When Board Members Are Liable for Company Debts
Art. 299 KSH: if enforcement against the company proves unsuccessful, the creditor may seek payment directly from board members — with their entire personal assets.
Prerequisites for Liability
Existence of the company's obligation (enforcement title) and unsuccessful enforcement.
Grounds for Exclusion of Liability
- Bankruptcy petition filed in due time (30 days)
- No fault in failing to file
- Creditor suffered no damage
- Restructuring proceedings were opened
Scope of Liability
Entire company debt including interest and costs. Joint and several liability among all board members.
Statute of Limitations
3 years from learning of unsuccessful enforcement, max 10 years from the event.
Preventive Protection
Monitoring liquidity, analyzing insolvency indicators, prompt bankruptcy or restructuring filings. D&O insurance as additional protection.
Facing a claim under Art. 299 KSH? Get in touch — I'll prepare a defense strategy or preventive audit.