List and discuss types of business organizations under the new commercial code of Ethiopia (hint,Nature,difference ,similarity ,etc
Under the new commercial code of Ethiopia, there are several types of business organizations. These include sole proprietorship, partnership, private limited company, public limited company, and joint venture. Let's discuss each of these business organizations, including their nature, differences, similarities, and other relevant details.
1. Sole Proprietorship:
- Nature: A sole proprietorship is the simplest form of business organization and is owned, managed, and controlled by a single person.
- Differences: The business and the owner are considered the same legal entity, which means the owner is personally liable for all debts and obligations of the business.
- Similarities: Easy to establish, low setup costs, and complete control over business operations.
2. Partnership:
- Nature: A partnership is an association of two or more individuals who share the profits and losses of a business carried on by all or any of them acting for all.
- Differences: Partnerships can be a general partnership (unlimited liability for all partners) or a limited partnership (with both general and limited partners). All partners are jointly and severally liable for the debts of the partnership.
- Similarities: Partnerships are relatively easy to establish, and the decision-making authority is shared among the partners.
3. Private Limited Company:
- Nature: A private limited company is a legal entity, separate from its shareholders, and can sell shares to a limited number of people. The liability of shareholders is limited to the amount unpaid on their shares.
- Differences: This type of company cannot invite the public to subscribe to its shares or debentures and has more strict regulations regarding its financial reporting.
- Similarities: This type of company provides limited liability to its shareholders and is commonly used for medium-sized businesses.
4. Public Limited Company:
- Nature: A public limited company is a company that can offer its shares to the public and can be listed on the stock exchange.
- Differences: Public limited companies have more stringent legal requirements, such as a higher minimum share capital, and must publish annual reports and financial statements.
- Similarities: Limited liability for shareholders and the ability to raise capital from the public through the sale of shares.
5. Joint Venture:
- Nature: A joint venture is an association between two or more parties to carry out a specific business venture for profit. Each contributor provides a specific portion of the resources or expertise.
- Differences: Joint ventures are usually established for a fixed period to achieve a specific purpose and are dissolved after that objective is fulfilled. The parties involved maintain their separate legal entities.
- Similarities: All parties share the profits, losses, and control of the venture according to their contribution and agreement.
Overall, the types of business organizations under the new commercial code of Ethiopia offer various options for entrepreneurs with different needs, resources, and objectives. Each organization has its own nature, differences, similarities, and legal requirements, allowing individuals to choose the most suitable structure for their business ventures. It is recommended to consult legal and business professionals for guidance and assistance in establishing and operating these organizations.