UAEssentials | Ask The Law

Employees not liable to settle company’s debts

  • Published: 18:47 February 16, 2012

SUBJECT
Employment

I need some clarification regarding my signing purchase orders on behalf of my company. I was employed as operations manager in a Dubai company, which had three more managers in different departments. In the past four months, the company suffered some big losses and the signatory (the general manager who had power of attorney and was the signing authority) fled and the company was sealed by the courts. On occasion, I had to sign purchase orders. Later, a creditor contacted me to claim the money my company owes them. After a couple of follow-ups, they gave the case to a law firm (recovery agents), which started threatening to put me in prison if I didn’t settle the debt. I explained to them that I was not the owner, partner or signing authority of my company. Apart from this, my company is a Limited Liability Company (LLC). When my visa expired I decided to exit the country, but was stopped at the airport. The police told me that I cannot leave as I had a case against me. I was sent to jail. I was released after I paid the money to the recovery agents. My questions are: Is an employee of a LLC who signs purchase orders liable to make the payment if the company closes down or the owners flee? What is the legal way to permanently resolve this issue? There are more suppliers who are owed money by my former company.

 I would like to clarify to the questioner that the police must have taken action against him with regards to a bounced cheque or trust receipt signed by the questioner in favour of the complainant, but otherwise, the police has no legal right to pressure anyone with regard to a debt for a certain party since such cases are the jurisdiction of the competent court. In case of a bounced cheque or trust receipt, the public prosecution can be approached to settle the matter or to apply for bail until the matter is presented to the competent court. As for the question on parties who are pursuing him in person for the payment of the company’s debts, if the questioner is not the guarantor of such debts, he shall not be obliged to pay the said debts from his own account, but the creditors can demand that the debtor (the company) settle the debt.

 

Questions answered by Advocate Mohammad Ebrahim Al Shaiba of Al Shaiba Advocates and Legal Consultants.