Principle of the Judgment: Piercing the Corporate Veil for Managers

In a recent and significant ruling by the Dubai Court of Cassation, in Commercial Appeal No. 695 of 2025, it was affirmed that a manager's personal financial assets are not immune from execution if their deviation from the requirements of trust is proven.

The Court decided that while the general principle is that a manager's actions bind the company, this rule

'does not immunize' the manager if they commit acts involving:

Fraud or deceit.
Abuse of power.
Gross negligence in performance.

Legal Basis and Court's Reasoning

Based on Articles 84 and 54 of the Companies Law, the Court confirmed in its reasoning:

The manager is obligated to compensate the company for any losses or expenses it incurs due to the misuse of authority or violation of the law.
Any provision in the company's articles of association that purports to exempt the manager from personal liability for their mistakes is void.

Proven Breaches by the Manager

The court found that the manager had breached his responsibility through the following actions:

Failing to appoint an external auditor and concealing the company's financial position.
Causing hefty administrative fines from the Ministry of Human Resources and Emiratisation.
Being unable to prove the disbursement of company funds with acceptable official documents.

Final Verdict

Based on the aforementioned breaches and legal reasoning, the judgment concluded with the final ruling.

Result: The judgment upheld the removal of the manager and held him personally liable for all those amounts.