Chapter 7 - Partnership & Corporation
Chapter 7 - Partnership & Corporation
Chapter 7 - Partnership & Corporation
6- Partnership &
Corporation
DR. ABDELRAHMAN MOHAMED SAYED
Entrepreneurship
Unlimited Liabilities
Limited Liabilities
Partnership Limited
Sole General Limited Joint-stock One-person
limited by liability
proprietorship partnership partnership Company company
shares company
1- Sole Proprietorship
A limited partnership must have one or more general partners and one or more
limited partners.
Liability of General and Limited
Partners
General partners and limited partners of a limited partnership have different
degrees of liability, depending on the circumstances.
Liability of General Partners
The general partners of a limited partnership have unlimited liability for the
debts and obligations of the limited partnerships. Thus, general partners have
unlimited personal liability for the debts and obligations of the limited
partnership. This liability extends to debts that cannot be satisfied with the
existing capital of the limited partnership.
Liability of General and Limited
Partners
Liability of Limited Partners
Generally, limited partners have limited liability for the debts and obligations of
the limited partnership. Limited partners are liable only for the debts and
obligations of the limited partnership up to their capital contributions, and they
are not personally liable for the debts and obligations of the limited
partnership.
Management of a Limited
Partnership
General partners have the right to manage the affairs of the limited partnership.
On the other hand, as a trade-off for limited liability, limited partners give up
their right to participate in the control and management of the limited
partnership. This means, in part, that limited partners have no right to bind the
partnership to contracts or other obligations.
A limited partner is liable as a general partner if his or her participation in the
control of the business is substantially the same as that of a general partner, but
the limited partner is liable only to persons who reasonably believed him or her
to be a general partner.
4- partnership limited by shares
Corporations have existed since medieval Europe when individual charters were
granted by the ruler, usually a monarch (king or queen). A corporation is owned by
its shareholders, who elect members of the board of directors to make policy
decisions and who, in turn, employ corporate officers to run the day-to-day
operations of the corporation.
Corporations are the most dominant form of business organization in the United
States, generating more than 85 percent of the country’s gross business receipts.
Corporations range in size from one owner to thousands of owners. Owners of
corporations are called shareholders. Shareholders are owners of a corporation
who elect the board of directors and vote on fundamental changes in the
corporation.
5- Limited Liability Companies
(LLCs)
A LLC must be established by two or more shareholders and no more than 50
shareholders.
The shareholders may be either judicial persons or natural persons. LLCs may be
fully owned by foreigners as a general rule, with few exceptions.
With respect to the management of LLCs, it is carried out by managers and not
a board of directors. Such managers may be either judicial persons
(represented by individuals) or appointed individuals.
Quotas, commonly referred to as shares, must all be of an equal value.
Although the law does not prescribe a minimum value for such quotas.
Any partner can sell his or her quotas to outsiders, given that he has already
offered them to the other partners and they declined to buy them.
6- Joint Stock Companies (JSCs)
A JSC may be listed on any stock exchange and may issue bonds or
other financial instruments that could be offered to the public. The
shares of the JSCs may be offered to public subscription, if so decided
by the shareholders.
Shares can only be issued after receiving the approval of the Egyptian
Financial Supervisory Authority (“EFSA”). These shares may be also
registered with the Stock Exchange, subject to certain requirements.
A joint stock company is managed by a board of directors comprising at
least three members. The members will be elected by the general
shareholders’ meeting; the board subsequently elects the chairman and
the management director.
7- Single Person Limited Company