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
discuss the types of business organizations under the new commercial code of Ethiopia (hint, nature, differences, similarity, etc.).
A.sole proprietorship
B.General proprietorship
C. Limited proprietorship
D. Share company
E.public enterprise
Title: Types of Business Organizations under the New Commercial Code of Ethiopia
Introduction:
The new commercial code of Ethiopia has provided a legal framework for the establishment and operation of various business organizations. These business organizations play a vital role in fostering economic growth, employment, and investment opportunities in the country. This paper aims to discuss and analyze the different types of business organizations under the new commercial code of Ethiopia, which include sole proprietorship, general partnership, limited partnership, share company, and public enterprise. It will delve into the nature, differences, similarities, and other relevant aspects of each type of business organization.
1. Sole Proprietorship:
A sole proprietorship is the simplest form of business organization, owned and operated by an individual. Here, the owner has complete control over business decisions and is solely responsible for all liabilities. Some key characteristics of sole proprietorship are:
- Nature: A sole proprietorship is an unincorporated business where the owner is the business itself, and there is no legal distinction between the individual and the business.
- Differences: The owner bears unlimited liability for the business's debts and obligations. The business's profits and losses are taxed as personal income of the owner.
- Similarities: Like other business organizations, a sole proprietorship needs to comply with legal requirements such as registration, licenses, and permits.
2. General Partnership:
A general partnership involves two or more individuals who join together to conduct business with the aim of making a profit. Important aspects of a general partnership include:
- Nature: A general partnership is based on an agreement between partners, where they share the decision-making, profits, and liabilities in an agreed proportion.
- Differences: Each partner has equal rights and responsibilities in the management of the business. The partners have unlimited liability for the obligations of the partnership.
- Similarities: General partnerships are required to be registered, maintain proper accounting records, and file tax returns separately.
3. Limited Partnership:
A limited partnership is a type of partnership composed of two types of partners, namely general partners and limited partners. Key features of limited partnership are:
- Nature: A limited partnership has at least one general partner who has unlimited liability and at least one limited partner who has limited liability.
- Differences: The general partner(s) manages the business and bears unlimited liability for the partnership's obligations, whereas limited partners have limited liability and do not participate in the management.
- Similarities: Limited partnerships require registration, adherence to legal procedures, and the filing of necessary documents with the appropriate authorities.
4. Share Company:
A share company, also known as a joint stock company, is an incorporated business organization with multiple shareholders. Important aspects of a share company are:
- Nature: A share company has a separate legal entity from its shareholders and is governed by laws and regulations.
- Differences: The shareholders hold shares representing their ownership in the company and have limited liability, typically up to the value of their shares.
- Similarities: Share companies must comply with legal requirements related to incorporation, registration, corporate governance, financial reporting, and taxation.
5. Public Enterprise:
A public enterprise is a business entity wholly or partially owned by the government. It typically operates in industries of strategic importance or public interest. Key features of a public enterprise include:
- Nature: Public enterprises are established by government legislation and often have a monopoly or significant control over specific industries.
- Differences: The government holds ownership or a substantial portion of shares in public enterprises, influencing their decision-making and objectives.
- Similarities: Public enterprises are subject to regulations, financial reporting requirements, and governance standards. They may also be subject to competition laws and public sector accountability measures.
Conclusion:
The new commercial code of Ethiopia provides a legal framework for various types of business organizations, each with its unique characteristics, differences, and similarities. Sole proprietorship, general partnership, limited partnership, share company, and public enterprise cater to different needs, levels of liability, and ownership structures. Understanding these types of business organizations is crucial for entrepreneurs, investors, and policymakers as they navigate the Ethiopian business landscape and contribute to its economic growth and development.
References:
- New Commercial Code of Ethiopia
- Investment Proclamation of Ethiopia
- Ethiopian Revenue and Customs Authority.