Generally, directors of a joint stock company (“KSC”) have a broad authority to manage the company, provided that such powers of management are not restricted by the provisions of the articles of association and/or resolutions of the shareholders of the KSC.  However, directors of a KSC may be subject to civil and criminal liabilities for mismanagement and bankruptcy of the KSC pursuant to the provisions of the Law No. 15 of the Year 1960 Regarding the Commercial Companies Law (“CCL”).

Civil Liability as a Result of Mismanagement

Under the CCL, directors of a KSC can be held personally liable for criminal acts as a result of their negligence. This does not extend to all directors but only the director who committed the negligent act or omission. As a result, directors of a KSC can be subject to claims for mismanagement by shareholders and/ or third parties.