diff --git a/app/src/main/java/com/owncloud/android/utils/EncryptionUtilsV2.kt b/app/src/main/java/com/owncloud/android/utils/EncryptionUtilsV2.kt
index f463f4358274..c49f42a19d50 100644
--- a/app/src/main/java/com/owncloud/android/utils/EncryptionUtilsV2.kt
+++ b/app/src/main/java/com/owncloud/android/utils/EncryptionUtilsV2.kt
@@ -106,10 +106,9 @@ class EncryptionUtilsV2 {
         context: Context,
         arbitraryDataProvider: ArbitraryDataProvider
     ): EncryptedFolderMetadataFile {
-        val encryptedUsers: List<EncryptedUser>
+        val encryptedUsers: List<EncryptedUser>?
         val encryptedMetadata: EncryptedMetadata
         if (metadataFile.users.isEmpty()) {
-            // we are in a subfolder, re-use users array
             val key = retrieveTopMostMetadataKey(
                 folder,
                 storageManager,
@@ -121,7 +120,7 @@ class EncryptionUtilsV2 {
                 arbitraryDataProvider
             )
 
-            encryptedUsers = emptyList()
+            encryptedUsers = null
             encryptedMetadata = encryptMetadata(metadataFile.metadata, key)
         } else {
             encryptedUsers = metadataFile.users.map {
diff --git a/app/src/test/java/com/owncloud/android/utils/EncryptedSubfolderMetadataTest.kt b/app/src/test/java/com/owncloud/android/utils/EncryptedSubfolderMetadataTest.kt
new file mode 100644
index 000000000000..62f2e2abfd0b
--- /dev/null
+++ b/app/src/test/java/com/owncloud/android/utils/EncryptedSubfolderMetadataTest.kt
@@ -0,0 +1,115 @@
+/*
+ * Nextcloud - Android Client
+ *
+ * SPDX-FileCopyrightText: 2026 Nextcloud GmbH and Nextcloud contributors
+ * SPDX-License-Identifier: AGPL-3.0-or-later
+ */
+
+package com.owncloud.android.utils
+
+import android.content.Context
+import com.google.gson.JsonParser
+import com.google.gson.reflect.TypeToken
+import com.nextcloud.client.account.User
+import com.owncloud.android.datamodel.ArbitraryDataProvider
+import com.owncloud.android.datamodel.FileDataStorageManager
+import com.owncloud.android.datamodel.OCFile
+import com.owncloud.android.datamodel.e2e.v2.decrypted.DecryptedFolderMetadataFile
+import com.owncloud.android.datamodel.e2e.v2.decrypted.DecryptedMetadata
+import com.owncloud.android.datamodel.e2e.v2.decrypted.DecryptedUser
+import com.owncloud.android.datamodel.e2e.v2.encrypted.EncryptedFolderMetadataFile
+import com.owncloud.android.datamodel.e2e.v2.encrypted.EncryptedMetadata
+import com.owncloud.android.datamodel.e2e.v2.encrypted.EncryptedUser
+import com.owncloud.android.lib.common.OwnCloudClient
+import org.junit.Assert.assertEquals
+import org.junit.Assert.assertFalse
+import org.junit.Before
+import org.junit.Test
+import org.mockito.kotlin.doReturn
+import org.mockito.kotlin.mock
+import org.mockito.kotlin.spy
+import org.mockito.kotlin.verify
+import org.mockito.kotlin.whenever
+
+class EncryptedSubfolderMetadataTest {
+    private val sut = spy(EncryptionUtilsV2())
+    private val folder: OCFile = mock()
+    private val storageManager: FileDataStorageManager = mock()
+    private val client: OwnCloudClient = mock()
+    private val user: User = mock()
+    private val context: Context = mock()
+    private val provider: ArbitraryDataProvider = mock()
+    private val key = byteArrayOf(1, 2, 3)
+    private val encryptedMetadata = EncryptedMetadata("ciphertext", "nonce", "tag")
+    private val metadata = DecryptedFolderMetadataFile(
+        DecryptedMetadata(metadataKey = key),
+        version = VERSION
+    )
+
+    @Before
+    fun setUp() {
+        whenever(storageManager.getE2EEVersion(user)).thenReturn(VERSION)
+    }
+
+    @Test
+    fun subfolderOmitsUsersSoWebClientCanInheritRootKey() {
+        doReturn(key).whenever(sut).retrieveTopMostMetadataKey(
+            folder,
+            storageManager,
+            client,
+            USER_ID,
+            PRIVATE_KEY,
+            user,
+            context,
+            provider
+        )
+        doReturn(encryptedMetadata).whenever(sut).encryptMetadata(metadata.metadata, key)
+
+        val encrypted = encryptFolder()
+        val json = JsonParser.parseString(EncryptionUtils.serializeJSON(encrypted, true)).asJsonObject
+
+        assertFalse(json.has("users"))
+        assertEquals(VERSION, json["version"].asString)
+        verify(sut).encryptMetadata(metadata.metadata, key)
+    }
+
+    @Test
+    fun rootRetainsRecipientAndEncryptedMetadataKey() {
+        val recipient = DecryptedUser(USER_ID, "certificate", null)
+        val encryptedRecipient = EncryptedUser(USER_ID, "certificate", "encrypted-key")
+        metadata.users.add(recipient)
+        doReturn(encryptedRecipient).whenever(sut).encryptUser(recipient, key)
+        doReturn(encryptedMetadata).whenever(sut).encryptMetadata(metadata.metadata, key)
+
+        val json = JsonParser.parseString(EncryptionUtils.serializeJSON(encryptFolder(), true)).asJsonObject
+        val users = json["users"].asJsonArray
+
+        assertEquals(1, users.size())
+        assertEquals(USER_ID, users[0].asJsonObject["userId"].asString)
+        assertEquals("encrypted-key", users[0].asJsonObject["encryptedMetadataKey"].asString)
+    }
+
+    @Test
+    fun readingExistingMetadataPreservesSignedRepresentationWithOrWithoutUsers() {
+        val base = """{"metadata":{"ciphertext":"ciphertext","nonce":"nonce","authenticationTag":"tag"}"""
+        listOf("", ",\"users\":[]").forEach { users ->
+            val json = "$base$users,\"version\":\"$VERSION\"}"
+            val parsed = EncryptionUtils.deserializeJSON(
+                json,
+                object : TypeToken<EncryptedFolderMetadataFile>() {}
+            )
+
+            assertEquals(json, EncryptionUtils.serializeJSON(parsed, true))
+        }
+    }
+
+    private fun encryptFolder() = sut.encryptFolderMetadataFile(
+        metadata, USER_ID, folder, storageManager, client, PRIVATE_KEY, user, context, provider
+    )
+
+    companion object {
+        private const val USER_ID = "alice"
+        private const val PRIVATE_KEY = "private-key"
+        private const val VERSION = "2.1"
+    }
+}