Introduction

Company directors in Kuwait are entrusted with managing corporate affairs, safeguarding assets, and maximizing shareholder value. However, when directors abuse power or engage in mismanagement, shareholders, partners, or creditors may legally intervene. Kuwaiti law offers various mechanisms to monitor directors and enforce accountability. This article outlines these tools and how lawyers can use them to protect clients’ rights.

Director Duties Under Kuwaiti Law

According to the Commercial Companies Law No. 1 of 2016, directors must:

• Act in the best interest of the company and shareholders
• Avoid conflicts of interest and self-dealing
• Maintain accurate records and financial transparency
• Comply with internal bylaws, resolutions, and state regulations

Who Has the Right to Monitor Directors?

Supervisory rights are available to:

• Shareholders (especially minority shareholders in joint-stock and LLC structures)
• Partners in partnerships and closed companies
• Creditors, when financial interests are jeopardized
• Judicial authorities during investigation or liquidation

Legal Tools for Oversight and Accountability

1. Shareholder Inspection Rights

Shareholders may legally request access to board minutes, contracts, and financial reports. Refusal may be contested in court.

2. Judicial Supervision (المراقبة القضائية)

A court may appoint a judicial monitor or assign a lawyer to report on the director’s activities if there is suspicion of misconduct or loss of transparency.

3. Filing a Director Liability Lawsuit

Under Article 301 of the Companies Law, shareholders can sue directors for:

• Misuse of corporate funds
• Fraudulent transactions
• Failure to comply with statutory obligations

4. Removing Directors

By vote in a general assembly or judicial ruling, directors may be removed if they breach fiduciary duties.

Key Legal Provisions

• Articles 281–307 of the Commercial Companies Law: Define director roles, responsibilities, and penalties for violations
• Article 299: Allows for civil claims by the company or shareholders against directors
• Civil Procedure Law: Governs court procedures for investigation and evidence collection

Role of Lawyers in Director Monitoring

Lawyers can support clients by:

• Requesting formal access to financial and administrative reports
• Filing urgent motions for interim judicial measures
• Preparing liability claims or criminal complaints
• Negotiating settlements or board-level resolutions