When Can You Be Personally Liable for Corporate Debts? A Guide to Rwandan Company Law
Limited liability is one of the greatest advantages of doing business through a company. It reassures investors and entrepreneurs that, in principle, their personal assets are protected from the company's debts. However, this protection is not absolute. Under Rwandan law, there are specific situations where directors and shareholders may lose the shield of the corporate veil and be held personally liable for corporate obligations. Understanding these situations is essential for founders, board members, and investors who wish to manage risk responsibly and avoid unexpected personal exposure. The General Rule: Separate Legal Personality Under Law No. 007/2021 of 05/02/2021 governing companies, a company has a legal personality distinct from its shareholders and directors. This fundamental principle means that the company owns its assets and owes its debts independently. Shareholders are liable only up to the amount of their share capital, while directors act as organs of the comp...