Business Law Individual 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, it’s character,future,objective .).
Under the new commercial code of Ethiopia, there are several types of business organizations. These include:
1. Sole Proprietorship: This is the simplest and most common form of business organization. In a sole proprietorship, the business is owned and operated by one individual. The owner has unlimited liability for all debts and obligations of the business. The main advantage of a sole proprietorship is that it is easy to set up and has few legal requirements. However, the owner bears all risks and responsibilities of the business.
2. Partnership: A partnership is a form of business organization in which two or more individuals share the management, profits, and liabilities of the business. Partnerships can be general partnerships, where all partners have unlimited liability, or limited partnerships, where there is at least one general partner with unlimited liability and one or more limited partners with limited liability. Partnerships are governed by partnership agreements, which detail the roles, responsibilities, and distribution of profits among the partners.
3. Limited Liability Company (LLC): An LLC is a hybrid form of business organization that combines the limited liability of corporations with the tax benefits and flexibility of partnerships. In an LLC, the owners are called members and have limited liability for the debts and obligations of the business. Members' personal assets are typically protected from business liabilities. LLCs are governed by an operating agreement, which outlines the management structure and the rights and responsibilities of the members.
4. Joint Stock Company (JSC): A JSC is a form of business organization in which the capital is divided into shares and the liability of the shareholders is limited to the amount of their shares. JSCs are usually larger companies with many shareholders, and their shares can be traded on stock exchanges. JSCs are subject to more regulatory requirements and are governed by a board of directors.
5. Cooperative: A cooperative is a business organization owned and operated by a group of individuals who share the profits and benefits of the business. Cooperatives are typically formed to serve the common economic, social, and cultural needs of the members. Each member has one vote in the decision-making process, regardless of the amount of capital they contribute.
These different types of business organizations have their own characteristics, differences, and similarities. While sole proprietorships and partnerships have unlimited liability, LLCs, JSCs, and cooperatives offer limited liability to their owners. LLCs and cooperatives provide flexibility in management and profit distribution, while JSCs have a more structured corporate governance system with a board of directors. The choice of the business organization depends on the objectives, resources, and future plans of the founders.
Overall, the new commercial code of Ethiopia provides a framework for the establishment and operation of various types of business organizations. It aims to promote economic growth, protect the interests of shareholders and stakeholders, and encourage investment and entrepreneurship in the country.