Questions & Answers
Liability of Finance Manager for bank loans of the company
My ex-colleague was an employee in a Sharjah Hamriya Free Zone entity owned by an Indian expatriate. During his tenure as Finance Manager, he was a co-signatory to bank cheques.
He has not signed any guarantee cheques or loan agreements with banks except as a witness to the document signed between the bank and the owner. He has resigned in Dec 2015 and since then the owner of the business has run away from the UAE.
Now my colleague is under threat from the banks which have provided banking lines to the entity that he will be sued as he was also responsible as Finance Manager of the entity.
Want to know can the banks include my colleague as a party to the case? If yes, what would be my colleague's liability?
Can the bank file a criminal case & enforce a travel ban on my colleague?
Dear Questioner,
Your ex-colleague must recall all the actions he made and all the documents and agreements he signed during the period of employment that put a liability over the company and himself to know the limits of his liability towards such loans and the level of seriousness of such threats from the banks.
In general, an employee of the company - even at the CFO level - is responsible for his actions towards the company itself, its board of directors and its shareholders. However, if an employee misuses his powers or performs any act of misconduct, he may be legally liable as well as in cases where he acts as a guarantor for loans or other forms of bank facilities.
I would highly recommend your friend to consult a specialized legal advisory to define the levels of threats he personally has based on his role and his actions during the term of employment.
Answering your questions:
- Yes, the bank can include your friend as a party in the case. His liability remains limited to his actions and the documents he signed.
- Yes, the bank can start an application to impose a travel ban on your friend and the court may accept such request and may reject it.
If you would like to be connected with a specialized legal adviser please get in touch with me through aelnaggar@lkmbgroup.com
Best regards,
Ahmed Elnaggar
