When you start thinking about starting your company, and before taking any action, you must determine its legal structure. Many entrepreneurs are often confused by the numerous company forms available. We will try to simplify these forms and types, which will help you choose the one that best suits your project's nature.
First: Individual establishments: These are legal entities established and owned by a single individual who receives all their profits and is personally responsible for all their obligations and debts to others.
Second: Partnerships: It is based on mutual trust between partners, and the partner's personality is taken into account, meaning that it does not dissolve into the company's personality. Types of partnerships:
1/Partnership Company: It is a company formed by two or more people (called general partners) to conduct business. The partners have unlimited liability and are personally and jointly liable for the company's debts.
2/ Limited partnerships: A limited partnership consists of two types of partners:
A/General partners who possess the same characteristics as general partners in a general partnership, including personal and joint liability, acquiring the status of a merchant upon the formation or joining of the company, and forming the company's name from the names of these partners.
B/ Limited partners are responsible for the company’s debts up to the amount of their contribution (their own funds are not used to pay the company’s debts), and they do not acquire the status of a merchant nor do they participate in the company’s external management activities.
3/ Joint venture companies: Its formation is based on secrecy and concealment, so that from a legal standpoint, only the partners know of its existence. It is an agreement between two or more people to carry out one or more business activities, which one of them performs in his own name, with profits and losses divided among them according to what they agree upon.
Third: Capital companies: Unlike partnerships, in corporations, partners' funds remain separate from the company's funds, and a partner's personal funds do not guarantee the company's debts.
1/ Joint-stock companies: The 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, and the shareholder is not liable for the company’s debts except to the extent of his share of the shares.
2/Recommended share companies: A limited partnership with shares consists of two classes of partners:
a) Joint partners: Their number must be no less than two, and their own funds are considered collateral for the company’s debts and obligations. Their shares are non-sellable, and they alone are responsible for managing the company.
b) Shareholders: There must be at least three partners, each of whom is liable for the company's debts and obligations only to the extent of their shareholding. Their personal assets are not considered collateral for the company's debts, and they are not permitted to interfere in the company's management.
3/ Limited Liability Companies: This type of company is formed between two or more partners, who are liable for the company's debts only up to the amount of their capital shares. They are not liable for the company's debts, and their personal assets cannot be used to secure the company's debts, except to the extent of their capital contribution.
4/One-person company: It is a company whose capital is wholly owned by one person, whether that person is a natural or legal person, and the founder of the company is not responsible for its obligations except to the extent of the company’s capital.
Contact our experts at Meligi Foundation Today you can analyze your idea and establish your company on a solid legal basis.
