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The Role of Managers in a Limited Liability Company

Al Tamimi & Company


Once you have set up a limited liability company, you would have to appoint at least one manager to be responsible for the management and operation of the company.

You can appoint yourself and/ or your fellow shareholders in the company as a manager or you may wish to employ someone else to carry out this role.

You should note that the person appointed as the manager has full authority to manage the company, unless there are limits on his authority that are set out in the company’s articles of association.

 

Manager's Duties

Other than the general duty to manage the company, a manager's main responsibilities under the law are to:

1.   Prepare the following documents within 2 months of the end of the financial year and to send the documents to each shareholder and the Ministry of Business and Trade:

  • balance sheet and profits and loss account.
  • report on company’s activities.
  • the proposal for profit distribution.

2.   Call shareholders’ meetings:

  • at least once a year within 4 months from the end of the financial year;
  • on request of the shareholders holding at least 25% of the share capital, the auditors or the supervisory council of the company (if there is one).

3.   Call shareholders’ meeting to reinstate the capital or dissolve the company if company loses half of its capital as a result of business losses.

4.   Maintain the register of shareholders and be responsible for the accuracy of its information.

 

Prohibited Acts

A manager should not:

1.   compete with the company’s business or hold a managerial position in a competing company. If a manager does so, he/she may have to compensate the company for any losses that the company suffers due to his/her actions.

2.   have interests in contracts, projects or transactions done for the company other than in construction or public tenders.

A manager would have to compensate the company, its shareholders and others for damages caused by him if he/she does any of the following:

  • cheating.
  • misusing his power.
  • breaching the Companies Law or the company's articles of association.
  • making mistakes in management.

 

A manager can also be liable to imprisonment and/or a fine if he/she:

  • discloses the company’s secrets or intentionally attempts to damage its business.
  • intentionally hinders or prevents the notification or holding of a shareholders’ meeting.
  • makes false statements in the company reports or intentionally omits any statement that the managers are committed to report on.
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