Court rejects case to return Dhs1.02 million

The Commercial Court in Dubai rejected a lawsuit filed by a woman who was a partner in a company working in cafes sector, in which she demanded the annulment of a share purchase agreement and obliging two partners to return Dhs1.02 million she had paid for purchasing 20% of the company's shares and contributing to its operating expenses, in addition to compensation of Dhs500,000.

The court found no evidence of fraud in the sale process, and that the plaintiff was aware of the company's financial and administrative situation before completing the deal.

The details of the case date back to when the plaintiff signed an agreement in May 2025 with two men, owners of a limited liability company, to purchase 20% of the company's total shares for Dhs800,000, 10% from each partner for Dhs400,000 each.

The court added that the plaintiff, under the memorandum of understanding, committed to contributing to the company's operating expenses and paid additional amounts, bringing the total amount she paid to Dhs1,022,000.

The plaintiff stated in her lawsuit that she was shocked, after officially becoming a partner, that the actual market value of the shares she purchased was much lower than the value she paid, and that the company had not been actually operated despite months passing since the contract, and that the manager did not adhere to some administrative and financial duties stipulated in the memorandum of understanding, including submitting periodic reports and appointing an auditor for the company.

The plaintiff requested the annulment of the share sale agreement and the cancellation of the memorandum of understanding, restoring the situation to what it was before the contract, with an obligation for the two partners to return all amounts she paid and compensate her for the damages she claimed to have incurred.

During the consideration of the lawsuit, the court appointed an accounting expert committee to examine the company's financial position and the extent of the parties' adherence to the terms of the agreement.

The expert report showed that the plaintiff paid the agreed value of the shares, and also paid a large part of her contribution to the operating expenses, and that the other two partners did not fully pay their shares of those expenses.

The report also proved that the manager did not adhere to submitting the periodic financial and administrative reports stipulated in the memorandum of understanding, and did not appoint an auditor for the company.

The report indicated that there were documents and meeting minutes signed by the plaintiff confirming she had known about the nature of the company's project and that it was in the construction phase, thus not generating revenue at the time of the contract.

The court indicated that the memorandum of understanding included an explicit acknowledgment from the plaintiff that she had reviewed the financial, administrative, and legal situation of the company before completing the deal, and that she signed the agreement upon her own will, without providing anything to prove that she was subjected to fraud by the selling partners.

Regarding the request for compensation and the penalty clause, the court clarified that the expert report proved there were errors on the part of the plaintiff and on the part of the other two partners in fulfilling some of the obligations contained in the memorandum of understanding, which prevented holding one party responsible or applying the penalty clause in favour of any of the parties.

Therefore, the court rejected the annulment of the contract, the return of amounts, and compensation, affirming that the contract remains valid and binding on its parties, and obligated the plaintiff to pay the court fees and attorney's fees.