Court rejects profit claims after ruling shareholder held only sponsor status.
Dubai: A commercial dispute involving claims exceeding Dh169 million has been dismissed by a Dubai court after it found that the claimant’s registered ownership in several companies — including an advertising firm — was only nominal and intended for sponsorship purposes rather than a genuine partnership.
The Dubai Court of First Instance upheld a counterclaim filed by the defendants and ruled that the claimant’s recorded 51 per cent shareholding and ownership of related establishments did not reflect the actual legal or financial relationship between the parties.
The court also ordered the claimant to pay court costs along with Dh1,000 in legal fees.
The dispute involved wide-ranging financial claims filed by the claimant, including Dh79.5 million in alleged profit shares, Dh32.7 million in company funds linked to an advertising and publicity firm, and Dh36.9 million from associated establishments.
He also sought repayment of Dh196,200, which he claimed had been transferred to a personal account without justification, along with an additional Dh20 million in compensation for material, moral and reputational damages.
In his lawsuit, the claimant argued that he owned a magazine and associated commercial licences through a sole proprietorship established in 2000, and that he also held a majority stake in an advertising company. He alleged that the defendants engaged in mismanagement, financial irregularities and diversion of funds, which he said led to operational disruption and financial losses across the businesses.
However, the defendants rejected the claims, arguing that the claimant was never the true owner and had acted only as a registered shareholder and sponsor. They maintained that the companies were placed in his name solely for sponsorship and regulatory compliance purposes, and that he made no financial contribution or genuine involvement in ownership or management.
The Dubai Court of First Instance 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 documents indicated that the share capital had instead been funded by other parties. The court also reviewed an irrevocable power of attorney and receipts describing certain payments as sponsorship fees.
After examining the case file and an expert report, the court concluded that the evidence pointed to a sponsorship arrangement rather than a genuine ownership structure. On that basis, it ruled that the claimant had no legal standing to claim profits, recover company funds, or file claims on behalf of the businesses.
The court also rejected an alternative claim of Dh15.46 million, which the claimant said he had personally paid to settle corporate liabilities such as debts, labour claims and banking obligations. Judges found the evidence insufficient, citing the absence of detailed creditor records, lack of audited financial statements after 2018, and no personal bank documentation proving payment from his own funds. 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 primary claims rejected, the court upheld the counterclaim, confirmed the disputed ownership and shareholding arrangement, and dismissed the case in its entirety.
