In. Ethiopia business companies are formulated according to the commercial code of 166 of 1960.

In the
commercial code of article 212, there are six forms of business organizations as follows: Ordinary
partnerships, General partnerships, Limited partnerships, Joint Venture, Share Companies and Private
Limited Companies (PLC).

1. Discuss the difference and similarities among the four forms of partnership in
Ethiopia.

A) Ordinary partnership
Partnership is an ordinary partnership within the meaning of this title where it does not have
characteristics which make it a business organization covered by other Title of the code. (Art 227 of The
Ethiopian Commercial Code of 1960).

B) General partnership
General partnership consists of partners who are personally, jointly, severally and fully liable as between
themselves and to the partnership for the partnership firms' undertakings. Any provision to the contrary
in the partnership agreement shall be of no effect with regard to third parties. (Article 280 of The
Ethiopian Commercial Code of 1960).

C) Limited partnership
A limited partnership comprises two types of partners: general partners in full liable personally, jointly
and severally and limited partners who are only liable to the extent of their contribution. (Art.296of the
Commercial Code).

D) Joint Venture
A Joint Venture is an agreement between partners on terms mutually agreed and is subject to the
general principles of law relating to partnerships. (Art. 271of the Commercial Code).

Differences between the 4 forms of partnerships:-

 Ordinary partnership is distinct from other forms of partnership in that commercial business
organizations cannot adopt this form of business organization
 General partnerships are formed when there are several partners investing personal expertise in
the business and each of them will take an active role in the management and operation of the
company.
 Limited partnerships are formed usually to raise capital for business startups or acquisitions
where a hands-on management role is not required of the individual investing partner.
 In Joint Venture, all partners have the status of managers in the absence of appointed
manager(s). Consequently, a partner who manages the joint venture will be fully liable (Articles
 275(2) and 276 of the Commercial Code). In addition, every partner should deal with third
parties in his/her own name (Article 276 (5) of the Commercial Code).

Similarities between the 4 forms of partnerships:-

 Minimum of 2 people is required to start a partnership form of organization
 At least 2 people must pool resources to start a partnership firm
 There is unlimited liability
 All partners are jointly and severally responsible for all activities carried out by the partnership
 Every partner has a right to take part in the management of the business. Therefore, the rights
of ownership and control are jointly held by the partners
 There is sharing of profits and losses. The partners share the profits according to the proportions
written in the partnership agreement. In case the business faces loss, it will be shared
proportionally as well.
 Every partner must make a contribution, which may be in the form of money, debts, other
property or skill

2. Discuss the difference and similarities between the two forms of companies in
Ethiopia
The two forms of companies in Ethiopia are Share Companies and Private Limited Companies (PLC).

Share Companyis a company whose capital is fixed in advance and divided into share and whose
liabilities are met only by the assets of the company. The members shall be lable only to the extent of
their share holding. Minimum capital requirement for a share company is 50,000Birr and itcannot have
members less than five and theirContribution is in only in cash form.

InPrivate Limited Company members are liable only to the extent of their contributions. These
contributions can be in cash, skill, property, and use of property. The Minimum capital requirement is
15,000Birr involving a minimum number of two and maximum number of fifty members. Private limited
company is always commercial in. form and The Company shall not issue transferable securities in any
form.

In share companies there is easy transfer of share ownership, while in Private Limited Company, shares
are not easily transferable.

Other Differences:-

 A PLC is managed by 1 or more managers while Share Company is managed by directors whose
minimum number shall be 3
 While a share company can invite public to subscribe to its shares, a PLC cannot go to public to
raise its capital. A share company which goes to public to raise its capital is required to file a
prospectus while a PLC is exempt from this requirement because it cannot invite public to
subscribe to its capital.
Similarities:-
 Both have limited liability. The liability of each member or shareholders is limited. This means
that if a company faces loss under any circumstances, then its shareholders are liable to sell
their own assets for payment.

3. Discuss the difference and similarities between partnership and companies in

Ethiopia considering their general nature.
Partnerships form when two or more persons agree to carry on a business and share the profits &
losses mutually.

A company is an association of persons who came together for a common objective and share its profit
and losses.

Difference between partnership and companies

Partnerships are created based onindividual agreements (contractual activities) between the partners.
There can be a voluntary registration but it is not necessarily required or it is not compulsory. The
management of concern in partnership is the partners themselves. In terms of

liability there is unlimited liability which means that liabilities of the organizations are also liabilities of
the partners and also creditors can have claim against both the partnership and members assets. In the
event of dissolution of the partnership firm, there are no legal formalities.

Whereas companies are organizations which exist and arecreated by incorporation under the
Companies Actindependent of the participators and depend up on capital resources, they are also called
an artificial person having. separate identity, common seal and perpetual succession, Registration is
obligatory and necessary. The management of concern in companies can be board of directors. In terms
of liability there is limited liability which means that liabilities of the organizations do not extend to the
owners or liability is only limited to organizational assets. In the event of dissolution of the company
there are legal formalities to follow to wind up the dissolutionprocess.

Similarities between partnership and companies

The only similarity between these entities is that they are both owned by groups of people instead of an
individual. There is not that much similarity on these two issues except difference.