LLC Management: Rights, Obligations, and Comparative Analysis

This report provides a comparative analysis of the rights and obligations of management in Limited Liability Companies (LLCs) in Kuwait and Turkey. The report examines the legal frameworks governing LLC management in both countries, including the Kuwait Companies Law and the Turkish Commercial Code. It details the appointment, dismissal, powers, and limitations of managers, as well as their obligations to the company, partners, and third parties. The analysis highlights key differences, such as the degree of obligation to treat shareholders equally, and similarities, like the non-compete obligations of managers. The report also discusses the liabilities of managers under each legal system, including penalties for breaches of duty. The conclusion emphasizes that both legal systems aim to ensure the attainment of company objectives and protect shareholder interests, with a focus on the managers' actions and decisions for the company's success.

Running Head: RIGHTS AND OBLIGATIONS OF MANAGEMENT IN LLC 1
COMPARISON IN RIGHTS AND OBLIGATIONS OF MANAGEMENT LLC IN
KUWAIT AND TURKEY
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Limited Liability Companies in Kuwait
Management of the Limited Liability Company
According to article 103 of Kuwait companies Law, the company shall be managed by
one or more managers, appointed by the company contract from among partners or third parties.
Article 104 stipulates the conditions for the dismissal of the manager through the court ruling at
the request of the partner(s) with one-quarter of the membership interests in the capital, for the
reasons listed below (Emir of Kuwait Al Sabah, 2017):
i. Violation of limitations and scope of work as set by Article 106
ii. Commits an act of fraud
iii. Commits error is resulting in damages.
Article 105 outlines the powers and obligations of the managers in LLC as by default having
the power to carry out the tasks and actions necessary to the attainment of the company’s
objectives. It further expounds that the manager is jointly liable towards the company, the
partners and third parties for any breach of company contract and mismanagement. Article 106
explains the limitations of the manager ((Emir of Kuwait Al Sabah, 2017). He/she unless
otherwise directed by the company contract or through directives of the general meeting of
partners, shall not assume management of competing company with similar objectives, or enter
into a contract on his or third party’s behalf, or carry out any activity that is similar to the
activities of the company.
Limited Company in Turkey
Management of Limited Liability Company
The management of LLC is regulated under articles 623 to 630 of the Turkish Commercial
Code No. 6102, in which there is a management and representation scope of the company.
According to TCC, all the shareholders, the natural organ principal, of the company are per se
managers, has been abandoned and the elected organ principal adopted (ADMD Law Office
Orhan Yavuz Mavioglu, 2007). The manager may be appointed during incorporation or
afterwards in the general assembly. It further explains that the management and representation
may be left to a shareholder or non-shareholder persons that have been elected. However,

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management and representation cannot be entirely left to the third party; at least there must be
one shareholder with the same rights of management and representation.
In accordance to TCC, managers and other persons responsible for the company’s
management are obliged to perform their duties with utmost diligence and to protect the interest
of the company guided by the principle of good faith. Both managers and shareholders have an
equal obligation to treatment. Within this scope, managers must realize equal actions for
shareholders under equal conditions. Nevertheless, in exception of some shareholders having
preferential rights on the pre-emptive right, then inequality condition is created. Therefore the
manager is deemed to have no equal obligation on treatment (Bereket & Baltaci Law Farm,
2015). Article 626/2 of the TCC, regulate non-compete obligation of managers. Under this,
managers and other persons that are responsible for the management of the company shall not
undertake activities that compete with the company. The provision is not mandatory as it can be
agreed during incorporation or through shareholders’ approval.
Article 625 of the TCC, provide for non-transferable duties and authorities of the managers
which relate to the execution and formation of the organisation and the management units of the
company. Managers’ liability is as per Article 644 of the TCC, Article 549 on illegality of the
documents and declarations therein, Article 550 on wrong declarations on capital and the
knowledge of the insufficiency to pay, Article 551 citing corruption in pricing, and Article 553
controlling the liability of incorporators, board of directors, managers, and liquidation officers,
shall be equally applicable to LLC managers (Erdem & Erdem, 2013). Accordingly, in violation
of Article 549-551, managers are subject to penalties set under Article 562. Further, the legal
representatives of LLC are liable for defaulted tax payment and other liabilities that are not
recoverable from the company.
Differences and Similarities between LLC in Kuwait and Turkey
LLC in Kuwait managers has a higher obligation to treatment compared to Turkey where
managers and shareholders have an equal obligation to treatment. The company’s law in Turkey
gives managers to exercise diligence and carry out their duties with the utmost good faith. In
Kuwait, unless otherwise stipulated by the company contract or under direct authorization by the
shareholders during the general assembly, managers are supposed to do what pertains to the

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attainment of the company’s objectives. Under Turkish company Law, the must be at least one
representation of the shareholders in the management, whereas under Kuwait Law the company
can be managed entirely by the third party. The main objective of both company laws is to
ensure attainment of the company’s objectives and shareholders interest. Managers are expected
to perform those duties which steer the company in the direction of success. The managers in
both countries LLC have limitations of not engaging in any activity which compete with the
interests of the company. Unless otherwise authorised by the shareholders or at the incorporation
level.
Conclusion
We can conclude that both laws work for the betterment and attainment of the company’s
main objective. The success of any company is vested in the managers’ actions and decisions.
The LLC laws all meet at a point of ensuring that management rights and obligations work for
the betterment of the company’s future. The law has also ensured adherence by providing for
liabilities on defaulting of a wrong decision made. Although there are differences in management
rights and obligation of limited liability companies in both countries, they are not punitive and
are acceptable and applicable.

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References
ADMD Law Office Orhan Yavuz Mavioglu. (2007). Turkey forms of doing business. Guide to
European Company Laws. Retrieved from: www.admdlaw.com
Bereket & Baltaci Law Farm. (2015). Regulations of Limited Liability Companies (LLC) in
Turkey. Retrieved from: www.files7.webydo.com
Emir of Kuwait, Al Sabah. (2017). Council of Ministers Law No. 15 of 2017 Amended
Provisions of Law No. 1 of 2016 on the Promulgation of the Companies Law. Official
Gazette. April 26, 2017. No.1337(63)
Erdem & Erdem. (January 2013). Managers in limited liability companies under the Turkish
Commercial Code No. 6102. Publications Newsletter. Retrieved from: www.erdem.av.tr