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The position
Limited liability under the Commercial Companies Law is not a property of the company.
Limited liability under the Commercial Companies Law is not a property of the company. It is a default the statute grants by form and withdraws by conduct.
The Law permits five forms and no others (Federal Decree-Law No. 32 of 2021 on Commercial Companies, Article 9(1), current as at 5 July 2026): the General Partnership, the Limited Partnership, the Limited Liability Company, the Public Joint Stock Company, and the Private Joint Stock Company. Those five sort into two liability worlds. In the first, a partner answers for the company with everything he owns: the general partner is jointly and severally liable to the extent of all his property (Article 39). In the second, a member’s exposure is capped at what he put in: the limited partner, the LLC partner, and the joint stock shareholder are each liable only to the extent of their capital contribution (Articles 62, 71 and 105).
That much is the architecture every general treatment states, and stops at. The operative content sits one layer down. The cap is defeasible, and the Law itself supplies the defeating conditions. A limited partner who takes part in management, or lets his name into the firm name, loses the cap (Articles 69 and 64(2)). An LLC manager who breaches the naming rule, and LLC partners who let the fifty-partner ceiling break and leave it unremedied, answer in their own property (Articles 72(2) and 75(2)). Directors and managers who fail to register an amendment to the constitution are jointly liable for the resulting damage (Article 15(4)). A company built in none of the five forms, or held void at a third party’s instance, throws personal and joint liability onto whoever contracted in its name (Articles 9(2) and 16(2)). And any clause that purports to relieve an officer of personal liability is void on its face (Article 24).
Reading those provisions together, they are specific and enumerated rather than a general power to disregard the company; the Law grants the shield form by form and takes it back trigger by trigger. So the question a founder, a manager, or an incoming partner actually needs answered is not which form carries limited liability. It is where that liability comes back. This article maps the grant and, at greater length, the withdrawal. It closes on the two largest breaches, which sit outside the statute altogether: the personal guarantee, which erodes the shield by contract rather than by law, and the question of whether a court can reach a member beyond these enumerated triggers, which the Law does not answer on its own text.
The first liability rule in the Law is a reversal, and it is easy to miss because it reads as a rule about form.
Article 9(1) sets a closed list of five forms. Article 9(2) states the consequence of standing outside it: a company that adopts none of the five is null and void, and the persons who contracted in its name are personally and jointly liable for the obligations arising from that contract (Article 9(2), current as at 5 July 2026). The shield does not fail quietly here; it is never raised. There is no company to stand behind, so the individuals stand exposed. This is the frame for everything that follows: limited liability is available only inside a recognised form, correctly constituted, and the Law returns to personal liability as its default whenever the form is absent or defective.
The definition of a company carries its own qualification, and the qualification matters for liability. A company is a contract of two or more persons who participate in an economic project to share its profit and loss (Article 8(1)). That plural is then displaced twice by Article 8(3): a single person may incorporate and own a company (Article 8(3)(a)), and a non-profit company may be formed whose profits are reinvested rather than distributed, on terms a Cabinet Resolution is to set (Article 8(3)(b)). The single-owner permission is what makes the one-person LLC and the wholly owned subsidiary possible, and it is the point at which the liability shield and the identity of the owner can come apart, examined in Section VII.
Limited liability is a consequence of a prior thing: the company’s separate legal personality. The Law is precise about when that personality begins, how far it reaches before and after the company’s life, and where it stops within a group.
A company acquires legal personality on registration in the commercial register (Article 21(1)). Before that, during incorporation, it has personality only to the extent necessary to be incorporated, and it is bound by the founders’ incorporation acts provided the incorporation completes (Article 21(2)). On dissolution it keeps personality only to the extent liquidation requires, and must add “Under Liquidation” to its name (Article 21(3)). The shield, in other words, is co-extensive with the personality: it is thin at the edges of the company’s life and full only once the company is registered and before it is wound up.
The most consequential separation rule for a group is Article 21(4): the subsidiaries of a holding company have legal personality and financial liabilities independent of the holding company. This is the provision that lets a group ring-fence risk, one entity’s liabilities from another’s, and it is stated as a default of independence rather than a presumption of consolidation. The Law also names the dedicated ring-fencing vehicle in its definitions: a Special Purpose Vehicle is a company incorporated to segregate the liabilities and assets of a financing transaction from those of its founder (Article 1). Personality is the mechanism; Article 21(4) and the SPV definition are the Law telling the reader, in terms, that separation between related entities is the starting position. The triggers in Sections V and VI are the conditions on which that starting position is displaced for the individuals behind the company.
One provision guards the whole scheme against private contracting-out. Any provision of a company’s constitution that authorises it, or a subsidiary, to relieve a current or former officer of personal liability is null and void (Article 24). A company cannot draft its way out of the officer liability the Law imposes; the reversal triggers cannot be switched off in the constitution.
Two positions in the Law carry unlimited liability from the outset, and they carry it to the extent of everything the partner owns.
The general partner is the first. In a General Partnership every partner is a natural person, and all are jointly and severally liable to the extent of all their property for the company’s liabilities (Article 39). The general partner also has the capacity of a trader, and the linkage is total: when the partnership is declared bankrupt, all its partners are bankrupt by operation of law (Article 40). The same position attaches to the general partner in a Limited Partnership, who is jointly and severally liable and acts as a trader, alongside the limited partner whose cap is examined below (Article 62).
The exposure attaches to the person, not to the moment. A partner who joins an existing partnership is jointly liable, to the extent of all his own property, for the company’s obligations both before and after he joined, provided the existing obligations were disclosed to him; an agreement among the partners to the contrary cannot be raised against third parties (Article 54). A partner who withdraws stays jointly liable for the company’s pre-withdrawal debts to the extent of his own assets (Article 55(2)), and is released from later obligations only once the withdrawal is registered and advertised and thirty days have passed (Article 55(3)). The reader should note the sequence in the last rule as substantive: liability for post-withdrawal obligations continues until registration, advertisement and the thirty-day period are all complete, so a partner who leaves in fact but not on the register remains exposed.
One protection runs the general partner’s way, and it is procedural rather than a cap. A company’s liabilities may be enforced against a partner’s own property only after a writ of execution has issued against the company and the company, having been given notice to pay, has not satisfied the debt (Article 60). The partner’s personal exposure is real and unlimited, but the creditor must exhaust the company first.
The three capped forms share a single sentence of principle and then diverge in how the cap is lost. This section states each cap in the Law’s own terms and then, for each, the conditions on which it breaks.
The limited partner. In a Limited Partnership the limited partner is liable for the company’s obligations only to the extent of his capital contribution, and does not act as a trader (Article 62). Two provisions take the cap away. If the limited partner’s name is included in the company name with his consent, he is deemed a general partner as against bona fide third parties (Article 64(2)). And if he crosses into management, the Law removes the cap in graded steps: obligations arising from his prohibited acts fall on all his own property (Article 69(2)); if his management leads third parties to believe he is a general partner, he answers with all his property for all the company’s obligations, and the general-partner provisions apply to him in full (Article 69(3)); and where he acted under the general partners’ authorisation, those partners are jointly liable for what results (Article 69(4)). A drafting default reinforces the point: if the partners’ capacities are not stated in the constitution, the company is treated as a General Partnership and every partner as a general partner (Article 65(2)). The limited partner’s shield, then, depends on staying out of both the name and the management, and on the constitution recording his capacity.
The LLC partner. In a Limited Liability Company the number of partners is between two and fifty, and any partner is liable only to the extent of his capital contribution (Article 71(1)); a single person may also own an LLC, again liable only to the capital stated in the constitution (Article 71(2)). Three provisions reach behind the cap. If the managers breach the company-naming rule, they are jointly liable in their private property for the company’s obligations and, where applicable, its damages (Article 72(2)). If the partner count rises above fifty and the company fails to regularise within the statutory window, the partners become jointly and severally liable, to the extent of their own property, for the company’s debts from the date the ceiling was breached, except for those proven unaware of or opposed to the increase (Articles 75(2) and 75(3)). And every manager is liable to the company, the partners and third parties for fraud, for misuse of powers, for breach of the law or the constitution, and for gross error, with any constitutional provision to the contrary void (Article 84(1)); the joint stock director-liability provisions apply to LLC managers as well (Article 84(2)). The cap protects the partner as investor; it does not protect the manager who breaches these duties, and the two roles often sit in the same person.
The FDL 20/2025 amendment added a layer here whose liability consequences are not yet fully drawn. LLC stakes may now be classified into different classes as to value, voting, redemption, and priority in profit or liquidation, with the classes and their conditions to be set by a Cabinet Resolution (Article 76(4)). Whether and how differential class rights interact with the contribution-based cap is a question the implementing resolution will govern; on the current text the cap in Article 71 is stated per partner and by reference to capital contribution, and reading a class-specific liability consequence into it would be an inference the text does not yet support. This is marked as open in Section VIII.
The joint stock shareholder. In a Public Joint Stock Company the capital is divided into equal, tradable shares, and a shareholder is liable only to the extent of his contribution to the capital (Article 105). The exposure at this tier concentrates on the founders rather than the ordinary shareholder. A founder is liable for damage suffered by the company or by third parties through any breach of the incorporation rules and procedures, and the founders are jointly liable for their obligations; a person who acts for another in the incorporation is personally liable if he does not name his principal or if his authority is shown to be invalid (Article 109(2)). If the company is not incorporated at all, the founders are jointly liable to refund subscribers with interest, and jointly liable to third parties for their own acts during the incorporation period (Article 128). The shareholder’s cap is clean; the founders’ path to the company is where personal, joint liability lives. The Private Joint Stock Company takes the same shareholder cap, and the joint stock provisions apply to it save where the Law provides otherwise; its form-specific liability articles sit later in the Law and are not examined here.
Some triggers do not belong to any one chapter. They attach to the constitution and its registration, and a reader who looks only at his own form’s provisions will not find them.
The constitution must be in Arabic and attested, failing which it, or the unattested amendment, is null and void (Article 14(1)). The nullity is asymmetric, and the asymmetry is a liability rule: the partners may raise that nullity against one another, but they may not raise it against third parties (Article 14(2)). A defective constitution, in other words, does not shrink the partners’ exposure to outsiders; it only unsettles their position among themselves.
Registration carries the same weight. An unregistered constitution, or an unregistered amendment, has no effect against third parties (Article 15(2)), and the managers or directors are jointly liable for the damage that failure to register causes to the company, the partners or third parties (Article 15(4)). Where a third party obtains a declaration that the company is invalid, the company is void from the outset as against that party, and those who contracted in the company’s name are jointly and severally liable for the obligations arising under the constitution (Article 16(2)). The Law also reaches back into distributions: fictitious profits may not be paid, the board is liable to partners, shareholders and creditors if they are, and a partner or shareholder must return profits distributed in breach even if he received them in good faith (Article 30).
A related set of provisions blocks attempts to contract around the liability the form imposes. A partner’s contribution may take the form of work only where the partner is jointly liable (Article 17(2)). Any constitutional term that denies a partner all profit, relieves him of all loss, or guarantees him a fixed return is void (Article 29(3)). Together with the void relief-from-liability clause in Article 24, these provisions mean the allocation of liability that comes with a form is not freely disposable by agreement; the parties take the form with the liability the Law attaches to it. The same principle runs through the general civil law in force from 1 June 2026, which voids any condition exempting or mitigating liability for a harmful act (Federal Decree-Law No. 25 of 2025, Article 257) and any agreement excluding the duty to disclose decisive information (Article 122(4)); the company-law rule and the general-law rule point the same way.
The two largest breaches in limited liability are not in the Commercial Companies Law at all. A complete answer has to name them, and the honest form of that answer marks where the loaded text runs out.
The first is contractual. A lender, a landlord or a counterparty routinely requires the individual behind a capped entity to guarantee the entity’s obligations in person. The guarantee does not touch the statutory cap; it sits beside it and defeats it in fact, converting a shareholder’s limited exposure into a personal one for the guaranteed debt. This is a matter of what the parties sign rather than what the Law provides, and it is the most common way an LLC owner’s Article 71 protection is lost in practice. The distinction to hold is between what the statute says, which is a real cap, and what a financing arrangement requires, which can remove the cap for the specific obligation guaranteed. The irreversible step is the signature on the guarantee, not the incorporation.
The second is a question the Law leaves open on its own text, and the instrument that frames it changed on 1 June 2026. The reversals in Sections V and VI are specific and enumerated. Whether a court can reach a member or officer beyond them, on general grounds such as abuse of the separate personality or conduct in the vicinity of insolvency, is not answered by the Commercial Companies Law. The general law that would frame it is now Federal Decree-Law No. 25 of 2025 on Civil Transactions, in force from 1 June 2026, which repealed Federal Law No. 5 of 1985 in full. Two of its provisions supply the routes. The first is abuse of rights: the exercise of a right is unlawful, and attracts liability, where there is intent to cause harm, where the interests pursued contravene the law or public order, where the benefit sought is disproportionate to the harm inflicted, or where the exercise exceeds custom (Federal Decree-Law No. 25 of 2025, Article 106(2), current as at 5 July 2026). The second is the harmful act: a person who causes harm is personally liable to compensate (Article 246), with joint liability arising on deception (Article 247(4)) and among multiple wrongdoers at the court’s discretion (Article 253). The distinction between these two routes is substantive and should be held. The harmful-act route imposes direct personal liability for a person’s own wrong and leaves the company’s separateness intact; it is the general-law parallel of the manager-liability rule in Article 84 of the Commercial Companies Law, not a disregard of the company. Only the abuse-of-rights route reaches toward treating reliance on separate personality as itself unlawful.
Two limits govern how far this carries, and both are on the loaded text. The general civil law applies only behind the special law: a legal person is subject to the special law governing it (Federal Decree-Law No. 25 of 2025, Article 95), a special provision is not overridden by a later general one and governs any conflict (Article 4(3)), and the harmful-act chapter itself operates “subject to the provisions on liability contained in special legislations” (Article 245(1)). The Commercial Companies Law therefore governs first, and the Civil Code fills the residual space. And whether a court would in fact deploy Article 106 to disregard the separation defaults in Section III on a given set of facts is a matter of judicial application, not of the statutory text; that application is not examined here, and it should not be assumed resolved in either direction. What can be stated from the loaded text is that the general law now supplies a structured abuse-of-rights test and a harmful-act regime as the routes by which personal liability may arise outside the enumerated triggers, and that the special-law-first rule keeps the Commercial Companies Law in front of them.
The nominee arrangement sits precisely at this seam. Where one person’s name is on the register over economics that belong to another, the individual’s liability under the triggers above and the identity of the true economic owner can diverge. The Law’s own segregation concepts, the independent subsidiary (Article 21(4)) and the SPV (Article 1), are the legitimate face of that separation; the beneficial-ownership regime, a separate federal instrument not examined here, governs the disclosure side. The general civil law adds a further layer as of 1 June 2026: a party who knows information of decisive importance to another’s consent must disclose it, and that duty cannot be excluded by agreement (Federal Decree-Law No. 25 of 2025, Articles 122(1) and 122(4)), so non-disclosure of the true economic party in a dealing built on a nominee can engage a separate, non-excludable liability under the general law. The point for this article is only that whose name appears and who bears liability are distinct questions under the Law, and the reversal triggers, not the register entry, decide the second.
There is also a boundary the Law draws expressly, and it belongs here because it decides which liability regime applies at all. The Commercial Companies Law does not apply to companies established in the free zones in respect of matters for which the free zone’s own legislation provides (Article 5(1)), and it defers, for the financial free zones, to their own regimes. A company incorporated in the Dubai International Financial Centre or the Abu Dhabi Global Market takes its incorporation and its internal liability architecture from that centre’s companies law, not from this one. The federal Law attaches when such a company operates onshore: a free-zone or financial-free-zone company that conducts activity within the State, outside the zone, does so through a branch or representative office that is subject to this Law (Articles 3(3) and 5(2)). The regimes are therefore complementary rather than competing at the level of incorporation; the seam to watch is the onshore branch, where the federal Law reattaches to an entity whose limited-liability shield was built under a different regime. How the DIFC and ADGM regimes construct that shield is the subject of the companion articles on each.
Most of this architecture is settled, and it is settled in the primary text. The five forms and the two liability worlds are settled (Articles 9, 39, 62, 71, 105). The enumerated reversals are settled: the wrong-form and invalidity triggers (Articles 9(2), 16(2)), the limited-partner triggers (Articles 64(2), 69), the LLC triggers (Articles 72(2), 75(2), 84), the founder triggers (Articles 109, 128), the registration triggers (Articles 15(4), 16(2)), and the void relief-from-liability clause (Article 24). The separation defaults are settled (Articles 21(4), 24), as is the procedural protection that a creditor must exhaust the company before a general partner’s own property (Article 60).
What is open falls into two kinds that should not be run together. The first is the interaction between the new LLC share-class regime and the contribution-based cap: Article 76(4) permits differential classes and defers the detail to a Cabinet Resolution, so any liability consequence specific to a class is awaiting that instrument and is not on the current text. The second is the residual-piercing question of Section VII, which the company-law text does not decide and which turns on instruments outside it. Each is a genuine gap, and each is better named than filled.
What is moving is the surrounding federal frame. The Commercial Companies Law was amended in 2025 by Federal Decree-Law No. 20 of 2025, which introduced the multiple share classes, the drag-along and tag-along and share-succession mechanics for LLCs and Private Joint Stock Companies (Article 14(4)), the re-domiciliation route (Article 15 BIS) and the non-profit company (Article 8(3)(b)); the implementing regulations for the share-class regime are awaited, and their issuance is the principal refresh trigger on this article. The general civil law beneath the Commercial Companies Law also moved: Federal Decree-Law No. 25 of 2025 on Civil Transactions came into force on 1 June 2026 and repealed the 1985 Civil Code in full, recasting the abuse-of-rights and harmful-act provisions that frame the residual question in Section VII. That recodification reinforces rather than displaces the company-law position, because a legal person remains subject to the special law governing it (Article 95) and a special provision governs any conflict with a general one (Article 4(3)); it is noted here because the instrument behind Section VII is now the 2025 Code, not the 1985 one. Separately, the consolidated text still names the Securities and Commodities Authority throughout, because it was last amended before 1 January 2026; on that date the Capital Market Authority reconstituted the Securities and Commodities Authority as its legal successor under Federal Decree-Law No. 32 of 2025, and references to the former authority in existing legislation are read as references to the Capital Market Authority. The register has not yet conformed the term, so a reader who takes the statute’s “SCA” at face value is reading a name the reconstitution has already replaced; the substance is unchanged, and the joint stock provisions that name the authority are now administered by the Capital Market Authority. Watching for the register to conform the term is worthwhile not because it changes the law but because it marks when the surface catches up with it.
The answer to the question in the title is therefore the one the architecture supports. Limited liability under the Commercial Companies Law is limited until a specific statutory condition is breached or a personal obligation is undertaken outside the statute. It is granted by form, in Articles 39, 62, 71 and 105; it is withdrawn by the conduct the reversal triggers name; and its two largest failures, the guarantee and the residual-piercing question, lie beyond the company-law text and must be read against the instruments that govern them.
For your facts, in confidence, put the question to the firm.
The bench stands behind it