when your name is not mentioned on the trade licence.
Investing in a company on the mainland without having the investor’s name mentioned on the trade license can expose the individual to potential legal risks and uncertainties.
We asked our professionals to give an opinion on the matter.
According to the information provided, it is crucial for the investor, assumed to be an expatriate who has invested in a limited liability company (LLC) in the UAE, to take steps to protect their interests in accordance with the applicable laws, particularly Federal Law No. 5 of 1985 on the Civil Transactions Law of the United Arab Emirates (the Civil Transactions Law of UAE).
Since the investor’s name is not included as a shareholder in the LLC, it is advisable to enter into a comprehensive investment agreement with the company.
This agreement should outline the specific details of the investment, such as the entitlement to profits and repayment terms.
Additionally, obtaining security cheques from the LLC as a guarantee against the investment and including the related details in the agreement can provide added protection.
In the event of the LLC’s default on paying profits or failure to refund the investment amount upon request, the investor should consider initiating a payment order case or filing a civil case against the LLC in a court.
To further safeguard the investment and subject to the consent of the other shareholders of the LLC, the individual in question may also consider becoming a shareholder of the company.
For more detailed and specific legal advice pertaining to this matter, it is highly recommended to seek the counsel of a qualified legal practitioner based in the UAE.
Their expertise can provide further clarity and guidance on ensuring adequate legal protection for the investor’s interests.