Business Law Individual Assignment
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
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 provides a framework for various types of business organizations. This assignment will discuss and analyze the types of business organizations recognized under the new commercial code in Ethiopia. It will explore the nature, differences, and similarities of these organizations.
1. Sole Proprietorship:
A sole proprietorship is a business organization owned and managed by a single individual. It is the simplest form of business organization. The owner has unlimited liability and is personally responsible for all debts and obligations of the business. The sole proprietorship is not considered a separate legal entity from its owner. This means that the owner's personal assets can be used to pay business debts. The main advantage of a sole proprietorship is the ease of formation and management.
2. Partnership:
A partnership is a business organization formed by two or more persons who agree to carry on a business together and share the profits and losses. There are two types of partnerships recognized under the new commercial code of Ethiopia: general partnership and limited partnership.
- General Partnership: In a general partnership, all partners have unlimited liability for the debts and obligations of the business. Each partner is personally responsible for the actions of the other partners. The partners also share in the profits and losses of the business according to their agreed-upon share.
- Limited Partnership: A limited partnership consists of at least one general partner and one or more limited partners. The general partner has unlimited liability, while the limited partners have limited liability. Limited partners are not personally liable for the debts and obligations of the business beyond their capital contributions. They also have limited participation in the management of the business.
3. Joint Stock Company:
A joint stock company is a business organization that is owned by shareholders, and the liability of the shareholders is limited to their capital contributions. The shareholders elect a board of directors to manage the company's affairs. A joint stock company can be either private or public.
- Private Joint Stock Company: A private joint stock company has a minimum of five shareholders and is prohibited from offering its shares to the public. It is suitable for small to medium-sized companies.
- Public Joint Stock Company: A public joint stock company can offer its shares to the public and is subject to stricter regulations. It requires a minimum of three promoters and a minimum subscribed capital.
4. Cooperative Society:
A cooperative society is a business organization formed by a group of individuals who voluntarily join together to achieve a common economic or social goal. The members contribute capital and actively participate in the management of the cooperative. Each member has one vote, regardless of the amount of capital contributed. The profits are distributed among the members based on their participation.
Comparison and Similarities:
- Nature: Sole proprietorship, partnership, joint stock company, and cooperative society are all legal entities recognized under the new commercial code. They have the capacity to contract, sue, and be sued in their own name.
- Liability: In a sole proprietorship, the owner has unlimited liability. In a general partnership, all partners have unlimited liability, while in a limited partnership, the general partner has unlimited liability, and the limited partners have limited liability. In a joint stock company and cooperative society, the liability of the shareholders or members is limited to their capital contributions.
- Management: In a sole proprietorship, the owner has sole control and management of the business. In a partnership, the partners share the management responsibilities. In a joint stock company, the board of directors is responsible for managing the company's affairs. In a cooperative society, the members actively participate in the management.
- Formation: Sole proprietorships and partnerships can be formed informally without any legal formalities. Joint stock companies and cooperative societies require registration with the appropriate government authority.
Conclusion:
The new commercial code of Ethiopia recognizes several types of business organizations, including sole proprietorships, partnerships, joint stock companies, and cooperative societies. Each type has its own characteristics, advantages, and disadvantages. The choice of business organization depends on factors such as liability, management, capital requirements, and flexibility. It is essential for entrepreneurs to understand the nature and differences between these organizations to make informed decisions when starting or expanding their businesses.
References:
(Include a list of all the sources used in your assignment)