B.L Final 2 - L

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B.

L final 2 - Lecture notes 5

Course: Business Law

University: Addis Ababa University

Info

Limited partnerships are formed usually to raise capital for business startups oracquisitions
where a hands-on management role is not required of the individualinvesting partner.In Joint
Venture, all partners have the status of managers in the absence of appointed manager(s).
Consequently, a partner who manages the joint venture will be fully liable(Articles 275(2) and 276 of the
Commercial Code). In addition, every partner should deal with third parties in his/her own name (Article
276 (5) of the Commercial Code).Similarities between the 4 forms of partnerships:-Minimum of 2
people is required to start a partnership form of organizationAt least 2 people must pool resources to
start a partnership firmThere is unlimited liabilityAll partners are jointly and severally responsible for
all activities carried out by thepartnershipEvery partner has a right to take part in the management of
the business. Therefore,the rights of ownership and control are jointly held by the partnersThere is
sharing of profits and losses. The partners share the profits according to theproportions written in the
partnership agreement. In case the business faces loss, itwill be shared proportionally as wellEvery
partner must make a contribution, which may be in the form of money, debts,other property or skill2.
Discuss the difference and similarities between the two forms of companies in Ethiopia The two
forms of companies in Ethiopia are Share Companies and Private LimitedCompanies (PLC). Share
Companyis a company whose capital is fixed in advance and divided into shareand whose liabilities are
met only by the assets of the company.The members shall beliable only to the extent of their share
holding.Minimum capital requirement for a share company is 50,000Birr and itcannot
havemembers less than five and theirContribution is in only in cash form.

InPrivate Limited Company members are liable only to the extent of


theircontributions.These contributions can be in cash, skill, property, and use of property. TheMinimum
capital requirement is 15,000Birr involving a minimum number of two andmaximum number of fifty
members. Private limited company is always commercial inform and The Company shall not issue
transferable securities in any form.In share companies there is easy transfer of share ownership, while in
Private LimitedCompany,shares are not easily transferable. Other Differences:-A PLC is managed by 1
or more managers while Share Company is managed bydirectors whose minimum number shall be
3While a share company can invite public to subscribe to its shares, a PLC cannotgo to public to raise
its capital. A share company which goes to public to raise itscapital is required to file a prospectus
while a PLC is exempt from thisrequirement because it cannot invite public to subscribe to its
capital.Similarities:-Both have limited liability. The liability of each member or shareholders is limited.
Thismeans that if a company faces loss under any circumstances, then its shareholders areliable to sell
their own assets for payment.3. Discuss the difference and similarities between partnership and
companies in Ethiopiaconsidering their general nature.Partnerships form when two or more persons
agree to carry on a business and share the profits& losses mutually.A company is an association of
persons who came together for a common objective and shareits profit and losses. Difference between
partnership and companiesPartnerships are created based onindividual agreements (contractual
activities) between thepartners. There can be a voluntary registration but it is not necessarily required
or it is notcompulsory. The management of concern in partnership is the partners themselves. In terms
of

liability there is unlimited liability which means that liabilities of the organizations are alsoliabilities of
the partners and also creditors can have claim against both the partnership andmembers assets. In
the event of dissolution of the partnership firm, there are no legalformalities.Whereas
companies are organizations which exist and arecreated by incorporation under theCompanies
Actindependent of the participators and depend up on capital resources, they arealso called an
artificial person having a separate identity, common seal and perpetualsuccession.
Registration is obligatory and necessary. The management of concern in companiescan be board of
directors. In terms of liability there is limited liability which means that liabilitiesof the organizations do
not extend to the owners or liability is only limited to organizationalassets. In the event of dissolution of
the company there are legal formalities to follow to windup the dissolutionprocess. Similarities between
partnership and companiesThe only similarity between these entities is that they are both owned by
groups of peopleinstead of an individual. There is not that much similarity on these two issues except
difference.

College Of Business and EconomicsSchool Of CommerceBusiness Law AssignmentPrepared by:Nuhamin


Thomas BER/7410/10Eden Zeleke BER/9874/10Hanna Debela BER/8282/10Netsanet Mulatu
BER/4704/10Kurban Gizaw BER/0670/10Michael Alemayehu BER/1719/09Mahder Dawit BER/7885/09
Submitted to: AtoSeyoumSection: R3MGMTDate: Dec/6/2019

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