introduction of the types of business organization under new commerical code of ethiopia
The new Commercial Code of Ethiopia recognizes several types of business organizations that individuals and groups can establish to conduct commercial activities. These types of business organizations include:
1. Sole Proprietorship: This is a business owned and operated by a single individual. The owner has full control and is solely responsible for all decisions, profits, and debts of the business. It is the simplest and most common form of business organization.
2. Partnership: In a partnership, two or more individuals come together to conduct business and share profits and losses. There are two types of partnerships under the new Commercial Code: general partnership and limited partnership. In a general partnership, partners are equally responsible for all aspects of the business, while in a limited partnership, there are general partners (fully responsible) and limited partners (limited liability).
3. Cooperative: A cooperative is a business organization formed by a group of individuals with similar needs or interests who pool their resources and efforts to achieve common goals. Cooperatives are typically formed in sectors such as agriculture, retail, and housing, and are governed by principles of democratic decision-making and equitable distribution of profits.
4. Private Limited Company: This type of business organization is owned by shareholders and managed by directors. Shareholders' liability is limited to the amount they have invested in the company, and their shares are not freely transferable. Private limited companies are required to have a minimum of two shareholders and a maximum of 50.
5. Public Limited Company: A public limited company is a larger-scale business organization that can offer its shares to the public and have them traded on the stock exchange. It requires a minimum of five shareholders and must appoint a board of directors for management. The liability of shareholders is limited to the amount unpaid on their shares.
6. Share Company: A share company is a type of business organization where the capital is divided into shares, and the shareholders' liability is limited to the amount unpaid on their shares. The minimum number of shareholders required is five. A share company can be public or private.
These are the main types of business organizations recognized under the new Commercial Code of Ethiopia. The choice of business organization depends on factors such as the scale of operations, desired level of liability, number of owners, and regulatory requirements.