Liability of the manager for the debts of the company

8-1-2009 | IslamWeb

Question:

Assalum Alaikom. I am the General Manager of a company. I was told that when I die, I am still in charge of the accounts payables and any debts of the company till the time of my death. Given the nature of any business, there are always accounts payable on the balance sheet. It is very hard to eliminate all accounts payable. Please note that we do not have any loans from banks. We might owe some partners or suppliers fees for rendering services on a monthly basis.

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Answer:

All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger.

 

If you are the owner of the company, then you are liable for the debts of the company as the Islamic rulings on debts apply to them, and they are of two kinds: debts that are due now and debts that are delayed to an appointed time. It is an obligation on a person who is able to repay the due debts to do so, but it is not an obligation to repay the delayed debts before their deadline.

However, if you are an employee in this company, then you are hired (to do a job) and the rulings of hiring and authorization apply to you. For example, if you (the employee) are authorized to buy something at a delayed payment, then it is the owner of the company who is liable to pay its price in principle, and then it is the agent who is liable for it in the second place, just like a guarantor.

On the other hand, the creditor is entitled to ask (for his right) whoever he wishes among the two persons [the owner of the company or the agent) either when they are alive or after they die. Nonetheless, it is also said that the guarantor is not to be asked unless it is not possible to get the right from the person who is guaranteed (owner of the company). There are other details about the issue but it is not the place to mention them.

Allaah Knows best.