A manager or member of the board of managers of a Limited Liability Company is a pillar of the company and its most important employee. Federal Law No. 2 of 2015 on Commercial Companies in the United Arab Emirates stipulates clearly and in detail the method of a manager's resignation.
The Resignation Must Be Tendered to the Shareholders
A manager may resign with no prior notice or announcement. The law regulates this through an explicit article: the resignation must be submitted to the shareholders, who must decide on it within a maximum of 30 days from submission.
What Shareholders Should Do Upon Receiving the Resignation
The shareholders must inform the competent licensing authority (the Economic Department for mainland companies, or the relevant Free Zone Authority) of the end of the manager's service within a maximum of 30 days of the termination date, and appoint a replacement during this period.
What if the Shareholders Disregard the Resignation?
UAE Companies Law also addresses cases where shareholders do not agree to, or disregard, the resignation: it becomes effective under law 30 days after submission to the shareholders, provided the competent authorities have been notified, unless the Memorandum of Association or the manager's appointment contract stipulates otherwise.
Managers Face Procedural Obstacles in Practice
Despite this clear legal process, if shareholders do not agree to or act on the resignation, the resigned manager will still face procedural obstacles in removing their name from the company's Memorandum of Association and Commercial License. The competent authorities will refuse to remove the manager's name without an amended Memorandum of Association or a shareholders' resolution signed by all shareholders confirming the removal and the appointment of a replacement.
How to Resolve This Without 100% Shareholder Approval
In practice, a resigning manager will submit their resignation to the shareholders and notify the competent authority. If the authority refuses to act without a shareholders' resolution or amended Memorandum of Association, the resigned manager must apply to the competent court for a judgment obliging the authorities to remove their name from the trade license and Memorandum of Association.
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