Corporate Law Commercial Companies

Chapter 5
INSTITUT SUPERIEUR DE MANAGEMENT

2nd Year Bachelor in Business Law
Academic Year 2021 - 2022
-------------------------
Corporate Law
Commercial Companies
1
What are the different forms of
business organizations ?
 Several types of organizations are
engaged in business :
 Sole proprietorship,
 Partnership companies ,
 Corporations,
 Co-operative societies,
 Combinations,
 Franchising, and nationalized industries.

What is a sole
proprietorship ?
 A sole proprietorship, or person in
business for himself; also called a one-man
concern, is the simplest form of business
organization. When somebody owns his
business and runs it alone he is an
independent trader, a sole trader, his business
is a sole proprietorship.
 Major characteristics: He provides capital,
assumes the risks and receives all the profits.

Sole Proprietorship
Advantages & Disadvantages
 Advantages:
 relatively low start-up costs;
 greatest freedom from regulation;
 owner in direct control of decision making;
 minimal working capital required;
 tax advantages to owner;
 all profits to owner.
 Disadvantages
 unlimited liability;
 lack of continuity in business organization in absence
of owner;
 difficulty raising capital.
What is a partnership company ?
 It is an association composed of two or more
people who join together, combine their resources,
and carry on a business in common, with a view to
profit. In case of a General Partnership, partners
share the management of the business, and are all
responsible for the whole of the company’s
liabilities. They own shares of the capital and their
shares are not transferable to anybody. Only those
who are named in the Articles of Association can be
shareholders. The nearest equivalent in France is
the SOCIETE EN NOM COLLECTIF.
How is a partnership set up ?
 The parties draw up and sign an arrangement
known as Articles of Partnership. Once a
general partnership is formed, all the partners
are jointly and severally liable for all debts.
However, a limited partnership is composed of
one or more general partners who manage the
firm and whose liability is unlimited; and one or
more limited partners who take no active part in
the management and whose liability is limited up to
the amount of their capital contribution.
What is a limited partner ?
A limited partner also called silent

partner shares in the profits and losses of
the business, but who is uninvolved in its
management, and/or whose association
with the business is not publicly known.
Silent partners can transfer their shares,
with the agreement of the general
partners.
How is a partnership
dissolved ?
 A partnership comes to an end either on the
death, retirement, bankruptcy or insanity of one
of the partners or at the expiration of the term
agreed upon for its duration.
 Advantages & Disadvantages
 ease of formation;  unlimited liability;
 relatively low start-up  lack of continuity;
costs;  divided authority;
 additional sources of  possible development of
investment capital; conflict between partners.
 possible tax advantages;  difficulty raising additional
 limited regulation; capital;
 broader management  hard to find suitable
base. partners;
What is a corporation?
 A corporation is an artificial “person” created

by law and authorized to act as a body
corporate. It is a legal entity that is separate
from its owners, the shareholders. This form of
business is characterized by the limited
liability of its owners, the insurance of easily
transferable stocks, and existence as an
ongoing concern.
What is a share (stock) ?
 Shares express ownership and decision
making power in the company. A share also
represents how much of the profit each
shareholder receives, it also represents how
much of the loss each shareholder is liable for.
 As an example, a shareholder holding a 20%
share in the company would receive 20% of
the company's profits but would also be liable
for 20% of the company's debt.
What are the two types of
corporations ?
 There are two main types of corporations both
receiving the benefit of incorporation and limited
liability. We have the private limited company,
in French roughly speaking, a S.A.R.L. And the
public limited company ,in French S.A.
 The private limited company is composed of
one or more members. The general public cannot
be asked to subscribe to capital and the shares
held cannot be transferred or negotiated without
the consent of the members. Shareholders are
responsible up to extent of their contributions.
Public limited company
A public limited companies is composed of, from
seven to an unlimited number of members. The
capital is divided into shares which are offered to
the public and bought and sold on the Stock
Exchange. Each member is responsible only to the
extent of his share of capital. Shares are freely
transferable. Anyone can be a subscriber.
Corporations
Advantages & Disadvantages
 Advantages
 limited liability;
 specialized management;
 ownership is transferable;
 continuous existence;
 separate legal entity;
 possible tax advantage;
 easier to raise capital.
 Disadvantages
 closely regulated;
 most expensive form to organize;
 extensive record keeping necessary;
 double taxation of dividends;
 possible development of conflict between shareholders and executives.
What is franchising ?
It’s a form of business ownership that comprises a

franchiser company and a franchisee
company.
 The franchiser company allows the franchisee to
sell its products or service, and supplies equipment

and advice.
 The franchisee can therefore expand without the
need for major capital investment.

In return for this the franchisee invests the capital and
pays royalties to the franchiser out of profits made,
and receives a well-known or well-supported product or
service.
Cookish case study
You are working in law firms as legal advisors specialized in

Ohada business law, as Cookish wants to know which legal
form of business fits better for her project, she has therefore
contacted you for advice before incorporating her business.
After consulting the case and deciding upon one the legal form
that you want cookish to choose while incorporating the
business, cookish finally thought that it would be better to
invite you ( the legal advisors) in her office so as to discuss
contradictorily the advantages and disadvantages of each legal
form before she actually decides upon which legal form she will
be choosing to do business within the Ohada framework.
15
Case 1: Sole proprietorship
versus Partnerships
 Case 1:
Cookish has invited you to help her decide upon a sole
proprietorship form or a partnership form.
Assignment: ( 1st Talk Show)
1)One student plays the role of Cookish by asking legal advisors the questions mentioned
in the talk show plan.( this is voluntarily played by students and a bonus of +2 points will
be granted for moderators performing this task.
2) Lawyers presenting the sole proprietorship form or the partnership one will just
follow the moderator’s instructions to start the talk-show.
16
Case 2: General Partnership
versus Limited Partnership
 Case 2:
Cookish has invited you to help her decide upon a General
Partnership form or a Limited Partnership form.
Assignment: ( 1st Talk Show)
1)One student plays the role of Cookish by asking legal advisors the questions mentioned
in the talk show plan.( this is voluntarily played by students and a bonus of +2 points will
be granted for moderators performing this task.
2) Lawyers presenting the General partnership form or the Limited partnership one will
just follow the moderator’s instructions to start the talk-show.
17
Vocabulary checklist :
 Custody
 Sole trader  Immovable by nature
 Personal property
 Body corporate  Naked ownership
 Patent
 Trade register  Neighborhood  Copy rights
 Shareholders  Joint ownership  Lien
 Co-ownership
 Stockholders  Asset
 Quiet enjoyment
 Shares  Freehold
 Title of ownership
 Stocks  Leasehold
 A will
 Partnerships  Tenancy  A deed
 Real property  Legacy
 Corporations  Fixtures  inheritors
 Contributions  Building
 Co-spouses
 In cash
 Community property
 In kind
 Separate property
 In skills

Corporate Law Commercial Companies

Uploaded by

Copyright:

Available Formats

Corporate Law Commercial Companies

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Corporate Law Commercial Companies

Uploaded by

Copyright:

Available Formats

Chapter 5

INSTITUT SUPERIEUR DE MANAGEMENT

 Franchising, and nationalized industries.

assumes the risks and receives all the profits.

A limited partner also called silent

 A corporation is an artificial “person” created

It’s a form of business ownership that comprises a

sell its products or service, and supplies equipment

need for major capital investment.

You are working in law firms as legal advisors specialized in

Assignment: ( 1st Talk Show)

Assignment: ( 1st Talk Show)

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.