Can a CEO of a company be held liable?

The_Librarian

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Scenario - workers haven't been paid for 3 months. (Not us, but somebody in the family).

Can the CEO be held liable and be forced to backpay salaries by selling his house/car/etc and use the proceeds for salaries?
 

Midnights_Ghost

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It's been a while since I studied that but if I remember correctly it will depend on how the company is registered (CC, PTY, PTY Ltd etc)

A quick google search and I found this

Edit: I also believe it may be the on the owner of the business. Unless it's the same person
 

Zarnicate

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This depends on the type of business. This is how I understand it.
Sole proprietor: Yes
Partnership: Yes
Company: No
Closed Corporation: No

Company, Closed Corporation is seen as a legal entity on its own this these can be forced to sell company assets but not force the CEO to sell private assets.
 

Zarnicate

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But either option basically means end of the business/employment
 

Cray

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Scenario - workers haven't been paid for 3 months. (Not us, but somebody in the family).

Can the CEO be held liable and be forced to backpay salaries by selling his house/car/etc and use the proceeds for salaries?
Generally not, if it's a limited company the CEO isn't liable for the debts of the company (unless reckless trading can be proved -that is a CEO continued to trade knowing that debts incurred could not be paid).

https://www.werksmans.com/legal-updates-and-opinions/reporting-obligations-directors-terms-companies-act-no-71-2008-reckless-trading-personal-liability/

Directors are obligated to report financial distress – failure to do so might result in personal liability.
Zarnicate's post is pretty spot-on in general respects..
 

Tman*

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As mentioned, dependant on the type of business it can technically be done.

Liquidation of a company & assets can take a very long time. Dependant on the amount of people, suppliers, landlords etc owed monies to the employees might only get a a percentage in the rand of their outstanding salaries.

That is if there are any assets left at all, it might be very likely there is no positive balance to pay anything.

best bet would be to update CV, start job hunting ASAP and move on.
 

The_Librarian

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Cold comfort.

Thanks for the replies.

Family member is already actively looking for another job.
 

Odracir

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Scenario - workers haven't been paid for 3 months. (Not us, but somebody in the family).

Can the CEO be held liable and be forced to backpay salaries by selling his house/car/etc and use the proceeds for salaries?
Is salaries the only thing on the table (what I mean on the table, is there other debt)?
 

Deadmanza

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Why are they continuing to work after not being paid for 3 months?
The first month I wasn't paid I would **** right off.
 

maumau

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Doesn't the CEO/business have to be sequestrated before they can take personal property?
 

mattrudlles

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Scenario - workers haven't been paid for 3 months. (Not us, but somebody in the family).

Can the CEO be held liable and be forced to backpay salaries by selling his house/car/etc and use the proceeds for salaries?
Is this CEO a shareholder? Or is he merely employed as the CEO of the company?
 

mattrudlles

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This is a good summary on the position of lifting the corporate veil, and holding people liable who otherwise could not be held liable. Such as a CEO for example. Scroll down to the heading "the future" dealing with the new companies act.


Edit: Go and consult with an attorney to get clarity. It'll be a few thousand, and if split between a few other employees it is small sum for peace of mind.
 
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