Instructions
1. Clarity is mandatory;
2. Your work shall include introduction, conclusion and reference;
3. Minimum of 5 and maximum of 10 pages;
4. Copying the work of others will be punishable;
5. Submission date: February 10, 2024
Questions
1. List and discuss the types of business organizations under the new commercial code of Ethiopia (hint, nature, differences, similarity, etc.).
Title: Types of Business Organizations under the New Commercial Code of Ethiopia
Introduction:
The New Commercial Code of Ethiopia has introduced various types of business organizations to facilitate commercial activities and promote economic growth. This paper aims to provide an overview of the different types of business organizations and discuss their nature, differences, similarities, and other relevant aspects. The analysis will shed light on the legal frameworks and options available for entrepreneurs and investors in Ethiopia.
Types of Business Organizations:
1. Sole Proprietorship:
- Nature: A sole proprietorship is the most basic form of business organization, owned and operated by a single individual. The owner assumes all responsibilities and liabilities for the business.
- Differences: The primary difference between a sole proprietorship and other business forms is the absence of legal distinction between the owner and the business. The owner enjoys full control and bears unlimited personal liability for business debts.
- Similarities: Like other business forms, a sole proprietorship requires registration with the appropriate public authority and the fulfillment of tax obligations.
2. General Partnership:
- Nature: A general partnership refers to a business formed by two or more individuals who contribute capital, labor, or skills to carry out a joint venture. Each partner shares profit, loss, and management responsibility.
- Differences: Unlike a sole proprietorship, a general partnership involves shared decision-making authority and the distribution of profits and losses among the partners. Additionally, partners are jointly and severally liable for business debts.
- Similarities: Both sole proprietorships and general partnerships are relatively easier to establish and have minimal legal formalities.
3. Limited Partnership:
- Nature: A limited partnership comprises general partners and limited partners. General partners have unlimited liability and share management responsibilities, while limited partners contribute capital but have limited liability and minimal involvement in management.
- Differences: Limited partners in a limited partnership have no management authority and bear limited liability, whereas general partners have unlimited personal liability. Limited partners' liability is limited to the amount they have invested in the partnership.
- Similarities: A limited partnership, like a general partnership, requires registration and adherence to tax obligations. Both offer flexibility in terms of management structure and capital contributions.
4. Share Company:
- Nature: A share company, also known as a joint-stock company, is a business entity with a legal personality separate from its shareholders. Shareholders invest capital by purchasing shares and elect a board of directors to manage the company.
- Differences: The key difference is the limited liability of shareholders. Shareholders' liability is limited to the amount they have invested, providing protection to personal assets. The shareholding structure allows for easy transfer of ownership.
- Similarities: Share companies are subject to legal registration, corporate governance requirements, and tax obligations. They provide the opportunity to raise capital by issuing shares to the public or private investors.
5. Public Enterprises:
- Nature: Public enterprises are entities established by the government to engage in commercial activities, often in strategic sectors such as transportation, energy, or telecommunications. They aim to promote national development and public interest.
- Differences: Public enterprises are wholly or partially owned by the government, operate under specific objectives set by the government, and may enjoy certain privileges or exemptions. They operate in sectors of strategic importance.
- Similarities: Public enterprises, like other business organizations, are governed by laws and regulations. They contribute to the economy, create employment opportunities, and generate revenue for public welfare.
Conclusion:
The New Commercial Code of Ethiopia presents a wide range of business organization options to entrepreneurs and investors. Each type of organization has distinct characteristics, providing diverse options to meet different business needs and objectives. It is essential for individuals and entities to carefully evaluate the nature, benefits, drawbacks, and legal requirements associated with each type of business organization before making a choice. Adherence to legal formalities and fulfilling tax obligations are crucial for successful business operations in Ethiopia's dynamic commercial landscape.
References:
(Include a list of credible sources used for research and information gathering)