The United Arab Emirates (UAE) requires individuals to sign a Declaration of Personal Liability when they accept personal responsibility for debts and obligations. It is often related to business or financial transactions. The legal implications of this declaration are severe so it is crucial to understand its purpose, procedure and its consequences for you.
The knowledge of personal liability declarations in the UAE becomes essential for business owners and investors and individuals who enter financial agreements to prevent legal issues and safeguard their rights.
What is a Declaration of Personal Liability?
A Declaration of Personal Liability means a declaration written and signed voluntarily by the individual accepting responsibility for a company’s debts or obligations. It is mostly needed by the bank, landlord, or supplier that is seeking extra assurance—and quite often, this involves a company.
If, for example, the loan will not be paid back or the rent will not be paid by the company, the person signing the declaration may be made personally liable for that amount and forced to cover the money out of their own resources.
When is it Used in the UAE?
Here are some of the situations where you may be asked to sign a Declaration of Personal Liability in the UAE:
- Corporate Loans: A bank may ask the director or owner of the company to personally guarantee the company loan.
- Commercial Leases: A landlord may want a company owner to guarantee personal rental payments.
- Trade Credit: A supplier will require a personal guarantee as a prerequisite to offering credit terms.
- Business Agreements: Personal liability may be declared by the parties involved when entering into a partnership or joint venture for the understanding of responsibilities.
UAE Legal Framework for Personal Liability
The concept of personal liability is defined by several UAE laws, including:
- Federal Decree-Law No. 32 of 2021 on Commercial Companies
- Federal Law No. 5 of 1985 (Civil Transactions Law)
- Federal Decree-Law No. 50 of 2022 (UAE Commercial Transactions Law)
In the UAE, companies such as Limited Liability Companies (LLCs) provide protection to shareholders. However, if a person signs a personal liability declaration, this protection is waived. That individual becomes personally responsible, and his assets can be used to settle company debts in case of default.
Why Notarization is Important
In order for the declaration to be valid and enforceable in the UAE, it must be:
- Written in Arabic or have an official Arabic translation
- Signed before a UAE notary public
- Notarized and officially registered with the relevant authority
Notarization shows that the person actually signed the document and knew the consequences of the signing of the document. Without notarization, the declaration may not be recognized by the UAE courts.
Legal Consequences of Signing
It is important to know that before signing a Declaration of Personal Liability there are possible legal effects that one should be aware of:
- Personal Assets at Risk: If the company defaults, your money or property can be taken to pay the debt.
- Civil Cases: Creditors can sue you in the UAE courts.
- Enforcement of Judgments: The courts can freeze your bank accounts, seize your assets, or issue travel bans.
After signing and notarizing, the declaration is binding unless you can prove that it was signed under fraud, misrepresentation, or pressure.
Things to Check Before Signing
Here are a few tips to keep in mind before signing a personal liability declaration:
- Get Legal Advice: Talk to a UAE lawyer to understand your risks.
- Read Carefully: Check all terms, amounts, and obligations.
- Limit Your Liability: Try to define a clear amount or limit the guarantee.
- Add Time Limits: Set an expiry or end date to the obligation.
- Explore Alternatives: Check if a corporate guarantee or security deposit can be used instead of a personal guarantee.
Can You Cancel a Declaration?
Once signed and notarized, the declaration is usually not revocable, unless:
- Both parties agree to cancel it in writing.
- The obligation (like the loan or rent) has been fully settled
- The declaration gets invalidated when a court establishes that it was signed under duress, fraud or legal error.
How to Draft and Notarize a Declaration of Personal Liability in UAE
A proper method to create and authenticate the Declaration of Personal Liability in UAE follows this sequence:
- Draft the Declaration: A document must contain explicit details about the individual’s duties together with payment terms and debt amount.
- Translation (if needed): The document requires translation through an authorized legal translator from the Ministry of Justice if it is not written in Arabic.
- Visit the Notary Public: The person needs to appear before the notary for signature purposes.
- Get it Notarized: A legal stamp from the notary serves to validate the document so it becomes legally binding.
The Dubai Courts Notary Public offer notarization services that include in-person and online options for residents.
Is a UAE Declaration Enforceable Abroad?
The UAE notarized Declaration of Personal Liability stands valid for use in UAE court proceedings. The document requires two steps to enforce it outside UAE borders: MOFAIC attestation and legalization through the foreign country embassy or consulate in UAE.
Only after the document receives these stamps from MOFAIC and legalization from the foreign embassy or consulate will it become accepted by the legal system of the other country.
Final Thoughts
The process of signing a Declaration of Personal Liability within UAE territory creates a major responsibility for signers. Using this document enables business trust and financial deal security yet it risks exposing personal assets to danger. It is crucial to know the exact terms before you sign a Declaration of Personal Liability.
How Notary Public Dubai Can Help You
Our legal experts at Notary Public Dubai provide complete guidance throughout the entire process. We can:
- Draft legally correct declarations
- Provide Arabic document translation according to UAE standards.
- Notarize your documents quickly—online or in person
- The notary will explain the legal risks to you before you finalize the document
- We assist clients in terminating or disputing declarations which were obtained through unfair methods.
Contact Notary Public Dubai today for more information.
Lesa Smith