Explanation of Article 542
The fundamental principle in debtor companies is that they are based on the personal consideration of the partner; therefore, he is not allowed to transfer his right to a foreigner to become a partner in his place unless the other partners accept it. Similarly, the personal creditor of the partner does not have direct rights over the partner's share in the company to protect the rights of the other partners, except in three cases where the article states that the personal creditor of the partner can satisfy his rights from the partner's share, which are:
The first case is when the personal creditor requests to satisfy his right from the debtor partner's share of the distributable profits. The creditor of the partner may execute on the profits that the partner receives from the company. It is also noted that the personal creditor of the partner can exercise his debtor partner's rights against the company through indirect action. Additionally, the creditor of the partner may impose a precautionary seizure under the company's hand on what the partner has of rights in it, such as his share of the profits.
The second case is when the personal creditor requests to satisfy his right from the partner's share in the company's assets after liquidation. If the company is liquidated, its capital becomes jointly owned among the partners, and the debtor partner has a common part in this money, which becomes part of his private assets. Therefore, his personal creditor in this case can satisfy his right from this part. In all cases, the creditor can impose a precautionary seizure on the partner's share before liquidation.
The third case: when the personal creditor requests the sale of the necessary shares of that partner if they can be sold without harm to the partners to collect his right from the proceeds of their sale. It is noted that the organizer considered the practical need for this third case, as the profits or waiting for liquidation may harm the creditors' rights, and it is not possible to give the creditor a direct right over the share. The article decided that the partner could request the court to sell the share, and the article restricted this by ensuring no harm to the partners. This will result in either ending the company, considering it a withdrawal from the partner, or the partners buying that share, which is the most suitable option for the partners' interest. Therefore, the article gave them priority in purchasing.
Related To
Article 542
A partner’s creditor may demand satisfaction of his debt from said partner’s share of distributable profits or his share of the company’s assets after liquidation. Said creditor may demand the sale of an adequate number of the partner’s shares to satisfy his debt, provided that such sale does not cause harm to the other partners. The other partners shall have preemptive right to purchase such shares.