A limited liability company (LLC) is one of the most common forms of business organization. This is primarily due to its relatively simple incorporation process, low minimum foundation capital and flexible organizational structure. For these reasons, this type of company is most frequently chosen by small and medium-sized enterprises, as well as foreign investors seeking to start business activities in the Republic of North Macedonia.
The term „LIMITED LIABILITY COMPANY“ raises the question of whom the limitation of liability actually applies to: the shareholders as owners of the company or the managers who conduct and manage the company’s affairs.
According to the Law on Trade Companies, shareholders are not liable for the company’s obligations. This means that for obligations undertaken by the company in the course of its regular business operations, only the company itself is liable with all its assets. The company’s creditors cannot seek satisfaction of their claims from the personal assets of the shareholders. A shareholder’s risk is limited solely to the amount they have undertaken to pay into the company’s foundation capital. However, there are several exceptions in the law and specific situations in which shareholders may incur personal liability, or even unlimited joint and several liability.
Conversely, while a manager may also be a shareholder, their liability primarily arises from their managerial role and statutory authority to represent the company. The legislator provides several legal mechanisms establishing the personal and unlimited liability of managers in cases of unlawful, negligent or disloyal conduct. This liability may be civil, administrative (misdemeanor) or criminal.
A manager’s primary duty is to conduct the company’s affairs with the diligence of a prudent and conscientious merchant, safeguarding the company’s business secrets. This implies acting with the care expected of a reasonably diligent professional: the manager must act in an informed manner, exercising reasonable care and the level of skill expected of someone in their position. Any deviation from this standard, whether intentional or resulting from negligence, may result in personal liability.
The manager is personally and unlimitedly liable for any damage caused by acting contrary to the law, other regulations or the company’s own internal policies. Where there are several managers, they are jointly and severally liable towards the company and third parties.
Liability may arise in several situations, including:
- When the manager performs activities falling within the company’s scope of business for their own account or on behalf of another person; when the manager is a shareholder, a member of a management body, a supervisory board member, or a controller in another company with the same or similar business activities; or when the manager carries out business activities for their own or another’s account within the company’s premises.
- When the manager causes damage to the company through actions or omissions, for example by concluding detrimental contracts, failing to pursue business opportunities or improperly disposing of company assets;
- when damage is caused to the company, its shareholders or its creditors due to inaccurate or negligent maintenance of the share register or incorrect data entry during company incorporation;
- When the manager acts on behalf of the company without proper authorization, or contrary to the provisions of the law and other applicable regulations and the Founding Act.
Therefore, the role of manager carries significant personal responsibility. Managing a company requires careful conduct and continuous monitoring of statutory obligations. When necessary, consultation with legal and financial professionals is also required. While the limited liability of shareholders is a key advantage of this corporate form, it ceases where unlawful or negligent conduct begins.