List and discuss the types of business organizations under the new commercial code of Ethiopia (hint, nature, differences, similarity, etc.).
Under the new commercial code of Ethiopia, there are several types of business organizations that individuals or groups can choose from. These include:
1. Sole Proprietorship: This is the simplest form of business organization where an individual operates a business on their own. They have complete control over the business and bear all the liabilities. The main advantage is simplicity, while the disadvantage is unlimited liability.
2. General Partnership: A general partnership is formed when two or more individuals come together to carry out a business for profit. Each partner contributes capital, shares profits and losses, and has equal authority. Similar to sole proprietorship, the partners have unlimited liability.
3. Limited Partnership: A limited partnership consists of one or more general partners who have unlimited liability and one or more limited partners who have limited liability up to the amount of their investment. The general partners assume management responsibilities and unlimited liability for the business.
4. Limited Liability Company (LLC): An LLC is a hybrid form of business that combines elements of a corporation and a partnership. The owners have limited liability, meaning their personal assets are protected from the company's debts. Management is either handled by the owners or appointed managers.
5. Joint Venture: A joint venture is a temporary business partnership between two or more individuals or companies for a specific purpose or project. They pool their resources, skills, and expertise and share profits and risks. Joint ventures can be formed as separate legal entities or contractual agreements.
6. Public Limited Company (PLC): A PLC is a business organization with share capital and shareholders. It can be listed on a stock exchange, and shares can be freely bought and sold. The liability of shareholders is limited to the amount of their investment. PLCs are subject to more extensive regulations and disclosure requirements.
7. Public Enterprises: These are government-owned business organizations involved in various sectors of the economy. They are created to provide essential services and promote economic development.
The main differences among these business organizations lie in the level of liability, ownership structure, governance, and legal requirements. Sole proprietorship and general partnerships have unlimited liability, while limited partnerships and LLCs offer limited liability. PLCs have more stringent regulations and are subject to reporting requirements.
Similarities among these organizations include the ability to engage in economic activities, obtain licenses, and enter into contracts. All of them can use the provisions of the commercial code to regulate their operations, protect their rights, and resolve disputes.
Overall, the choice of business organization depends on factors such as liability protection, ownership structure, management control, and the specific nature of the business and its objective. Entrepreneurs should carefully consider their needs, resources, and future plans when selecting the appropriate type of business organization in Ethiopia.