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 classifies business organizations into different types. Each type has its own nature, differences, similarities, and governing laws. In this essay, we will discuss the types of business organizations under the new commercial code of Ethiopia.
Types of Business Organizations:
1. Sole Proprietorship:
A sole proprietorship is a business organization owned and operated by a single individual. The owner has the full control and responsibility for the business. The main advantage of this type of business is the ease of formation and decision-making. However, the owner is personally liable for all debts and obligations of the business.
2. Partnership:
A partnership is a business organization where two or more individuals (partners) come together to carry on a business venture and share the profits and losses. Partnerships can be of two types, general partnership and limited partnership. In a general partnership, partners have equal rights and responsibilities, while in a limited partnership, there are general partners who manage the business and limited partners who contribute capital but have limited liability.
3. Private Limited Company:
A private limited company is a separate legal entity formed by two or more individuals. The liability of the owners (shareholders) is limited to the amount of their capital contribution. The company's shares are not publicly traded and cannot be freely transferred. It has more flexibility than a sole proprietorship or partnership, with a clear separation between ownership and management.
4. Public Limited Company:
A public limited company is similar to a private limited company, but its shares are publicly traded on the stock exchange. It requires a minimum number of shareholders and substantial capital to form. The liability of the shareholders is limited to their capital contribution. It has more regulatory requirements and is subject to public scrutiny.
5. Cooperative:
A cooperative is formed by a group of individuals or organizations who come together voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly-owned and democratically-controlled enterprise. The profits are shared equitably among the members based on their participation or patronage.
Differences and Similarities:
The main differences between these types of business organizations lie in their legal structure, liability, capital requirements, and ownership. Sole proprietorship and partnership have unlimited liability, while limited liability is present in private and public limited companies. Co-operatives are unique in their democratic control and equitable sharing of profits.
The similarities between these types are that they are all legally recognized business entities that have the capacity to enter into contracts, hire employees, incur debts, and own property. They also require some form of registration with the appropriate governmental authorities.
Conclusion:
In conclusion, the new commercial code of Ethiopia recognizes various types of business organizations, including sole proprietorship, partnership, private limited company, public limited company, and cooperative. Each type has its own nature, differences, and similarities, and is governed by specific laws and regulations. It is important for entrepreneurs to understand these different types to choose the most suitable structure for their business.