The shares move one way, the signing power moves another
By Monday the office manager needs someone who can sign payroll, the bank is querying a transfer the deceased approved before dying, and a supplier wants to know whether last month's contract still stands. Those look like one problem. They are two: the shareholding moved, and signing authority did not.
The first thing: the share moved. For a mainland limited liability company, the default rule is Article 307 of Federal Decree-Law No. 32 of 2021 (Commercial Companies Law): the death of a partner leaves the company standing unless the memorandum of association provides otherwise, "the share of each partner shall be transferred to his heirs", and a beneficiary named in a will counts as an heir. Read that from the survivor's side. The heirs receive the shareholding by operation of law. They need no consent, no signature from you, and no approval of them as people.
A caution on citation: Federal Decree-Law No. 20 of 2025 amended the companies law from 15 October 2025, and the sources behind this article could not confirm whether the inheritance articles were renumbered. Every companies-law article number below is 2021 text numbering: confirm before filing.
What the heirs receive is property. Membership interests in an LLC are indivisible (Article 77). If several heirs hold one interest and have not appointed a representative, the partner whose name appears first in the Memorandum of Association is the representative toward the company. The company may then set a time limit for the selection. After that deadline expires, it may sell the interest for the owners' account, with the existing partners holding a pre-emptive right to buy. Some heirs treat the statutory transfer as an immediate right to act for the company. The statute separates ownership from day-to-day authority. The company deals with one representative, and if the heirs cannot organise one, the statute itself supplies the sale mechanism after the company's deadline.
If the company is a joint stock company, the gate is even plainer. The heir or legatee must apply to enter the transfer in the Shares Register, and the rights attached to the share run from the date of registration rather than from the date of death (Article 215). Where one share lands on several heirs, they choose a representative among themselves, or the competent court appoints one (Article 216).
The second thing: an office fell vacant. The manager named on the licence, the authorised signatory on the bank mandate, the person counterparties are used to dealing with, those are appointments made by resolutions and registry filings. They attach to the person, and they ended with the person. An heir who now holds half the shares holds half the shares. The bank mandate is a separate instrument, and so is the manager appointment. Changing either means a company decision and a registry amendment, which in practice means the registry asks for the succession documents first.
One company type gets a statutory exception worth knowing. In a professional company, the vehicle many doctors, lawyers, engineers and consultants use, the Civil Transactions Law provides that on the death of a partner the company continues among the remaining partners, the deceased's share devolves to the heirs after a valuation at the date of death, and the heirs keep rights arising from contracts concluded before the death, up to the issuance of the financial statements for the following fiscal year. The text is verified; the article number remains unconfirmed here, so no number is printed. Counsel can locate it in Federal Decree-Law No. 25 of 2025, in force 1 June 2026.
One flat fact on the quotes above: English texts of UAE federal law are courtesy translations, and the Arabic original prevails in case of conflict.
The first ten days
The first ten days carry two real statutory duties, and both land on the people most likely to be you.
First duty. If you and your partner held any joint account in your own names, the surviving co-owner must notify the bank within ten days of the death, and the bank then suspends withdrawals up to the deceased's share until a successor is appointed (Article 379(4) of the Commercial Transactions Law, Federal Decree-Law No. 50 of 2022).
Second duty. If your partner held an employment contract with the company, the company owes his family his wages, financial entitlements and end of service gratuity within ten days of the death, or of the company learning of it (Article 15(1) of the Labour Law, Federal Decree-Law No. 33 of 2021). Your staff stay employed either way: the death of an employer ends employment contracts only where the work was personal to him (Article 42(4) of the same law). Payroll still has to run. Who signs for it is the mandate problem from the section above.
Now the instruments. A cheque your partner signed before dying remains a valid instrument: death is outside the lawful grounds to stop payment on a cheque, which are loss or destruction of the cheque and the bearer's bankruptcy (Article 651(2) of the Commercial Transactions Law). What closes is the account underneath it, because a current account closes by operation of law on the death of either party (Article 400(3) of the same law). On the sources available, a cheque returned after the drawer's death is a claim in the estate file rather than a criminal matter, and once a court appoints and records an executor, every creditor proceeds only against the executor (Article 1227(1) of the Civil Transactions Law, in force 1 June 2026). The practical version: an old signature is an estate claim, not a promise of clearance.
The company account is the urgent question. No single statute freezes it. For personal accounts, the Central Bank's Consumer Protection Standards expressly permit a bank to block an account on evidence that the consumer has died. For a company account where the deceased was the sole signatory, the practical outcome is the same: the bank stops honouring the mandate once it knows, and waits for the registry and succession documents. The news usually reaches the bank through the employer or HR side, a notification duty where loans or policies sit with the same bank, or government systems linked to the death registration. The mechanics sit in our piece on how banks learn of a death. If your mandate allows either of two signatures, confirm the bank's position in writing before you rely on it. Deeper treatment: why the accounts freeze, and what a family can still use.
The counterparty waiting on a signature deserves an honest answer rather than a fast one. Your contract is with the company, and the company still exists. What changed is who may sign for it this week. Read the MOA's management clause and the latest resolutions before you give anyone a date.
Three things the surviving partner should avoid, in descending order of temptation:
- The power of attorney your partner granted you, or anyone else, extinguished at death. Using one after the death is unlawful. The detail sits in our piece on why a power of attorney dies with the person who signed it.
- The saved passwords. Logging into his email, his phone or the online banking with credentials you happen to hold is a criminal offence in its own right: Article 9 of the cybercrime law (Federal Decree-Law No. 34 of 2021) punishes acquiring another person's access codes without permission with imprisonment and/or a fine of AED 50,000 to AED 100,000, with heavier penalties where the codes are then used, and the statute contains no exception for heirs, partners or spouses.
- Moving money "for safekeeping". The estate's asset here is the shareholding rather than the company's bank balance, and heirs are barred from disposing of any estate asset before the court issues the certificate of their share in the net estate (Article 1228, Civil Transactions Law). The company's cash belongs to the company.
For the family side of the same fortnight (the death certificate, the visa, the home), the week-by-week sequence is here: the full week-by-week timeline.
The documents that decide everything
Start with the Memorandum of Association (MOA), because Article 307 hands it a switch. The default is continuation, but the MOA may provide that the company dissolves on a partner's death. If your MOA is the incorporation agent's template from the year the company was formed, read it before you assume anything about this week. Look for three things while you are in there: what it says about transfer of interests, who it names as manager, and how a manager is removed and replaced.
Then the shareholders' agreement, if one exists. This is where a death clause usually lives: what happens to the deceased's shares, whether the surviving partners may or must buy them, at what price, payable how. The statutory pre-emption regime (Articles 79 and 80) is drafted for a partner who wishes to assign his interest, a voluntary sale by a living person. Nothing in the provisions we could verify gives a surviving partner a statutory right to buy an inherited share at a set price. The one statutory mechanism that bites on death is the Article 77 mechanism from section one, and it arrives only after the first-named MOA default is in play and the heirs miss the company's deadline for appointing a representative. It gives the company a power to sell with the partners pre-empting, which is a blunt instrument compared with a written clause.
Valuation is where death clauses fail in practice. Outside the professional companies described above, no provision we could verify prices an inherited share or forces its sale. If your documents say "the surviving partners may purchase at fair value" and stop there, you have an argument about fair value scheduled for the worst possible year. A workable clause names a method: book value at the last financial statements, an agreed multiple, or an independent valuer with a tie-break rule. Any actual valuation belongs with licensed corporate counsel or a valuation professional.
Then your partner's will, which decides who you will be negotiating with. A beneficiary named in a will counts as an heir for the share transfer (Article 307 again). What matters operationally is the executor. With a registered will naming an executor, the standing question is answered inside the document: on the DIFC route, the executors named in the will apply to the Registry for a Grant of Probate, per the DIFC Courts' own probate page. Without one, everyone waits for the court to issue the certificate identifying the heirs and their shares (Article 1244 of the Civil Transactions Law), and the heirs speak through whatever representative the process produces.
Finally, the registry, because the same death is processed differently depending on where the company lives. Mainland LLC: the share passes under Article 307, and the commercial register and licence are then updated against the succession documents, through an amended MOA and a register entry. Joint stock: the Shares Register moves on application. Free zones: this article stops early. JAFZA's own transfer-of-shares guide never mentions the death of a shareholder, and no ADGM or DMCC shareholder-death procedure was locatable in public sources. The claim that free zones simply apply mainland federal law to share succession is unverified, and doubtful for DIFC and ADGM, which run their own companies regimes. Ask your registry in writing what it requires before anyone files anything, and treat every filing as discretionary until it is accepted.
Every amendment described in this section belongs with licensed corporate counsel. The audit in the next section is the part you can do yourself.
The Dead-Partner Clause Audit
This is the planning version of everything above, built for partners who are all still alive. Run the company file against the eleven lines below as a rough self-check. The Dead-Partner Clause Audit (company type, MOA, any shareholders' agreement, the partner's will, valuation clause, pre-emption right, voting rights, manager appointment, bank mandate, registry documents, and the funding source for any buyout) runs to eleven lines. Pull each document, answer each line in writing, and file the answers where a surviving partner would actually look on a Monday morning.
| \# | Check | What you are looking for |
|---|---|---|
| 1 | Company type | Mainland LLC, one-person LLC, joint stock, professional company, or free zone entity. The default rule changes with the answer: Article 307 for the LLC, a six-month continuity election for the one-person company (Article 306), register-based transfer for joint stock. |
| 2 | MOA | Any clause on the death of a partner: continuation or dissolution, transfer restrictions, how a manager is appointed and removed. |
| 3 | Shareholders' agreement | Whether a death clause exists at all, then what it says about who buys, at what price, payable how and by when. |
| 4 | The partner's will | Whether one exists, where it is registered, whether it names an executor, and whether it covers the shares at all. |
| 5 | Valuation clause | A named method for pricing the share on death: book value, an agreed multiple, or an independent valuer with a tie-break. |
| 6 | Pre-emption right | Whether the surviving partners hold a written right of first refusal over an inherited share specifically, since the statutory regime covers voluntary sales only. |
| 7 | Voting rights | Who votes the deceased's share between death and registration, and what the MOA says about decisions that cannot wait. |
| 8 | Manager appointment | Who is the licensed manager after a death, and what the appointment and amendment route requires. |
| 9 | Bank mandate | Who can sign, whether any account depends on one person, and what the bank will ask for before honouring a changed mandate. |
| 10 | Registry documents | Commercial register entry, licence, share register, and the document list your specific registry requires for a change. |
| 11 | Buyout funding | Where the money for any buyout comes from: cash, instalments against the share, or insurance. |
Some partnerships run this audit and find nothing to fix: a current MOA with a continuation clause, a shareholders' agreement with a priced and funded buyout, registered wills naming the same executor. That happens, and when it happens the audit has done its job. Gaps to look for on the checklist: a mandate that names one person only, an MOA silent on death, no valuation method, and a buyout promise with no money behind it.
The fix splits into two layers, and it is worth being precise about which tool does which job. A registered will moves the shares to the person your partner chose, through an executor who has standing from the start: the DIFC Business Owners Will, for instance, covers up to five companies, is listed at AED 5,000 for a single will and AED 7,500 for mirror wills (DIFC Courts fee schedule, July 2026), and is open to non-Muslim testators (confirm full eligibility, including age, on the DIFC page or with counsel before filing). A will prepared through the SmartWills process and reviewed by UAE-licensed partner lawyers handles that layer. The other layers, the mandate, the manager appointment, the pre-emption clause, the valuation method, the funding, are company documents for your corporate counsel. The founder's own planning piece walks through the first layer from the owner's side: what freezes when a shareholder dies. This piece is the survivor's operations manual.
Row 11 deserves an honest word. A buyout clause without funding is a payment plan the surviving partners may struggle to honour in the year the company just lost a partner. Life cover written specifically to fund a buyout is one way practitioners close that gap, but insurance is a product decision: take it to a licensed insurance professional. SmartWills leaves insurance product advice to licensed professionals.
The DIFC fee figures above come from the July 2026 schedule and change from time to time, so confirm them before quoting them to a partner.
Last updated: 25 July 2026 · Changelog: 2026-07-25: first published.
Frequently asked questions
Do the heirs automatically become my new partners?
In a mainland LLC the share transfers to the heirs by statute (Article 307), so they step into the shareholding without needing your consent. What they still lack is automatic authority to act: if several heirs hold one interest without a representative, the partner named first in the Memorandum of Association stands as representative; the company may then set a selection deadline, and after that deadline may sell the interest with partners pre-empting (Article 77). In a joint stock company the heir's rights run only from registration in the Shares Register (Article 215). Your MOA and any shareholders' agreement shape everything after that.
Can I use the power of attorney my partner gave me?
No. A power of attorney extinguishes at the grantor's death, and using one after the death is unlawful. Whatever signature authority you held as attorney ended with the person. From that point, the counterparty for estate questions is the executor named in a registered will or the representative the court process appoints. The full treatment is in our piece on why a power of attorney dies with the person who signed it.
Will the bank freeze the company account?
Plan for a block in practice once the bank learns of the death, especially where the deceased was the sole signatory. For personal accounts the Central Bank's Consumer Protection Standards expressly permit blocking on evidence of the consumer's death; company accounts run on the bank's own mandate rules, and banks typically wait for registry and succession documents before honouring any change. Confirm the bank's position in writing early, and keep more than one living signatory on every account from now on.
Do I have a legal right to buy my partner's shares from the heirs?
Not from statute alone, on the provisions we could verify. The pre-emption articles cover a partner who wishes to sell voluntarily; an inheritance sits outside them. Article 77 first defaults representation to the partner named first in the MOA when co-owners have not appointed one, then lets the company set a selection deadline, and only after that deadline fails gives the company a power to sell with the partners pre-empting. A genuine buyout right exists only if your MOA or shareholders' agreement wrote one in, complete with a valuation method and a funding source.
How long until the heirs can act and the register changes hands?
No UAE court publishes a standard processing time for succession or estate files, so any fixed number you read online is an estimate rather than an official figure. The DIFC Courts describe uncontested probate on the scale of weeks on their own FAQ; the unregistered route through the onshore courts has no published equivalent. What drives the timeline is documents: a registered will with a named executor, clean registry papers, and heirs who agree on a representative shorten everything.
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