Dubai Court of Cassation: Transformation of LLC Invalidity Rules

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Overview

On 14 July 2025, the general assembly of the Dubai Court of Cassation issued DCC 8/2025, introducing a significant change in how the validity of limited liability company (LLC) incorporation contracts is assessed, particularly for companies formed before the enactment of Federal Decree-Law No. 32/2021 On Commercial Companies.

The decision of DCC 8/2025 is particularly relevant to cases involving nominee arrangements and the former minimum Emirati ownership requirement in LLCs.

Definitions

  • LLC: Limited liability company.

  • UAE: United Arab Emirates.

Practical Guidance

Nominee shareholding before Federal Decree-Law No. 32/2021

Before Federal Decree-Law No. 32/2021 came into force, court rulings were divided as follows:

  • First approach: Some judgments declared a LLC absolutely null and void if it was proven that an Emirati partner was merely a nominee, with no genuine intention to invest or share risk. This was based on the principle that the absence of essential elements, such as mutual intent to invest, renders the contract legally non-existent as it conflicts with public policy.