Dubai Court Dismisses Dh169 Million Ownership Claim in Corporate Dispute

A Dubai court has dismissed a commercial dispute involving claims exceeding Dh169 million, after ruling that the claimant’s registered ownership in multiple companies was only nominal and intended for sponsorship purposes rather than reflecting a genuine partnership.

The Dubai Court of First Instance upheld a counterclaim by the defendants and concluded that the claimant’s recorded 51 per cent shareholding in an advertising and publicity company, along with ownership of related establishments, did not represent the true legal or financial arrangement between the parties. The court ordered him to pay court costs and Dh1,000 in legal fees.

The case stemmed from extensive financial claims filed by the claimant, who sought Dh79.5 million as alleged profit shares, Dh32.7 million in company funds linked to the advertising business, and Dh36.9 million from associated establishments. He also claimed Dh196,200 allegedly transferred to a personal account without justification, in addition to Dh20 million in compensation for material, moral and reputational damages.

The claimant argued that he owned a magazine and related commercial licences through a sole proprietorship established in 2000 and held a majority stake in the advertising company. He accused the defendants of mismanagement, financial irregularities and diversion of funds, which he said led to operational and financial losses.

The defendants, however, denied the claims and argued that the claimant was never the true owner, but only a registered shareholder acting as a sponsor. They maintained that the businesses were placed in his name for regulatory and sponsorship compliance, with no financial contribution or active participation in ownership or management.

The court relied on documentary evidence submitted by the defence, including written declarations allegedly signed by the claimant acknowledging that he had not paid for the shares registered in his name and had made no financial contribution to the companies. The records also indicated that share capital was funded by other parties, along with an irrevocable power of attorney and receipts describing payments as sponsorship fees.

After reviewing the case file and expert report, the court concluded that the arrangement reflected a sponsorship structure rather than actual ownership. It held that the claimant therefore had no legal standing to claim profits, recover company funds, or pursue claims on behalf of the businesses.

The court also rejected an alternative claim for Dh15.46 million, which the claimant said he had personally paid to settle corporate liabilities, including debts, labour claims and banking obligations. Judges found the evidence insufficient, citing the absence of creditor records, lack of audited accounts after 2018, and no personal bank documents proving payment. The expert report was also unable to confirm whether some liabilities had already been settled.

In addition, the court dismissed the Dh20 million compensation claim, ruling that no wrongful act had been established and that the legal requirements for damages — fault, harm and causation — were not met.

With all principal claims rejected, the court upheld the counterclaim, confirmed the disputed ownership structure, and dismissed the case in full.

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