One of the main duties of the General Assembly “Annual Meeting” of the shareholders in joint stock companies, is the issuance of a very important “Resolution” that aims to absolve all Directors in the company from any responsibility in relation to what they have done during that specific year.
This “Resolution” is normally issued, as part and parcel of their other agenda for the “Annual Meeting” of the company. The mentioned “Resolution” is very important because it absolves members of the “Board of Directors” of the company from all legal liabilities whatsoever. It (the Resolution) works as a certificate of good conduct and excellent behavior issued by the shareholders to the members of the Board of Directors.
However, such a “Resolution” shall not give any immunity in cases of gross negligence or criminal offences. In relation to this “Resolution””, we have to distinguish at this juncture, between the civil liability of the members of the Board of Directors and likewise their criminal responsibility. In relation to civil liability, the “Resolution” absolves members of the Board of Directors from the responsibility in relation to all acts exercised during their work, except acts of gross negligence. This means the “Resolution”, legally speaking, gives partial release and not full and complete release. Tort-feasors shall not rejoice and assume that they are not questionable for their tortuous wrongdoing and malpractice. I think this is very fair for the company and all members of the Board Directors.
In connection to what we are saying here regarding the responsibility of the members of the Board Directors of the company, an interesting question arises, that is to say for how long this responsibility follows and chases (the erring) member of the Board of Directors?
In other words, can a shareholder or a third party lodge a claim of negligence versus a member of the Board of Directors or all members of the Board of Directors after, say, five or six years? As mentioned earlier, the civil right to sue in cases of gross negligence is time-barred after one year from the date of the “Resolution” absolving members of the Board of Directors from liability.
This prevents members of the Board of Directors from being constantly under the dreadful impression that they can be sued at any time during their life. Nobody would like to be under such an impression, and this is why the Legislature closes the civil right after one year from the date of the “Resolution”.
But, this is not the end of the matter. There are points to be closely considered. The one-year limitation principle applies only if the shareholders issue the “Resolution” absolving members of the Board of Directors. In case there is no such “Resolution”, for any reason whatsoever, the limitation period shall be extended for a longer period of five years. As we can see, this is indeed a big difference because the one-year limitation period goes to five years, in case there is no “Resolution” by the shareholders to absolve the Board Directors. Now let us turn to the criminal responsibility of the members of the Board of Directors. Basically the “Resolution” cannot and shall not be taken as absolving members of the Board of Directors from the criminal responsibility, if any. Having stated this basic rule now, this question arises. Are they (the criminal responsibilities) time-barred also like the civil rights? In brief, the answer is No. This is because the criminal responsibility is a matter of public interest, whereas the civil right is a matter of personal interest.
I have to stress here that, this is not the only reason or difference between the criminal responsibility and the civil right; however, discussing this issue in details will take me out of the concerned issue under discussion. Due to the public interest and other reasons, the concept of time-limitation is not applicable in criminal cases. Any aggrieved person could prosecute any member of the Board of Directors at any time, for any offence committed by him during his membership tenure.
Offenses to be committed by members of the Board of Directors are unlimited and uncountable. However, the most common offences could be criminal breach of trust, counterfeit, forgery, false information…. etc. According to the Companies Law and other related laws, criminal offences against members of the Board of Directors are not barred unless the “public proceedings” falls or becomes of no existence. This means, as long as the public proceedings are maintained, the criminal responsibility continues endlessly.
It would be interesting to mention that one of the ways and means of waiving or ending the criminal responsibility could be through the process of what is called (the Noelle Prosequi, legally speaking) and according to this rule the prosecutor general or the attorney general could ask the concerned court to stop any or all criminal proceedings against any person on the basis of public interest.
Normally, this right should be exercised during the preliminary stage of the case before the concerned court and, by all means, before closing the case for final judgment by the court. The law gives this unquestionable authority to the prosecutor general or the attorney general who should exercise such authority only when public interest demands.
This discretion should not be used to cover-up mistakes of certain individuals and to give them a chance to escape the law. There should be a certain balance between public interests and private interests and public interests shall always prevail when applying this golden rule. By all means, criminals must be taken to justice…
Dr . AbdelGadir Warsama Ghalib
Founder & Principal Legal Counsel
Dr.AbdelGadir Warsama Consultancy
E-mail : awarsama@warsamalc.com
