Business Law Assignment
Instructions
1. Clarity is mandatory;
2. Your work shall include introduction, conclusion and reference;
3. Copying the work of others will be punishable;
Questions
1. List and discuss the types of business organizations under the new commercial code of Ethiopia (hint, nature, differences, similarity, etc.).
Introduction:
The new commercial code of Ethiopia recognizes various types of business organizations. These business organizations have distinct characteristics, nature, differences, and similarities. This assignment will discuss and list the types of business organizations recognized under the new commercial code of Ethiopia, along with the key features, differences, and similarities among them.
1. Sole Proprietorship:
A sole proprietorship is a type of business organization where the owner is an individual who runs and manages the business alone. The owner has complete control and authority over the business and assumes full responsibility for its debts and liabilities. The sole proprietorship is the simplest and most common form of business organization, and it does not have a separate legal entity from its owner.
2. Partnership:
A partnership is a business organization that involves two or more individuals who come together to carry out a business venture. Partnerships can be categorized as general partnerships or limited partnerships. In a general partnership, all partners have equal control and share profit and losses equally. In a limited partnership, there are both general partners who have unlimited liability and limited partners who have limited liability and do not participate in the management of the business.
3. Public Limited Company:
A public limited company is a business organization that has its shares available to the public for purchase. It is required by law to have a minimum number of shareholders and meet certain regulatory requirements. The shareholders have limited liability, and the company has a separate legal entity from its owners. The shares of a public limited company can be traded on a stock exchange.
4. Private Limited Company:
A private limited company is a business organization that restricts the transferability of its shares to a select group of individuals. It is not required to have its shares traded on the stock exchange, and it is often owned and managed by a closely-knit group of individuals. The liability of the shareholders is limited to their contribution to the company's capital.
5. Joint Venture:
A joint venture is a business organization where two or more individuals or entities come together to undertake a specific business project or activity. It is usually formed for a limited duration and purpose and allows the participants to share resources, risks, and profits.
Differences and Similarities:
- Sole proprietorship and partnership are both unincorporated business organizations, meaning they do not have a separate legal entity from their owners. In contrast, public and private limited companies have a separate legal entity.
- Sole proprietorship has a single owner, whereas partnership, public limited company, private limited company, and joint venture involve multiple owners.
- Sole proprietorship and partnership have unlimited liability, which means the owner(s) are personally liable for all business debts and obligations. Public and private limited companies have limited liability, where the shareholders' liability is limited to their investment in the company.
- Partnerships and joint ventures are formed through an agreement between the parties involved, while limited companies require legal registration and compliance with regulatory requirements.
Conclusion:
The new commercial code of Ethiopia recognizes various types of business organizations, including sole proprietorship, partnership, public limited company, private limited company, and joint venture. Each type of organization has its own characteristics, nature, differences, and similarities. It is important for individuals and entrepreneurs to understand these different types of business organizations to make informed decisions about which structure to adopt for their business ventures.
References:
- Commercial Code of Ethiopia.
- Mulugeta, L. (2019). Ethiopian Business Law in Brief. Lap Lambert Academic Publishing.