Question: My brother and I are partners in a limited liability company and each of us owns 20 per cent of the company’s shares. The problem is that the company’s manager does not inform us of the company’s budget, and he also claims that the company does not make profits, but rather large losses. Are we legally entitled to dismiss the manager and appoint another one? What are the legal procedures to review the company’s budget? Please advise
Answer: You have the right to dismiss the manager as per the terms of the Memorandum of Association of the Company or the contract through which he was appointed. If they do not provide any such term, he can be dismissed by a decision of the general assembly or by filing a justified suitcase in front of a court if he, for example, did not prepare the annual balance sheet, the profit and loss account, the annual report on the activity and financial position of the company or he commits any fraudulent acts.
Article 85 states that unless the Memorandum of Association of the Company or the contract appointing the manager provides otherwise, the manager shall be dismissed by the decision of the general assembly, whether the manager is a partner or not. Also, a court may dismiss the manager at the request made by one or more partners in the company if the court deems that such dismissal is justified.
Regarding the second part of the question, it may be noted that the budget is usually checked by the general assembly when it convenes at least once a year or at the request of one or more partners holding at least 10 per cent of the company’s capital as per Article 92. The Limited Liability Company shall have a general assembly consisting of all the partners.
The general assembly shall be convened by an invitation from the manager or the board of managers at least once a year within the four months following the end of the fiscal year of the company. The manager or an authorised manager shall invite the general assembly to be convened at the request of one or more partners holding at least 10 per cent of the company’s capital.
To review the accounts, you may send a written request to the company for that purpose or to invite the general assembly to convene as mentioned above. Article 27 states that every partner or shareholder in any company may, based on a written request he submits, obtain a free copy of the last audited accounts and of the last report of its auditor and a copy of the accounts of the group if it is a Holding Company. The Company shall respond to such request within 10 days from the date of its filing.