Introduction In limited liability companies, the manager is considered the central figure in managing the company’s business and achieving its goals. However, this authority is countered by legal and ethical responsibilities toward the company, the partners, and third parties, in accordance with the provisions of the Kuwaiti Commercial Companies Law.
First: Appointment and Powers of the Manager
The limited liability company is managed by one or more managers appointed in the company’s articles of association or by a decision of the partners in the general assembly. The manager may be a partner or an external person. If the company’s contract does not specify the manager’s powers, the law grants them full authority to carry out the actions and procedures necessary to achieve the company’s objectives.
Second: Manager’s Liability Toward the Company and Partners
- Liability for Mismanagement or Law Violations: The manager is held personally liable toward the company, partners, and third parties if they commit a violation of the law, a breach of the company’s contract terms, or improper management.
- Commitment to Fulfilling Obligations: The manager may not manage businesses that conflict with the company’s interests or cause damage to the company or partners as a result of negligence or poor judgment.
Third: Limits of Powers and Restrictions Imposed on the Manager
The law imposes important restrictions on the manager if the company’s contract does not state specific powers. Without the approval of the general assembly of partners, the manager may not:
- Enter into the management of a company that competes with or has a similar activity to the company.
- Execute contracts on behalf of the company for their personal benefit or for other parties.
- Perform activities similar to the company’s activity for a third party. This restriction ensures that the manager’s interests do not conflict with the company’s interests.
Fourth: Penalties and Possibility of Dismissal
A manager may be dismissed from their position by a court ruling at the request of one of the partners owning 25% of the company’s shares, if it is proven that they:
- Committed forgery or fraud.
- Caused a gross error damaging the company.
- Violated the provisions of power restrictions as per Article 106 of the law.
Fifth: Manager’s Liability Toward Third Parties According to the law, the manager is personally liable toward third parties in the following cases:
- When they are required to pay the company’s obligations if the debtor proves that the manager was the real factor in making the decision responsible for the disputed actions.
- If the manager shows bad faith or severe negligence leading to damage to a third party.
Sixth: Effect of Waiver or Resignation
Even after the manager’s resignation, they may remain liable for the actions taken during their tenure if those actions were illegal or harmful and obligations related to their period of work appear.
Conclusion The manager’s responsibility in limited liability companies includes executive and administrative duties alongside legal accountability in case of violation or mismanagement. This responsibility aims to protect the company, its partners, and third parties from any actions that may harm their interests, imposing a balance between the manager’s authority and performance obligations under Kuwaiti law.
Frequently Asked Questions
What is the liability of the manager of a limited liability company according to Kuwaiti law?
The manager’s responsibility consists of managing the company’s business in good faith and in accordance with the provisions of the Commercial Companies Law and the articles of association. They are legally liable if they commit a violation of the law, misuse their powers, or cause negligence or a gross error that harms the company, partners, or third parties.
Is the manager of a limited liability company liable for the company’s debts?
The original rule is that the company’s debts fall on the company itself. However, the manager is personally liable toward third parties if it is proven that they acted in bad faith, committed gross negligence, or were the direct cause of taking illegal decisions that led to damaging the creditors.
What are the restrictions imposed on the powers of the manager of a limited liability company?
The manager may not, without the approval of the general assembly of partners, practice an activity competing with the company, execute contracts for their personal account or for the benefit of others, or exploit their position to achieve a private benefit, in order to prevent conflict of interest and protect the company’s rights.
Can the manager of a limited liability company be dismissed and when?
Yes, the manager may be dismissed either by a decision of the partners or by a court ruling at the request of a partner owning at least 25% of the company’s shares, if it is proven that they committed forgery, fraud, a gross error, or a violation of the power restrictions stipulated in the law.
