Commercial Partnership Essay

The comp exploit en nom collectif, the confederation en commandite and the participation argon the three kinds of commercial confederacys which whitethorn be established downstairs the Companies proceed. Explain the main features of each(prenominal). Why do you think the social club is the roughly widely used vehicle to do billet with?Introduction mercenary leagues in Malta be regulated by The Maltese Companies act which came into assemble on the 1st January 1995 in order to regulate hold financial obligation companies and other commercial bothiances. In fact, when ane wants to set up a commercial union in Malta the act provides a number of executable legal structures. The Act stipulates that, A commercial fusion may be of the following kinds a league en nom collectif a confederacy en commandite and a comp each ( trammel obligation federation).The purpose for which the commercial partnership may be organize is regulated by the Act which provides that a par tnership en nom collectif and a partnership en commandite may be formed for the exercise of one or much acts of trade. Under the Commercial fusions Ordinance, this homework applied connatur all in ally to a special obligation federation til now beneath the provision of the Act in force today, a telephoner may be formed for any lawful purpose and shall fork out the status of a humanity phoner or a insular companionship. This means that a gild may not necessarily be set up for the purposes of merchandise. Any lawful purpose is sufficient in order to set up a hold indebtedness company.The Partnership En Nom Collectif style 7 of the Companies Act defines the partnership en nom collectif as one which may be formed by devil or more partners and operates under a partnership fig and has its obligations guaranteed by the immeasurable and stick and several liability of all the partners. The formation of a partnership en nom collectif requires that every(prenominal) partner gives his theatrical role in money or in kind or in future individualal services. The nitty-gritty of the personas constitutes the original great(p) of the partnership en nom collectif. In a partnership en nom collectif all the partners are un checkly liable.The above definition highlights the fundamental elements of a partnership en nom collectif. It may be formed by two or more partners it mustiness operate under a partnership name and the partners are un curbly, joint and severally liable for all the obligations of the partnership. The partnership-name is the name under which the duty is carried on and the obligations are presented into. It is the name by which the partnership and the legal entity created by such name are known to the hot and it represents the external manifestation of the juridical distinction between the legal character of the partnership and the members authorship it.The unlimited liability of the partners for the obligations of the partners hip is an essential feature film of the partnership en nom collectif which distinguishes it from the other forms of commercial partnerships. In a partnership en nom collectif, each and every partner is liable for all the debts and obligations of the partnership with all his property present and future and not wholly up to the amount contri just nowed by him to the partnership. Due to the unlimited liability of each and every partner, creditors of the partnership may enforce their claims against any of the partners and this even where such claims come well-nigh the amount contributed or promised as contribution by the give tongue to partner.The joint and several liability of the partners for the obligations of the partnership means that the partner against whom an action is brought for the recovery of a sum collectible by the partnership may not plead the benefit of discussion of any of the other partners. However, one of the provisos to Article 7 states that, no action shall l ie against the go bad partners unless the property of the partnership has prototypic been discussed. Therefore a creditor looking for a payment has to beginning go to the property of the partnership itself as an entity before its individual partners. solitary(prenominal) in the absence of sufficient partnership assets quite a little the creditor go to the individual partners.A partnership is legally valid when partners enter into an agreement called the action of partnership. The deed of partnership has to be entered into, signed and sent to the registrar and therefrom duly registered by the recorder of Companies. The next step would be the disregardd of a certificate of registration and this lot be described as the act of birth of the partnership because it is at this point that the latter comes into macrocosm. Article 14 of the Companies Act shall state (a) the name and residence of each of the partners (b) the partnership-name (c) the registered office in Malta of the partnership (d) the objects of the partnership, that is to say, whether the objects are trade in familiar or a particular branch of trade, and in the latter case, the nature of the trade (e) the contribution of each of the partners, specify the appreciate of the assessive contribution of every partner (f) the period if any m eat up for the duration of the partnership.The Partnership En CommanditeIn a partnership en commandite there must be at least one popular partner and one limited partner. The general partner has to guarantee all the obligations of the partnership unlimitedly whereas the limited partner enjoys limited liability up till the payment of his share. Article 51 of the Act defines a partnership en commandite as one which operates under a partnership name and has its obligations guaranteed by the unlimited and joint and several liability of one or more partners, called general partners, and by the liability, limited to the amount, if any unpaid on the contribution, of one or more partners, called limited partners. From the definition, it is lighten up that this partnership shares a number of similar traits with the partnership en nom collectif.What has been said with regard to the partnership name when dealing with the partnership en nom collectif applies also to the characteristics of the partnership en commandite. In addition Article 53 of the Act states that a person who holds himself out as being a general partner shall be held liable unlimitedly and jointly and severally with the general partners for all the obligations contracted by the partnership. Therefore, if a partner stupefys believe that he is a general partner, then he will be treated as such. Furthermore, Article 53(2) of the Act provides that the inclusion in the partnership name of the name of a person who is not a partner shall be interpreted into account by the Court in determining whether such person is retentivity himself out as being a partner. Therefore the partners hip name can only include the name of the general partner, other if a limited person added his name, he would be deemed to be holding himself out as being a general partner. These same provisions are applicable also to a partnership en nom collectif by means of Article 18 of the Companies Act.The co-existence in the partnership of one or more general and one or more limited partners distinguishes the partnership en commandite from the partnership en nom collectif and from the limited liability company. The liability of the general partners is similar to that of the partners in en nom collectif, that is unlimited and joint and several. The liability of the limited partners is outlined by law as limited to the amount, if any, unpaid on the contribution and in no case are limited partners bound to construct profits received in good faith.The Company (Limited financial obligation Company)A limited liability company is defined as being one, formed by means of a gravid divided into s hares held by its members. The members liability is limited to the amount, if any, unpaid on the shares respectively held by each of them.From the said definition the most important characteristic and benefit of a limited liability company is highlighted, that is, the limited liability of all the members composing the company. The limitation of liability of the members of a company forms the exceptional legal characteristic of this kind of partnership. The limitation of liability is a valued privilege in itself and as long as it is operated legally and within the terms of the Companies Act, the face-to-face assets of directors or shareholders are not at adventure. However, due to this privilege, there are a number of provisions, aimed at preventing possible abuses.Article 68 of the Act provides that, A company shall not be validly constituted under this Act unless a memorandum of association is entered into and subscribed by at least two persons, and a certificate of registration is issued in respect thereof. The memorandum will include all the information about the company deemed necessary to lessen opportunities for abuse. When the memorandum or the articles are force up in a macrocosm deed or in a private writing enrolled in the records of a notary public, an veritable(a) copy thereof shall be delivered in lieu of the original. On receiving the above-named documents, the duty of the Registrar is to examine them and, on being satisfied that all the requirements prescribed by law have been compiled with he will issue the certificate of registration. These measures and provisions will strengthen the credit and reputation of the company.The quality of company names is restricted and, providing a chosen name complies with the rules, no-one else can use it. Article 4 of the Companies Act provides that A company shall not be registered by a name which (a) is the same as a name of another commercial partnership or so almost similar as in the opinion of the Registrar it could create perplexity Therefore no two limited companies can exist with incisively the same name.It is essential for the company to have a share capital and that the amount of such capital is stated and divided into shares of a improve amount which according to Article 69(f) of the Act, must be stated in the memorandum. The said article states that, the amount of share capital with which the company proposes to be registered (hereinafter referred to as the authorised capital), the division thereof into shares of a fixed amount. The law also makes it impossible for a company to issue shares with variant share capital. This is only possible in the case of a SICAV which is an investiture company with a variable share capital. Where a private company is an enthronisation company with variable share capital, the name of the company shall be followed by the words investment company with variable share capital or by SICAV, followed by the words private limited company , limited or its abbreviation (ltd).A company can either be a private or public company. The company must have a name under which it can operate and enter into legal relationships with third parties. Article 70 of the Act states that . A public company may be designated by any name but such name must end with the words public limited company or their abbreviation p.l.c. A private company may be designated by any name, but such name shall end with the words private limited company or the words limited or its abbreviation Ltd. The memorandum of association has to state whether it is a public or a private company. The public company may be listed or non-listed on the subscriber line-exchange. It stands to reason that this would not be possible for a private company because its shares cannot be made available to the public at large.The members of a company manifest their wishes at general meetings by suffrage for or against proposed resolutions and as a rule the will of the majority o f the members prevails and is salad dressing on all.An important issue to address is deciding which form of business partnership to use. In practice, the limited liability company is the most popular commercial partnership. First and foremost, the principal benefit of trading via a limited company has always been the limited liability bestowed upon the companys officers and shareholders. originally the c at a timept of limited liability many people who had a pregnant amount of resources would be reluctant to form a partnership due to the fear of losing everything as a result of the companys losses. With the accession of limited liability that person knows that he is only liable up to the amount he has invested and therefore only that amount is at risk and not all of his property. Therefore, this low risk of limited liability encourages great investment.Once a Company builds a good reputation, it even increases the value of its goodwill with the result of being more in demand fo r investment continuity. Another fact which promotes the use of a limited liability company is that the creditors who deal with companies know that they are dealing with a company whose shareholders liability is limited, namely from the fact that it has (Ltd) at the end of its name. The creditors thus know what they are going in for and know what the repercussions are if they enter into transactions with limited liabilities and therefore if they have doubts, they should not enter any contracts in the first place.Just like all the rest of the commercial partnerships, the Limited obligation Company is a separate person. A shareholder in the company is just a person who has just acquired shares but is a separate person from the company. The company and the share holder are not one and the same thing and therefore the latter cannot be responsible for the obligations entered into by the company. In the Commercial Partnership Ordinance under Section 4(2) it was spell out out that a comm ercial partnership has a legal personality distinct from that of its members. Nowadays, even a single member company has a separate juridical personality.Another advantage of forming a company is that once a company is formed it continues despite the death, resignation or failure of management and members. Since the limited liability company is considered a lasting legal entity a company can only be terminated by winding up, liquidation or other order of the courts or Registrar of Companies.Another reason why it is of an advantage to form a limited liability company is that it is easy to secure new shareholders and investors. A public company which is in need of money or wishes to invest in another business enterprise can be listed in the stock exchange and acquire the needed finance by means of trading by other shareholders or investors, hence the ownership of a company can be divided among several owners in the form of shares of stock. The issue, conveyancing or sales of shares is regulated by the Companies Act.With a limited liability company, the process of borrowing money from a bank is much easier. On registration with the MFSA the company is a legal person in conformity with the Companies Act and consequently the bank will open an account and can secure its loan against certain assets of the business or against the business as a whole. When setting up a company business partners do not pay tax on their individual income but on a corporate level on company profits which may constitute benefits and allowance. In addition companies are approved better beneficiary pension schemes which consequently are offered to the employees of the company.Since the introduction of the limited liability company a total number of 52,000 companies where registered with the Malta Financial Services Authority, date only around 1,300 partnerships were registered. These statistics prove that it is the best decision one can make to carry out a business in the form of a limi ted liability company. In conclusion, a legal limited liability company helps you gain from a number of advantage mentioned above while you can limit your personal liability and protect your personal assets.Bibliographystatutory Sources* Chapter 386 of the Laws of Malta, Companies Act (1995)* Commercial Partnerships OrdinanceInternet Sources and websites* Coddan. Advantages And Benefits Of A Limited Company.. lendable http//www.ukincorp.co.uk/s-46-uk-company-formation-benefits.html. get accessed 4th May, 2011* European Commission. (02/2010). Legal Requirements. lendable http//ec.europa.eu/youreurope/business/starting-business/setting-up/malta/index_en.htm. Last accessed seventh May, 2011.* Focus Business Services. (1998-2011). Registration Process of a Malta Company. Available http//www.fbsmalta.com/malta-company-law-full-text-and-formation-procedure-2/registration-process-malta-company/. Last accessed 7th May, 2011* QUBE Services Limited. Maltese Bodies Corporate. Available http //www.qubeservices.com/01types.asp. Last accessed 7th May, 2011.* RSM Malta. Services. Available http//www.rsmmalta.com.mt/company-formation.aspx. Last accessed 7th May, 2011.* tutor2u. advantages of a limited liability. Available http//tutor2u.net/business/finance/legal_company_advantages.htm. Last accessed 7th May, 2011.* http//www.commonlii.org/mt/legis/consol_act/cpo307.pdf