Board members' liability for the company's asset deficit during liquidation

Abstract

The study addresses the conditions set by comparative legislation for implementing the texts related to the responsibility of the board of directors when a deficit appears in assets in the cases of liquidation and bankruptcy, expressing its opinion on the position of each of them on the related issues, and on the difference that existed between them in this regard, undertaking the task of scientific research to reach treatments and proposals that contribute to finding solutions to such problems, and identifying the shortcomings in the position of comparative legislation regarding the responsibility of members of the board of directors when a deficit appears in the assets of the company under liquidation or bankruptcy.

The legislator has intervened with mandatory provisions to protect all shareholders, third parties, and the state economy from the consequences of poor company management, given that legislation generally stipulates the liability of board members for administrative errors. However, given that management errors become more apparent when a company defaults, is placed under liquidation or enters bankruptcy (insolvency, according to some legislation), the legislature has specifically provided provisions for the disclosure of management errors at this stage or at another time. This study examines their adequacy in deterring those who might deviate from the path of good governance, thereby curbing corruption and ensuring the necessary protection for shareholders, third parties, and the state's economy.