Company Manager Liability in Omani Law: Powers and Accountability

Being a company manager is not an honorific without consequences. Omani law holds the manager personally answerable for breaches of the law and the constitutive documents and for errors of management, and the liability can reach personal assets. Said Ibrahim Ambusaidi Advocates (SIA), a law firm in Muscat, explains the limits of the manager’s authority in a limited liability company and when accountability bites, under the Commercial Companies Law issued by Royal Decree 18/2019.

What are the manager’s powers and their limits?

A limited liability company is managed by one or more managers, partners or otherwise, appointed by resolution of the partners assembly under Article 263. Managers may take all steps needed to achieve the company’s objects unless the constitutive documents restrict them, under Article 264 — but any resolution restricting managers’ powers is only effective against third parties from the date it is registered with the Registrar and published. A third party dealing in good faith with the manager in the ordinary course of the company’s business binds the company, unless the restriction was registered and published.

Which acts are prohibited without authorisation?

Article 267 prohibits managers from certain acts unless expressly authorised in the constitutive documents or by a unanimous resolution of the partners, including: making donations other than small customary ones required by the business; selling all or a substantial part of the company’s assets; mortgaging the company’s assets except in the ordinary course of its business; guaranteeing third-party debts outside the ordinary course; and releasing the company’s debtors, settling claims, or agreeing to arbitration. Article 266 further obliges managers to inform the partners assembly of every conflict between their interests and the company’s in transactions they conclude.

When is the manager personally liable?

Managers of a limited liability company are subject to the same liability rules as directors of a joint stock company, and any provision in the constitutive documents or a later agreement providing otherwise is void, under Article 265. Managers are liable individually or jointly, as the case may be, for breaches of the Law and the constitutive documents and for errors of management; where several managers took part in the same act, the court apportions the compensation between them. A liability claim must be brought within five years of learning of the harmful acts.

Liability intensifies at liquidation: from the date of dissolution the managers’ powers end, and anyone who acts in the company’s name afterwards is answerable for it from personal assets, under Article 42 of the Law.

How does a manager protect himself?

Protection starts with documentation: written partners assembly resolutions for every act caught by Article 267, a recorded disclosure of any conflict of interest, minutes showing the decision was taken with care and on adequate information, and financial statements prepared and sent to the partners on time. A manager who documents meets a liability claim with files, not memory.

Key facts

• The manager is appointed and removed by the partners assembly under Article 263, and restrictions on his powers bind third parties only once registered, under Article 264.
• Fundamental acts such as selling or mortgaging the company’s assets or giving guarantees require express authorisation under Article 267.
• Disclosing conflicts of interest to the partners assembly is a statutory duty under Article 266.
• LLC managers’ liability follows the rules for joint stock company directors, and cannot be contracted away, under Article 265.
• Liability claims against managers are time-barred five years after knowledge of the harmful act.
• Acting for a dissolved company creates personal liability for the actor, under Article 42.

When to involve a lawyer

Involve a lawyer if you are a partner harmed by a manager who exceeded his powers or contracted for his own benefit, a manager facing a liability claim or wanting decisions insulated before they are taken, or a third party whose counterparty company now disowns a contract by pleading its manager’s lack of authority.

At Said Ibrahim Ambusaidi Advocates we bring and defend manager liability claims, review delegation structures and constitutive documents, and represent companies, partners and managers before the courts across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.