I am a partner in a limited liability company and share in the company is 30 per cent. For two years, I have not received any profits, and I have not been informed of the company’s budget, and the manager states that the company does not achieve profits, but rather large losses. I asked him to liquidate the company or buy my share and I would leave the company, but the manager and the rest of the partners preferred to stay quiet. My question: what is the appropriate action to take against the partners, and do I legally have the right to file a lawsuit to liquidate the company? Please advise.
Answer: To answer such question, I would advise the questioner that:
Regarding liquidation, Article 308 of the Commercial Companies Law no.32 of 2021 states that (If the losses of a Limited Liability Company reach half of the capital, the managers shall refer the dissolution matter to the general assembly of the partners. The dissolution decision shall be passed by the majority prescribed for amending the Memorandum of Association of the Company. 2- If the losses reach three quarters of the capital, the partners holding one quarter of the capital may request to dissolve the Company.) And Article 314 of the same law states that (Unless the Memorandum of Association or Statute of the Company provides for the method of liquidation or the partners agree otherwise upon the dissolution of the Company, the provisions of this Decree-Law shall apply to the liquidation of the Company.)
Based on the above, you should follow the methods stated in the memorandum of association or the statute of the company or the partner’s agreement to request for liquidation otherwise liquidation will be rejected by court. But if the losses of the company reach three quarters of the capital, then you have the right to file a case to request to dissolve the Company.
From your part, you can sell your share to a third party since the partners refused to buy it. For this purpose and as per Article 80 of the above law, you shall notify the other partners through the manager of the Company of the assignee or the purchaser and the terms of the assignment or sale. The manager shall notify the partners thereof forthwith upon the receipt of the notice. If 30 days passes, from the date of notifying the manager of the agreed-upon price, without the partner’s exercise of the pre-emptive right, the partner shall be free to dispose of his membership interest.
In all cases you must file a suitcase in front of the court to request for your profits for the past 2 years in case the partners refuse to give you such profits amicably.