Legal Liability Where a Manager Exceeds Their Authority or Uses Company Funds for Unauthorised Purposes
Legal liability where a manager exceeds their authority or uses company funds for unauthorised purposes raises three separate questions: Is the company bound by a contract concluded by a manager who exceeded their delegated authority? Can the manager be required to pay damages or return funds they misappropriated? And does their conduct constitute a criminal […]
Liability of the Managing Director and Executive Management for Crimes Committed by Company Employees
The liability of the managing director and executive management for crimes committed by company employees depends on distinguishing management and supervision, civil liability for the acts of subordinates, and personal criminal participation in an offence. An employee may forge an invoice or misappropriate an advance without management’s knowledge; a manager may issue instructions concealing unlawful […]
Does Resignation Exempt a Board Member from Liability for Previous Decisions?
The resignation of a board member does not erase the consequences of decisions in which they participated or acts they performed during their term of office. Conversely, former membership does not create perpetual liability for everything the company does after that membership ends. The legal position of a resigning member depends on the date their […]
The Effect of Recording a Board Member’s Objection in the Meeting Minutes on Their Liability
Recording a board member’s objection to a disputed resolution is an important step in establishing their actual position when the board is called to account. An objection, however, is not an absolute statutory exemption, and the meeting minutes are not conclusive evidence preventing a court from examining the member’s involvement in preparing or implementing the […]
Liability of a Board Member for Resolutions on Which They Were Absent or to Which They Objected
When a company’s board of directors adopts a resolution in the absence of one of its members, or despite that member’s objection, questions arise as to whether civil or criminal liability extends to them. The answer does not depend on attendance or absence alone. It requires an examination of the resolution, the breach attributed to […]
Management’s Refusal to Allow Regulatory Authorities to Inspect Company Books and Documents
Companies operating in Egypt must manage inspections by competent authorities in a manner that combines compliance with legal obligations and protection of documents, data and trade secrets. Refusing to make company books available or delaying their delivery may constitute a punishable violation where the request is issued by a duly authorised person acting within their […]
Obstructing the Convening of a General Meeting by Board Members: The Offence and Its Penalty
The regular convening of general meetings is a fundamental safeguard of shareholders’ oversight of company management. A failure to issue a notice convening a meeting may prevent discussion of financial statements, election of board members, or the adoption of a necessary resolution when the company is in financial distress. Egyptian law, however, distinguishes administrative delay […]
Distribution of Profits or Interest in Violation of the Law or the Company’s Articles of Association: Board Liability
Profit distributions are among shareholders’ fundamental financial rights, but they are subject to the existence of distributable profits, the rules governing reserves and employees’ entitlements, and the company’s ability to meet its obligations. Liability may arise from distributing fictitious profits, breaching the articles of association, or distributing genuine profits in a way that jeopardises creditors’ […]
Recording Inaccurate Information or Concealing Information in Board Reports: Legal Liability
Shareholders’ ability to assess a company’s performance depends on the accuracy of the information presented by its board of directors, particularly financial results, risks, liabilities and related-party transactions. Recording inaccurate information or omitting material facts may give rise to civil, criminal or regulatory liability. The legal characterisation, however, varies according to the type of report […]
When Is a Board Member Civilly Liable, and When Does Criminal Liability Arise?
A board member’s civil liability differs from criminal liability in terms of the source of the obligation, the requirements of proof, and the consequences of each. An investment loss or an unsuccessful decision does not necessarily constitute a criminal offence, whereas exceeding authority or neglecting oversight may give rise to civil compensation if fault, damage, […]
Liability of Board Members and Managers in Egyptian Companies: Violations, Offenses, and Legal Risks in Decision-Making
The powers of the board of directors, executive management, auditors, and general assemblies overlap in the management of Egyptian companies. A single management decision may have civil, criminal, or regulatory consequences. Nevertheless, an unsuccessful commercial decision is distinct from one that breaches the law or is tainted by fraud. Establishing the liability of a board […]
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