Commercial Cassation Judgment No. 600/2026 on LLC Partner Profits and Expense Reimbursements Following Partner Decease

Abu Dhabi Court of Cassation Judgment No. 600/2026 (Commercial)

Judicial Panel

Presided over by Judge Abdullah Ali, with the membership of Judge Dr. Adlan El Hag and Judge Dr. Ahmed Hamdeen.

Factual Background and Procedural History

The first respondent company initiated Commercial Case No. 424/2025 before the Abu Dhabi Court of First Instance against the appellants (the heirs of a deceased partner). The company sought disclosure and payment of AED 545,685.00 claimed against the deceased partner's estate arising from financial settlements and returned execution files, alongside legal interest at 12% and amendment of the company's constitutional documents.

The first appellant filed a counterclaim on her own behalf and on behalf of her minor children, requesting an accounting of company affairs since inception, determination of their inherited share in capital and profits, and reimbursement of AED 100,000.00 paid out of her personal funds to settle urgent worker salaries and operational expenses.

The Court of First Instance ordered the appellants to pay AED 544,585.00 within the limits of the inherited estate plus 1% late payment interest, dismissing the counterclaim. On appeal (Commercial Appeal No. 558/2026 Abu Dhabi), the appellate court affirmed the primary judgment, prompting this cassation appeal.

Legal Grounds and Court Reasoning

1. Entitlement to Company Profits

The Court held that pursuant to Federal Decree-Law No. 32 of 2021 on Commercial Companies, managers are mandated to prepare annual balance sheets and profit distributions to be reviewed by the general assembly. Negligence or intentional delay by the management in convening assemblies or ratifying balance sheets does not extinguish the partner's intrinsic right to receive their verified share of net profits established by expert accounting reports.

2. Non-Dissolution of LLC upon Partner's Death

In accordance with Article 307 of the Commercial Companies Law, a limited liability company does not dissolve upon the death of a partner unless explicitly provided for in its memorandum of association. The deceased partner's share devolves upon legal heirs.

3. Reimbursement of Advanced Company Expenses

The court-appointed expert established that the first appellant advanced AED 100,000.00 from personal funds to pay worker salaries and administration costs, as acknowledged by company management. The refusal of lower courts to order restitution of these personal advances constituted an error in applying the law.

Final Verdict

The Court of Cassation decided:

• To partially quash the challenged appellate judgment.

• Ruling on the merits of Commercial Appeal No. 558/2026, to reverse the dismissal of the counterclaim and newly order the first respondent company to pay the appellants AED 391,075.80 representing their share of company profits up to 31/12/2024, and AED 100,000.00 to the first appellant for reimbursed company expenses.

• To split court fees and expenses across both litigation stages equally and order attorney fees offset.