Dr. AbdelGadir Warsama Ghalib
A commercial company normally enters into contracts for different transactions and such valid contracts shall be respected, honored and executed by the company. The company shall be discharged from its legal obligations only after full performance of all provisions as stipulated in the contract. In case, of failure, non-performance or any breach committed by the company, the aggrieved parties \ creditors have a claim on the assets of such company. They shall, also, have a legal claim on the private assets of any partner in the company at the time of the subject-matter contract. As clear, the legal liability here goes to both, the company as well as the partners therein.
As per Company Laws, all partners in the company shall jointly be liable towards the creditors of the company. Having said that and based on this golden rule any insider agreement between the partners, to the contrary, shall not be valid towards third parties. Such agreement, if any, shall be void ab initio and of no effect at all.
I have purposely pin-pointed this important issue, as some company partners are not aware of this obligation and could be taken by surprise when creditors ask for their dues. All partners shall always be vigilant and careful about their joint responsibility and related obligations, otherwise they may face unpleasant experiences and hard times. Let’s be optimistic and hope the contrary.
The above mentioned is the rule for current incumbent partners, however, if new partners joined on board, they shall instantly be liable jointly hand in hand with other partners to meet the financial obligations of the company. The liability of each new partner is up to his \ her equity shareholding in the company which will be calculated on pro rata basis. The liability of each partner goes-up to the extent of his \ her property, to meet the preceding and subsequent obligations of the company, and any agreement to the contrary shall have no value or effect towards third parties. No side agreements and the provisions of the law shall prevail..
Likewise, it would be important to mention that, if any partner withdraws from the company, he \ she shall not be liable for any obligations accruing subsequent to the proper publication of his withdrawal from the company. And, if any partner assigns his company shares, he \ she shall remain liable for the obligations towards creditors unless the assignment under question has been appropriately approved by all concerned..
The private property \ assets of the partner shall not be subject to execution in lieu of to the obligations of the company, unless there is a final Court decree against the company. In this respect, with the final Court decree in hand, the first execution steps shall be taken directly against the company and thereafter if the company fails the partner(s) shall be asked to pay from his private assets.. The Court decree against the company suffices for execution by the company and, also, the second in line who is the partner(s).
Companies are obliged to meet and perform their obligations. Likewise, partners are also under such obligation and if a partner fails to honor any obligations, the company may take steps to claim appropriate compensation, as and when required..
Being a partner in a company, is your choice and you are advised to work hard with all other partners so as to take the company for high profits and success. All partners, including you, will rejoice and enjoy such good yields. However, at the same time, as partner, you are required to share loses and grievances. Both, success and failure, could happen to any company. There is no exception in this respect and whatever happens all partners should be ready to grab the profits and or pay the loses even from their private assets…