Company Types & Distinguishing Features

Types of companies


There are many commercial and service activities and each activity requires an appropriate legal form, so, you should be aware of the difference between each of commercial and legal forms in order to select the most appropriate one for your company. Before taking any action, you should determine the legal form of your company. For this purpose, we are going to discuss the types of the companies and features of each type to select what is suitable for your project according to its nature. Individual enterprises. are considered to be the simplest common legal forms, and then companies which are divided into two main types (Partnerships and investment companies) each type includes a number of legal forms as follows: A number of different legal forms of corporations. Here is an explanation of these types:

First, individual establishments:

Individual facilities are legal entities incorporated and owned by one individual who, is entitled to obtain all of its profits, while being personally responsible for the obligations and debts of the business of others, so that if the facility fails to pay its debts, the owner shall pay these debts at his own expense, and its profits considered as the owner’s income not as company profits. From legal perspective, this entity is not a corporate, for corporates require the existence of one or more partners. However, in actual practice, it shall not be differentiated from other companies by its dealers. When small and medium-sized enterprises are mentioned, it shall be considered as a part of them.

Second, companies of persons: :

Second: Partnerships are based on mutual confidence between partners in which a partners’ personality shall be earnestly considered, in the sense that it shall not be integrated with the company’s entity. Further, a partner in any partnership may not sell his share in the company due to the partners’ confidence relations. That has advantages and disadvantages that will be clear in explaining types of partnerships. Partnerships include three types of companies: general partnerships, limited partnerships, and particular partnerships detailed as follows:

  • joint company

    is a company incorporated by two or more partners (called joint partners) to do business. The responsibility of partners shall be unlimited and they shall be personally and jointly responsible for the company’s debt. In the event that a company fails to pay its debts, creditor shall use partners’ personal funds. Partnerships are characterized by ease of establishment, capital amendment, and obtaining merchant capacity.

  • Limited Partnership

    limited partnerships consist of two kinds of partners: (1) joint partners who assume the same joint partners’ properties in the general partnership in respect to the personal and joint responsibility, and obtaining the merchant capacity once the company is incorporated or once anybody joins the partnership. The company’s name should consist of the names of those partners, and (2) limited partners who are responsible for the company’s debt within the limits of their share, they don’t obtain merchant capacity and don’t participate in the external management of the company. This company is characterized by a mutual confidence among partners. Some individuals prohibited from trade such as public servants may invest their funds as limited partners. The recommended person may have a free time for the other business, and he shall not be worried about his personal funds.

  • Joint Venture:

it depends, in its structure, on secrecy and confidentiality, as nobody legally knows about it except for the partners, it constitutes an agreement between two or more persons to do business in one’s own name with distributing profits and losses between them according to what is agreed upon, others are to be dealt with as individuals as partners in the company, as this company is not legally registered and is not an independent legal entity. Particular Partnership is characterized by being a temporary company set up to do one or more work and it terminates with the end of the business, and it doesn’t take a long time to build. There is no legal impediment to the company to carry out a particular activity continuously.

Third Money Companies

unlike partnership companies, partners’ money in the money companies shall remain independent of persons’ company, the partner’s personal money is not a guarantor of the company’s debts. The partner may sell his share in the company for non-partners, sell of his share may be subject to contracted terms upon the company. Money Companies include three types described below:

  • Joint-stock Companies:

joint-stock company is the largest type of money company, their capital is divided into equally valuable shares, each partner has a certain number of shares according to his share of the capital, shareholder shall not ask about debts only within limits of its share. Joint-stock companies shall be characterized by a large capital, reassuring all kinds of investors, it shall also enable them to carry out major projects and also the ability of shares to sell and buy easily, worth mention that the minimum of the capital in the joint-stock company shall be 250 thousands, it will be paid 10%( with a minimum 25 thousand pound at the beginning of the establishment) with a commitment to pay another 15% within 3 months of establishment.

Partnership by Share Companies:

partnership by share companies consist of two categories

  • a. Joint Partners:

not less than two, their private money shall be considered as guarantor of the company’s debts and obligations, their shares are unsellable and they shall be only responsible for the management of the company

  • b. Shareholders Companies:

not less than three, each partner is asked how much shares he owns according to company’s debts and obligations, their personal money shall not be a guarantor for the company’s debts and they may not interfere in management company

Limited Partnership:

this company consists of two partners or more, that are responsible for the company’s debt as much as their equity share in the capital, and they are irresponsible for the company’s debt, personal money is not refunded and is not guarantor for the company’s debt only within the limits of the company’s capital, that kind is the most entrepreneurs return to, as we mentioned that the parties responsibilities are limited, and there is no minimum limit for the capital required for establishment, speed, and ease due to the establishment of place in one place which is investment authority

Sole Incorporation:

Egyptian law has developed this legal form for companies to meet a desire of some businessmen who want to work alone without partners not as individual facility but as a company that have at the same time the advantages of companies, to change facilities into companies and work on its development and expansion. The sole company provided this requirement and balanced between the equation and this form is an exception from article 505 of law, which shall be required that the company consists of two partners at least, and now the natural and legal person shall have the right to establish this form of companies, an important advantage of this company is that it serves as a money company not as persons, so the legal responsibility of the founder is within the limits of the company’s capital, don’t skip to his other money which means that his personal money is not guarantor of repayment of the debts and obligations of the company. Another advantage in which the sole company enjoys is obtaining advantages of investment guarantees and incentives law, as this form allows the company to obtain the necessary funding to guarantee to ensure its sustainability and not stumbling over individual establishments. This legal form is a form of money company that give it great flexibility in the diversity of activities that the company can perform and also enjoy all the benefits of the money company • Minimum capital is 50,000(Fifty Thousands Egyptian pound) • Capital shall deposit in one of the Egyptian banks completely and shall take a certificate

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