Legal Implications Of The Limited Liability Of The Partner In Single-Member Companies Under Algerian Law

Abstract

This study highlights the protections granted to single-member companies and their creditors, particularly since they are limited liability companies. The legislature has established legal procedures to safeguard the company's capital, ensuring greater financial transparency and stability.

Among these procedures is the precise determination of the capital in the company's articles of association, along with measures to ensure proper subscription and the contribution of both cash and in-kind shares. This guarantees the existence of genuine capital within specified timeframes, while reinforcing the principle of accurate valuation of non-cash contributions and the immediate payment of cash contributions, in order to prevent fictitious contributions and thus protect the company and its creditors.

The mixing of the company's assets with those of the sole member is considered a serious legal violation that may trigger the activation of the sole member's personal and unlimited liability over their private assets. Even if the member does not personally manage the company, they are still subject to a fiduciary duty that prohibits them from using the company's funds for personal purposes. The legislature has identified various actions as exploitative and depleting the company's funds. However, following amendments to the relevant laws, these safeguards have proven insufficient to protect those dealing with the company from the risks of non-payment and insolvency.