When may a judgment or order be issued to arrest the authorized manager in limited liability companies in Oman?

In the bounced cheque cases and during the judgement execution stage, the authorized manager may be surprised by arrest orders even though both the cheque and judgment are related to the company’s activities, not the manager personally. Such orders sometimes force the manager to pay sums of his own money to avoid the consequences of those orders.

Why the person who signs a bounced cheque is imprisoned although the cheque is issued by the company and relates to its commercial transactions?

In the bounced cheque lawsuit, the plaintiff requests the court to obligate the accused/defendant, who signed the bounced cheque on behalf of the company, to pay the value of the cheque. Suppose the court convicts the accused/defendant of the crime of issuing a cheque with no existing balance; in that case, the court shall accept the plaintiff’s request based on the last paragraph of Article 356 of the Penal Code, which reads:  “ … In all cases, the court shall oblige the convict of the crime to pay the value of the cheque and expenses incurred by the beneficiary, on the basis of a complaint by those concerned ”

In lawsuit No. 409/2021, the Supreme Court canceled the Appellate Court judgment which convicted the person who signed the cheque without ordering him to pay the value of the cheque. The Supreme Court stated that the Appellate Court violated Article 356.

Is the authorized manager obliged to pay the amounts awarded in the judgments issued against the limited liability company?

Although the authorized manager is not responsible for the debts of the limited liability company, the execution judge issues arrest orders against the manager as a means of forcing him to settle the company’s obligation according to Article 421 of the Civil and Commercial Procedure Law, which reads: “In case the debtor is a private juristic person, the order of detention shall be issued against whoever is empowered personally to take such decision to abstain from implementing the judgment or the order.”

 

S&A Law Firm supports the clients in finding the best strategies to address bounced cheque claims and detained orders that company managers may face in Oman.

 

S&A Law Firm