Organizations legal forms of ownership

Forms of ownership:

Sole proprietorship

Partner ship

Co - operation  (Liability separate) 

Forms of special forms:

Franchise 

Co - operative

Organizations legal forms of ownership

To start thinking about establishing your company, and before taking any action, you must determine the legal form of your company, as the owner of the project idea is often confused in front of the many forms of companies. In this article, we will try to simplify the forms and types of companies and the advantages of each of them, through which you can choose the right type for your project according to its nature.

 If you already own a company, and you are not aware of this information, this article may change your thinking and give you the opportunity to change the current legal form of your company to the one that best suits it. In addition to the existence of sole proprietorships, companies are generally divided into two main types (personnel companies and money companies) under each type a number of different legal forms of companies. Here is an explanation of these types:

First, Sole Proprietorships: They are legal entities established and owned by one individual who obtains all of their profits and is responsible on the other hand for all their obligations and debts with others, personal responsibility so that if the facility cannot pay its debts, he is obligated to pay these debts from his own money, even that its profits are considered part of the income Its owner is taxed in this way and not as corporate profits. Legally, it is not a company, because the company assumes the presence of one or more partners. But in practice, there is no distinction between them and companies by those who deal with them, and when small and medium enterprises are mentioned, they are considered part of them.

Secondly, partnerships of persons: It is based on mutual trust between partners, in which the personality of the partner is taken into account, meaning that it does not dissolve in the personality of the company. Likewise, it is not permissible for a partner in partnerships to sell his share in the company because the partnership is linked to trust between the partners. This has advantages and disadvantages that will be clarified in the explanation of the types of people’s companies. People’s companies include three types: General partnerships, limited partnership companies, and joint venture companies. Here is an explanation of those types:

General Partnership: 

A company is formed by two or more (they are called general partners) to conduct business. The liability of the partners in it shall be unlimited, and they shall be personally and jointly liable for the company’s debts.

 If the company fails to pay its debts, the creditor shall return to the partners’ personal funds. As for what distinguishes the Solidarity Company, it is the ease of its establishment, the ease of adjusting the capital, and acquiring the status of a merchant.

Simple partnership companies: 

A simple partnership company consists of two types of partners, general partners who have the same characteristics as the general partners in the general partnership where the personal and joint liability and the acquisition of the status of a merchant once the company is convened or joined, and the company’s address is formed from the names of these partners, and silent partners are responsible for the company’s debts Within the limits of the share they provided (their own funds are not reverted to pay the company's debts), they do not acquire the capacity of a merchant and do not participate in the external management of the company.

 This company is characterized by the fact that it is based on mutual trust between the partners, and it enables some people who are prohibited from trading, such as government employees, to invest their money as trusted partners. The silent partner can also devote himself to other work, and he does not fear for his personal money.

Joint venture companies:

depend in their formation on covertness and concealment, and their existence is not known from the legal point of view only the partners. It is an agreement between two or more to carry out one or more commercial acts performed by one of them in his own name with the division of profits and losses among them according to what they agree upon, and third parties are dealt with as individuals. 

Not as a partner in a company, this company is not legally registered and is not a separate legal entity. The joint venture company is characterized by being a temporary company established to carry out one or several works and ends with the end of the works, and its establishment does not take a long time. There is also no legal impediment for the company to carry out a certain activity on an ongoing basis

as follows:

Thirdly, money companies:

In contrast to people companies, the partners in money companies keep their money independent of the company's money and the partner's personal money is not a guarantor of the company's debts.

 A partner may sell his share in the company to non-partners, and the sale of his share may be restricted by contractual terms when the company was established.

 Money companies include three types, which we explain briefly as follows:

Joint Stock Companies:

A joint-stock company is the largest type of capital company, and its capital is divided into shares of equal value. Each partner (shareholder) has a certain number of shares according to his share in the capital. Joint-stock companies are characterized by large capital, which reassures all types of investors, as well as enables them to carry out major economic projects, as well their ability of shares to sell and buy easily. It is worth mentioning that the minimum capital in a joint-stock company is 250 thousand pounds, of which 10% is paid (with a minimum of 25 thousand pounds at beginning of incorporation) with a commitment to pay another 15% within 3 months of incorporation.

Partnerships limited by shares:

A partnership limited by shares consists of two classes of partners: 

A-) General partners: their number shall not be less than two, and their own funds are considered a guarantor of the company’s debts and obligations, and their shares are not salable, and they are only responsible for managing the company.

 B-) Shareholding partners: their number shall not be less than three, and each partner is responsible for the company’s debts and obligations, according to the number of shares he owns. Their personal funds are not considered a guarantee of the company's debts, and they may not interfere in the management of the company.

Limited liability companies: 

As for this company, it is formed between two or more partners, who are responsible for the company’s debts to the extent of their shares in the capital and are not responsible for the company’s debts. To it most of the entrepreneurs, given that the liability of the partners is limited as we mentioned, as well as the absence of a minimum capital required for incorporation, and the speed and ease of its establishment due to the presence of the place of incorporation in one place, which is the Investment Authority.